In-depth Analysis of the Current Situation and Investment Opportunities in Hong Kong Stock Market's Technology Sector

Based on the latest market data and in-depth analysis, I will provide you with a comprehensive analysis of the current situation and investment opportunities in the Hong Kong stock market’s technology sector:

The Hang Seng Index fell 1.91% at midday close, while the Hang Seng Tech Index saw a larger decline of 2.41%, indicating that tech stocks led the decline in the Hong Kong stock market [0]. Over the past 30 trading days, the Hang Seng Index dropped from 25,701.63 points to 25,107.00 points, a cumulative decrease of 594.63 points (2.31% decline), with a volatility of 1.19% [0].

From the market observation, obvious sector rotation characteristics are present:

• Declining sectors
  : Precious metals, software services, semiconductors
• Rising sectors
  : Traditional defensive sectors like coal and lottery concepts

This phenomenon of capital flowing from the technology sector to traditional industries reflects a significant decline in market risk appetite.

Southbound funds had a net outflow of HK$1.103 billion, hitting a recent record. Such large-scale outflows usually indicate:

1. Rising short-term risk aversion
   : Investors’ concerns about high valuations of tech stocks have intensified
2. Need for valuation regression
   : After previous sharp rises, tech stocks need time to digest gains
3. Policy uncertainty
   : The market has differences over the direction of future technology policies

Large-scale outflows of southbound funds often mark an important turning point in market sentiment. From historical data, after each record outflow, the market usually takes 1-2 months to re-establish balance.

• P/E ratio: 23.53x, in a reasonable range
• ROE: 20.59%, strong profitability
• Current share price: HK$594.50, year-to-date increase of 42.91%

• P/E ratio:19.51x, relatively reasonable valuation
• ROE:12.16%, good profitability
• Current share price: HK$143.30, year-to-date increase of76.26%

Compared with global tech giants, Hong Kong tech stocks still have certain valuation advantages:

• US tech stocks generally have a P/E ratio above30x
• Hong Kong tech stocks have an average P/E ratio in the range of20-25x
• From the PEG perspective, some leading stocks have entered a reasonable or even undervalued range

From technical indicators, the Hang Seng Tech Index is near a key support level:

1. Short-term trend
   : The20-day moving average is at25,756.20 points; the current index has fallen below this important support
2. Medium-term trend
   : The200-day moving average is still above, indicating that the medium-term uptrend has not been completely broken
3. Volatility
   : A daily volatility of1.19% indicates that market sentiment is relatively fragile

###5.1 Short-term Strategy (1-3 months)

1. Wait and see
   : Wait for the trend of southbound fund outflows to ease
2. Dollar-cost averaging
   : Consider buying high-quality tech stocks in batches during market panic
3. Focus on support levels
   : Closely monitor the strength of key technical support levels

###5.2 Medium-to-Long-Term Strategy (6-12 months)
Based on fundamental analysis, the Hong Kong tech sector still has long-term investment value:

1. Accelerated digital transformation
   : Strong demand for digital transformation among Chinese enterprises
2. Policy support
   : The country’s policy support for technological innovation remains strong
3. Valuation repair
   : After adjustments, valuations have returned to a reasonable range
4. Performance growth
   : Leading companies still maintain stable growth in performance

###5.3 Key Focus Areas

1. Artificial Intelligence
   : Accelerated implementation of AI applications benefits related companies
2. Cloud Computing
   : Sustained growth in demand for enterprise cloud adoption
3. Semiconductors
   : Accelerated process of domestic substitution
4. FinTech
   : Huge development space for digital finance

###6.1 Main Risk Factors

1. Policy risk
   : Changes in regulatory policies may affect tech stock performance
2. Geopolitics
   : Increased uncertainty in Sino-US relations
3. Liquidity risk
   : Shifts in global monetary policy may affect capital flows
4. Performance risk
   : Some tech companies face pressure of slowing performance growth

###6.2 Response Strategies

1. Diversified investment
   : Do not concentrate investments in a single stock or sub-sector
2. Regular adjustments
   : Adjust portfolio structure in a timely manner based on market changes
3. Long-term perspective
   : Adhere to the concept of value investment and avoid short-term speculation

Although the Hong Kong tech sector faces adjustment pressure in the short term and southbound fund outflows have hit a record, from a long-term perspective, this instead provides a rare layout opportunity for value investors. The current market adjustment is more of a technical correction rather than a deterioration of fundamentals.

• Remain cautious in the short term and wait for market sentiment to stabilize
• Be optimistic about the investment value of the tech sector in the medium to long term; can choose the right time to lay out in batches
• Focus on leading companies with reasonable valuations and stable performance
• Use methods like dollar-cost averaging to smooth investment costs and reduce the impact of short-term fluctuations

[0] Jinling API Data - Real-time data and company analysis of Hang Seng Index, Hang Seng Tech Index, Tencent, Alibaba
[1] Bloomberg - “China’s Hong-Kong Listed Stocks May Extend Lag on Tech Rotation” (https://www.bloomberg.com/news/articles/2025-12-16/china-s-hong-kong-listed-stocks-may-extend-lag-on-tech-rotation)
[2] Bloomberg - “HK’s Red-Hot IPO Market Closing 2025 With Rush of Deals” (https://www.bloomberg.com/news/videos/2025-12-16/hk-s-red-hot-ipo-market-closing-2025-with-rush-of-deals-video)