Hang Seng Index Rises for Three Consecutive Days: Tencent and Alibaba Lead Tech Rally, Sustainability Analysis

Hang Seng Index Rises for Three Consecutive Days: Tech Giants Lead, Capital Flows Beneath the Surface

Hong Kong's Hang Seng Index closed in the green for three consecutive trading days this week, with the tech sector leading the rebound. Tencent Holdings and Alibaba, two heavyweight stocks, alternated in driving gains, significantly boosting market sentiment. After the previous deep correction, is this rebound a fleeting short-term pulse or the prelude to a trend reversal? This article analyzes the driving forces and sustainability of this rally from the perspectives of capital flows and earnings expectations.

Capital Flows: Southbound Capital Accelerates Return, Foreign Sentiment Warms

According to public data disclosed by the Hong Kong Stock Exchange, the net buying volume of southbound capital has significantly expanded over the past three trading days, with notable increases in holdings of tech leaders like Tencent and Alibaba. Market analysts point out that this reflects mainland investors' recognition of the valuation trough in Hong Kong stocks—the Hang Seng Index's current P/E ratio remains at historically low percentiles, making it attractive compared to major global indices. Meanwhile, some foreign institutions have upgraded their ratings on Chinese concept stocks in recent research reports, believing that a stabilizing regulatory environment will unlock valuation repair space. However, the sustainability of capital flows still needs observation: if the Federal Reserve releases hawkish signals later, global capital may flow back into dollar assets, testing Hong Kong stock liquidity.

Earnings Expectations: Tencent Gaming Recovers, Alibaba Cloud Regains Growth

From a fundamental perspective, the latest earnings expectations of the two tech giants have injected a shot in the arm for the market. For Tencent, its core gaming business is entering a product cycle after the normalization of game license issuance, with several new games performing well in overseas markets. Coupled with the rapid growth of WeChat Channels advertising revenue, the market generally expects its quarterly revenue to return to double-digit growth. For Alibaba, the Cloud Intelligence Group has made progress in commercializing AI large models, partnering with several leading companies, while the Taobao and Tmall Group has stabilized market share through price power strategies, with a clear trend of profit improvement. However, it should be noted that the pace of consumption recovery still carries uncertainty; if consumer willingness to spend falls short of expectations in the second half of the year, growth in the e-commerce and local services sectors may face pressure.

Sustainability of the Short-Term Rebound: Three Key Variables

Looking ahead, whether this rebound can continue depends on three core variables. First, macro liquidity: The stance of the Federal Reserve's September FOMC meeting is crucial; if expectations for rate cuts intensify, it will benefit Hong Kong stock valuation expansion; conversely, a high-interest-rate environment may suppress risk appetite. Second, policy catalysts: The market has fully priced in normalized regulation of the platform economy, but if supportive policies for new areas such as AI and data elements are introduced, it will open new imagination space for tech stocks. Third, technical signals: After consecutive gains, the Hang Seng Index is approaching key resistance levels; if trading volume continues to expand and breaks through effectively, the rebound may upgrade to a medium-term rally; if it stalls with shrinking volume, profit-taking pressure should be watched.

Overall, the three-day rise in the Hang Seng Index is the result of a resonance between capital flows and fundamentals, but the sustainability of the short-term rebound remains to be verified. For investors, rather than chasing short-term volatility, it is better to focus on the long-term competitiveness of tech leaders—against the backdrop of the AI wave and digital economy transformation, the moats of companies like Tencent and Alibaba have not disappeared, and current valuation levels provide a good margin of safety. The market will ultimately reward those who remain rational amid volatility.