Hang Seng Index Rises for Third Straight Day, Reclaims 18,000 Mark: What's Driving Tech Stocks?

Hang Seng Index Rises for Third Straight Day, Reclaims 18,000 Mark: What's Driving Tech Stocks?

Hong Kong stocks have seen a strong rebound recently, with the Hang Seng Index rising for three consecutive trading days and successfully reclaiming the 18,000-point mark. Market sentiment has notably improved, with tech stocks serving as the core driver of this rally. Key stocks such as Tencent Holdings and Alibaba have been active, while southbound capital continues to flow in, providing liquidity support. However, amid lingering external uncertainties and the need for further verification of fundamental recovery, the sustainability of this rebound has become a key focus for investors.

I. Rebound Drivers: Policy Expectations and Capital Resonance

This Hang Seng rebound is primarily driven by a confluence of positive factors. On one hand, policy signals from mainland China's economy have turned more positive, with rising expectations for growth-stabilizing measures boosting investor confidence. On the other hand, expectations for a Fed rate cut have strengthened again, with the US dollar index weakening, prompting capital to flow back into emerging markets. As a valuation trough, Hong Kong stocks have attracted incremental capital, including southbound funds. According to HKEX public data, southbound capital has been net buying for several consecutive days, with single-day net inflows hitting recent highs, primarily flowing into the tech sector.

II. Tech Stock Performance: Heavyweights Lead, Sector Divergence Evident

Tech stocks have been the absolute leaders of this rebound. Tencent Holdings' share price has climbed steadily, with the market positively assessing its gaming business recovery and WeChat Video Account monetization progress. Alibaba, after organizational restructuring, has shown stable core e-commerce performance and resilience in its cloud computing business. Internet platform stocks like Meituan and JD.com have also recorded considerable gains. However, the sector has not seen a broad rally, with some small- and mid-cap tech stocks posting limited gains, indicating that capital prefers to chase more certain blue-chip targets. From a valuation perspective, the Hang Seng Tech Index's P/E ratio remains at historically low percentiles, providing a safety cushion for the rebound.

III. Capital Flow Analysis: Southbound Capital and Foreign Fund Movements

Southbound capital has been a key driver of this rebound. According to HKEX disclosures, net buying of Hong Kong stocks by southbound capital has significantly expanded over the past week, with tech stocks accounting for over 40% of the total. On the foreign side, despite an overall cautious stance, some active funds have begun to modestly increase their holdings in Hong Kong stocks, particularly in the internet sector. Notably, the Hong Kong dollar exchange rate has strengthened recently, indicating signs of international capital inflows. However, the sustainability of capital flows remains questionable—if Fed policy expectations reverse, foreign capital may flow out again.

IV. Rebound Sustainability: Opportunities and Challenges Coexist

Looking ahead, whether the Hang Seng rebound can continue depends on several key variables. First, whether mainland China's economic data can continue to improve, especially the recovery progress in consumption and real estate, will directly impact corporate earnings expectations. Second, changes in the global liquidity environment, particularly the pace of Fed rate cuts, are crucial for Hong Kong stock valuation recovery. Additionally, geopolitical risks and the direction of US-China relations remain factors that cannot be ignored. From a technical perspective, the Hang Seng Index faces some profit-taking pressure above 18,000 points, but if trading volume remains high, the index may challenge higher resistance levels.

Overall, this Hang Seng rebound has some fundamental support and capital coordination, but its sustainability still needs to be observed. As the leading sector, tech stocks' ability to deliver earnings will be a key test of market confidence. Investors should closely monitor subsequent policy developments and corporate earnings reports, and adjust positions flexibly.