Hong Kong stocks' new economy sector experienced divergence and volatility during the week, with the pharmaceutical sector leading the gains, and southbound funds flowing in significantly.

Ask AI · How could a major inflow of Southbound Capital affect the valuations of the new economy sector?

This week (March 23–27), the Hong Kong stock market showed a volatile and divergent pattern. Sector performance varied significantly: the healthcare and pharmaceutical sector led higher against the trend, while new-economy directions such as technology and consumer stocks adjusted in tandem. Southbound Capital increased its entry strength markedly, with net purchases of over HK$25 billion for the full week.

On the index level, performance also diverged across sub-sectors: the CSI Hong Kong Connect Healthcare Index rose 3.1% over the week, becoming the only core index in the positive; the Hang Seng Hong Kong Connect New Economy Index fell slightly by 0.5%, with relatively stable overall performance; the CSI Hong Kong Connect Internet Index and the Hang Seng Tech Index declined by 1.7% and 1.9%, respectively; and the CSI Hong Kong Connect Consumer Thematic Index saw the steepest drop, down 4.4% for the week.

Judging from index valuations and historical performance (data source: Wind, as of March 26, 2026):

Hang Seng Hong Kong Connect New Economy Index: trailing price-to-earnings (P/E) ratio of 24.0x. Since its launch in 2018, the valuation percentile has been 48.9%. It covers three major new-economy core areas: information technology, discretionary consumption, and healthcare;

Hang Seng Tech Index: trailing P/E of 21.8x. Since its launch in 2020, the valuation percentile has been 21.8%. The combined share of the information technology and discretionary consumption industries accounts for more than 90%;

CSI Hong Kong Connect Healthcare Index: trailing P/E of 35.9x. Since its launch in 2017, the valuation percentile has been 56.3%. The healthcare industry weight accounts for more than 90%, and the cumulative gain since the start of this year is 1.6%;

CSI Hong Kong Connect Internet Index: trailing P/E of 22.7x. Since its launch in 2021, the valuation percentile has been 15.3%;

CSI Hong Kong Connect Consumer Thematic Index: trailing P/E of 15.3x. Since its launch in 2020, the valuation percentile has been 0.0%, which is at a historical low.

On the fund flows side, as of March 26, the Hang Seng Tech ETF of E Fund (513010, index-tracking fund A/C: 013308/013309) that tracks the Hang Seng Tech Index “pulled in” more than RMB 2 billion over the past month. Most of the ETF products under E Fund’s Hong Kong Connect series are low-fee offerings.

Risk warning: Funds involve risk; invest cautiously.