This year, the southbound funds have been quite crazy, with net inflows into Hong Kong stocks surpassing HKD 840 billion in just seven months. This not only exceeds last year's total but also sets a historical record since the launch of the mutual market access mechanism. In the past month, the momentum has not slowed down, especially in increasing holdings of the $Hang Seng Tech Index ETF (SH513180)$ and the $Hang Seng Internet ETF (SH513330)$. The increase in southbound funds is not coincidental but a logical resonance from multiple dimensions, primarily driven by three factors.
The first is that valuations are attractive. At the current valuation level, the dynamic price-to-earnings ratio of the Hang Seng Tech Index is about 21 times, which is within the 16%-21% percentile range over the past five years (data source: Wind), far lower than the Nasdaq 100 Index (about 32 times) and the Sci-Tech 50 Index (about 45 times). Such a significant valuation gap makes Hong Kong tech stocks a 'value oasis' in the eyes of global capital.
The second is the upward resonance of the industrial cycle. The artificial intelligence industry is at a critical turning point from technological exploration to commercial implementation. The World Artificial Intelligence Conference held in Shanghai a few days ago injected new momentum into the AI industry, and the components of the Hang Seng Tech Index cover the entire AI industrial chain, from computing power infrastructure (SMIC) and large model development (Tencent, Baidu) to commercial applications (Meituan, Xiaomi), forming a complete ecological closed loop.
The third is that the cost-performance ratio is high under loose liquidity. We are currently in a global easing cycle, with the cost of capital in the Hong Kong stock market declining, coupled with the stabilization of the RMB exchange rate, further opening up the valuation recovery space for Hong Kong tech stocks.
Historically, market trends driven by technological revolutions often last for several years, and the current rise of AI is pushing the Hang Seng Tech Index into a new upward cycle. The continuous increase in southbound funds not only recognizes the scarcity of leading Hong Kong tech stocks but also reflects long-term confidence in China's economic transformation and the restructuring of the global tech industry landscape. For ordinary investors, using the Hang Seng Tech Index ETF (513180) and the Hang Seng Internet ETF (513330) to easily invest in leading Hong Kong tech stocks is an important way to share in the dividends of the AI era.