After a deep correction, what is the outlook for the current Hong Kong stocks in the hard technology sector? | Hong Kong Stock Information Technology ETF (159131)

Since October 2025, the Hong Kong stock market has corrected for nearly 5 months. The Hang Seng Index has dropped by 10.64%, the Hang Seng Tech has corrected by 29.48%, while the CSI Hong Kong Stock Connect Information Technology Composite Index (referred to as “Hong Kong Stock Connect Information C”) has corrected by 31.86%. For the Hong Kong stock technology sector, the depth and duration of this round of correction have exceeded that of last February.

Meanwhile, capital is positioning for a strong rebound after the dip, especially in hard technology stocks. As of March 23, the only listed and tradable Hong Kong stock information technology ETF (159131) has seen a net capital inflow of over 120 million yuan in the last 5 days, and over 290 million yuan in nearly 20 days, with the current size of this ETF exceeding 500 million yuan.

What investors favor may be the high elasticity of Hong Kong stock information technology. After the adjustment period ended in April last year, the rebound rates for the Hang Seng Index, Hang Seng Tech, Hong Kong Stock Connect Internet, and Hong Kong Stock Connect Information C were 37.62%, 51.83%, 56.11%, and 87.50%, respectively. Clearly, the Hong Kong Stock Connect Information C index has shown superior elasticity during this phase. The reason is that both Hang Seng Tech and Hong Kong Stock Connect Internet inevitably include large-cap internet companies with significant weights. For investors seeking sharpness, focusing on the “Hong Kong stock chip semiconductor” industry chain represented by the Hong Kong Stock Connect Information C index may be a more suitable tool. It is understandable that capital has been densely flowing into the Hong Kong stock information technology ETF (159131) tracking the Hong Kong Stock Connect Information C.

Looking ahead, the fund manager of the Hong Kong stock information technology ETF (159131), Cao Xuchen, believes that the first half of the year is the worst point for capital flow and earnings in the Hong Kong stock market, and it is also the point where terminal companies are most significantly squeezed by upstream prosperity. The fundamentals of Hong Kong stock internet and information technology may gradually improve starting from the second quarter. The lack of fundamental logic is a hard injury for Hong Kong stocks, but valuation and positioning will guarantee their elasticity thereafter. Since the technology sector has strictly differentiated between high and low prosperity segments, the next round of valuation uplift in the technology sector may be difficult to achieve internally. Financial technology, brokerages, and other large financial directions may signal the overall valuation.

In terms of valuation, the latest price-to-earnings ratio of the index corresponding to the Hong Kong stock information technology ETF (159131) is 30.63 times, positioned at the 22.93% percentile over the past 3 years, and the distance to the peak in February 2025 has expanded to 60%.

Finally, whether the adjustment in Hong Kong stocks is complete remains to be seen. However, at this current point, the investment cost-performance ratio of hard technology stocks in Hong Kong is gradually becoming apparent.

Data source: China Securities Index Company, Shanghai and Shenzhen Stock Exchanges.

Note: “The only one in the entire market” refers to the only listed and tradable ETF tracking the CSI Hong Kong Stock Connect Information Technology Composite Index currently in the entire market.

ETF fund-related fee explanation: Investors may be charged a commission by the subscription and redemption agency of no more than 0.5% when subscribing or redeeming fund shares. Transaction fees on the market are subject to the actual fees charged by the securities company. No sales service fee is charged.

Link fund-related fee explanation: Subscription fee/purchase fee of less than 1 million yuan is 0.3%, 1 million (inclusive) - 2 million is 0.2%, above 2 million is 1000 per transaction; redemption fee (individual investors) within 7 days is 1.5%, 7 days (inclusive) and above is 0%; redemption fee (institutional investors) within 7 days is 1.5%, over 7 days and within 30 days (inclusive) is 1%, over 30 days and within 180 days (inclusive) is 0.5%, over 180 days (inclusive) is 0%. No sales service fee is charged.

Risk warning: The Hong Kong stock information technology ETF and its linked fund passively track the CSI Hong Kong Stock Connect Information Technology Composite Index, with the base date of this index being 2014.11.14, and published on 2017.6.23. The涨跌幅 of the CSI Hong Kong Stock Connect Information Technology Composite Index over the last 5 complete years was: 2021, -9.54%; 2022, -34.47%; 2023, -0.25%; 2024, 21.58%; 2025, 39.30%. Past performance of the index does not predict its future performance. The index constituents in the materials are for display purposes only, and the descriptions of individual stocks do not constitute any form of investment advice, nor do they represent any fund under the manager’s holdings and trading direction. This product is issued and managed by Hua Bao Fund, and the distribution agency does not bear responsibility for the product’s investment, payment, and risk management. Investors should carefully read the “Fund Contract,” “Prospectus,” and “Fund Product Summary” and other legal documents related to the fund to understand the fund’s risk and return characteristics, and choose products that match their own risk tolerance. Past performance of the fund does not predict its future performance, and the performance of other funds managed by the fund manager does not guarantee the performance of the fund. Investment must be cautious! The risk level assessed by the fund manager for this fund is R4—medium to high risk, suitable for aggressive (C4) investors and above. Sales institutions (including direct sales institutions of the fund manager and other sales institutions) evaluate the risk of the fund according to relevant laws and regulations. Investors should pay timely attention to the appropriateness opinions issued by sales institutions and take their matching results as the standard. The appropriateness opinions from various sales institutions may not be consistent, and the fund product risk level evaluation results issued by the fund sales institution must not be lower than the risk level evaluation results made by the fund manager. There may be differences in the fund’s risk-return characteristics and risk levels in the fund contract due to different considerations. Investors should understand the risk-return situation of the fund and carefully choose fund products based on their investment objectives, duration, investment experience, and risk tolerance, and bear the risks themselves. The registration of this fund by the China Securities Regulatory Commission does not imply any substantive judgment or guarantee regarding its investment value, market prospects, and returns. Funds carry risks, and investment must be cautious.

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Editor: Yang Ci