Hang Seng Stabilizes After Seven-Day Losing Streak, Tech Stock Valuation Recovery Attracts Attention

Hang Seng Stabilizes After Seven-Day Losing Streak, Tech Stock Valuation Recovery Attracts Attention

Hong Kong's Hang Seng Index has shown signs of stabilization after seven consecutive trading days of decline. Market analysts point out that during the continuous correction, the valuations of heavyweight tech stocks like Tencent and Alibaba have fallen to historically low levels, attracting some long-term capital to buy on dips, with technical rebound signals gradually emerging.

Technical Stabilization After Seven-Day Drop

The Hang Seng Index's seven-day losing streak set a recent record for the longest consecutive decline, with cumulative losses exceeding a certain threshold. Technically, the index found buying support near key support levels, forming stabilization patterns such as doji or small bullish candles on the daily chart. According to market technical analysts, the Relative Strength Index (RSI) has entered oversold territory, historically often accompanied by short-term rebounds. However, some argue that given ongoing external macroeconomic uncertainties, the sustainability of any rebound depends on whether trading volumes can effectively expand.

Tech Stocks at Historically Low Valuations

During this decline, the tech sector has been under the most pressure. Stocks like Tencent and Alibaba have seen significant pullbacks from their year-to-date highs. According to estimates from multiple brokerage reports, the average price-to-earnings ratio of Hang Seng Tech Index constituents is now close to 2022 lows, with some stocks' price-to-book ratios even falling below 1x. Low valuations have attracted "smart money": southbound capital has recorded net buying for several consecutive days, with Tencent and Meituan among the top net inflows. A fund manager noted that current tech valuations have fully priced in pessimistic expectations, and if there is marginal improvement in fundamentals, the valuation recovery potential is substantial.

Capital Flows: Long-Term Positioning and Short-Term Trading Coexist

From a capital flow perspective, the market shows a divergent pattern. On one hand, some foreign institutions have begun to replenish positions after the continuous decline. According to HKEX disclosure data, JPMorgan Chase and BlackRock have recently increased their holdings in Tencent and Alibaba. On the other hand, short-term trading capital remains on the sidelines, waiting for clearer policy or earnings signals. Notably, Alibaba's stock has gained some support after announcing an expanded buyback program, while Tencent, driven by its overseas gaming business and video account commercialization progress, is seen by some analysts as a rebound leader.

Catalysts and Risks for Valuation Recovery

The market generally believes that tech stock valuation recovery requires multiple catalysts. First, at the macro level, rising expectations of a Fed rate cut would ease liquidity pressures, benefiting Hong Kong stocks. Second, stronger signals of domestic economic recovery, especially improvements in consumption and internet advertising data, would directly enhance tech companies' earnings expectations. Additionally, a more stable regulatory environment, with platform economy policies shifting from "tight regulation" to "promoting development," provides fertile ground for valuation recovery.

On the risk side, geopolitical tensions, repeated Sino-US audit disputes, and some companies' earnings misses remain potential factors suppressing valuations. A strategist cautioned that low valuations do not equate to an immediate rebound, and investors should focus on the arrival of earnings inflection points.

Outlook: Rebound or Reversal?

There is significant divergence in the market regarding the future direction of the Hang Seng Index and tech stocks. Optimists believe that stabilization after a seven-day losing streak often signals a phase bottom, and combined with valuation advantages, could usher in a repair rally. Cautious voices point out that historical experience shows the first rebound after a prolonged decline often ends as a "one-day wonder," requiring more fundamental confirmation. Overall, the short-term market is likely to maintain a volatile bottoming pattern, with structural opportunities in tech stocks worth watching, but a full reversal will take time.