Hong Kong's Hang Seng Index Rises for Third Straight Day; Tencent and Alibaba Lead Tech Sector Rally on Earnings Hopes and Fund Flows

Hong Kong Stocks: Hang Seng Index Rises for Third Straight Day; Tencent and Alibaba Lead Tech Sector Rally

Hong Kong's Hang Seng Index has closed higher for three consecutive sessions, with market sentiment notably improving. The tech sector led the rebound, with Tencent Holdings and Alibaba Group showing particularly strong price performance. Analysts attribute the rally to improved earnings expectations, a recovery in liquidity, and macro policy hopes.

Key Drivers of the Hang Seng Rebound

The Hang Seng Index has rebounded from recent lows, posting three consecutive bullish days with substantial cumulative gains. Market consensus points to the following key drivers:

• Earnings Season Optimism: Tencent and Alibaba are set to release their latest quarterly results, with the market holding high expectations for improved performance. According to a Bloomberg survey, analysts generally expect Tencent to maintain growth in advertising and gaming, while Alibaba is likely to show profit improvement in cloud services and international e-commerce.
• Liquidity Recovery: Southbound capital has been flowing steadily into the Hong Kong market, with increased allocation to tech leaders. Data from the Hong Kong Exchange shows that net buying by southbound investors hit a recent high over the past week, with Tencent and Alibaba ranking among the top net buys.
• Macro Policy Expectations: Rising expectations for mainland China's economic stimulus measures and the Federal Reserve's rate-cutting cycle have provided external support for valuation recovery in Hong Kong stocks.

Tencent: Dual Engines of Gaming and Advertising

Tencent, a bellwether in Hong Kong's tech sector, has shown strong price performance in this rebound. Market focus is on the recovery of its gaming business and growth in advertising revenue. Reports indicate that several of Tencent's new games have performed well in overseas markets, while the monetization of its Video Accounts advertising is accelerating. Analysts believe that if earnings show revenue growth exceeding expectations, Tencent's stock price could rise further.

Alibaba: Cloud Services and E-commerce Profit Improvement

Following its recent organizational restructuring, the market is optimistic about Alibaba's business integration effects. In particular, its cloud services business, amid surging demand for AI large models, is expected to become a new growth engine. Additionally, domestic e-commerce operations have seen continuous margin improvement through cost-cutting and efficiency measures. According to industry research data, Alibaba's cloud revenue growth has rebounded for two consecutive quarters, sending a positive signal to the market.

Tech Sector Fund Flows

In terms of fund flows, the tech sector has been the most favored area in this rebound. Besides Tencent and Alibaba, other tech stocks such as Meituan and JD.com have also attracted varying degrees of capital inflow. According to Wind data, the tech sector saw cumulative net inflows exceeding HKD 10 billion during the three-day Hang Seng rally, accounting for over 60% of total market net inflows. This indicates that institutional investors are regaining confidence in tech leaders.

Future Outlook

Looking ahead, whether the Hang Seng Index can sustain its upward momentum will depend crucially on the actual performance of the earnings season and the direction of macro policies. If Tencent and Alibaba's earnings meet market expectations, the tech sector could drive further strength in Hong Kong stocks. However, investors should also be wary of external uncertainties, such as geopolitical risks and potential volatility from shifts in Federal Reserve policy.