Hong Kong Tech Stocks Show Signs of Dawn, Wall Street Short-Sellers Suddenly "Switch Sides"! Hang Seng Tech ETF Invesco (513980) Locks in Low-Level Chips in the Hong Kong Stock Market

Recently, a significant turning point has emerged in the global capital markets: Wall Street’s notorious “big shorts,” known for consistently bearish views on Chinese assets—including hedge funds and strategic analysts who have previously loudly bet against Hong Kong’s tech sector—are quietly adjusting their positions and collectively turning bullish on Hong Kong tech stocks.

Michael Burry, the legendary “Big Short” of Wall Street—who accurately predicted the 2008 US housing bubble burst and made huge profits during the financial crisis—has clearly stated: “Over the past few years, the stock prices of Hang Seng Tech-related companies have fallen sharply, but their revenues and profits have continued to grow. Hong Kong-listed companies have significant upside potential.”

This shift in sentiment is not just verbal but is accompanied by real capital flows: on March 9 alone, southbound funds net bought HKD 37.213 billion worth of Hong Kong stocks, setting a record and indicating that institutional investors may be increasing their allocations to Hong Kong tech assets systematically.

Why are Wall Street “shorts” suddenly “defecting”?

Market confusion abounds: in the face of ongoing volatility and subdued trading sentiment in Hong Kong stocks, why are well-known “big shorts” on Wall Street choosing to build positions against the trend now? This strategic positioning is not driven by emotion or blind following but is based on in-depth fundamental analysis, rooted in three core logic points, each highlighting the core value of Hong Kong stocks.

1. Valuations at Bottom, Discount Effect Highlighted

According to Wind data, as of March 17, 2026, the Hang Seng Tech Index PE-TTM is about 25x, placing it in the 28.74th percentile over the past five years, significantly below its long-term average.

Chart: Valuation and Cost-Effectiveness of Hong Kong Tech Stocks

Source: Wind, as of 2026.03.17

Trend analysis: The PE-TTM of the Hong Kong Stock Connect Tech Index is around 25x, at a low point in the past five years, well below the long-term valuation median, providing a substantial safety margin for investors.

It is important to note that since Q4 last year, the market correction has essentially reflected liquidity expectations oscillating and geopolitical disturbances, rather than a fundamental deterioration of the industry. In fact, after months of relative weakness, the valuation compression has already priced in pessimistic expectations, making the current risk-reward profile quite attractive.

2. Steady Earnings, Core Assets Have Support

Hong Kong core assets are mainly high-quality Chinese companies across internet, new consumption, and hard tech sectors, with mature business models and proven cash flow generation over multiple cycles.

By 2026, AI across the entire industry chain has become the main theme for Hong Kong tech allocations. The sector’s investment logic is shifting from “theme expectations” to “technological iteration and performance realization.” The “Lobster” phenomenon has kicked off a new era of AI agents, and Hong Kong tech companies with high concentration of intelligent business are expected to benefit from this trend and return to AI growth narratives.

Data shows that over the past year, domestic C-end AI applications have continued rapid development and are now sizable. According to AI app rankings, by December 2025, the top 20 AI apps on mobile had a combined monthly active user base of 837 million, while the top 20 web-based AI apps reached 1.311 billion, representing growth of 292.1% and 76.5% respectively since January 2025.

Among these, Tencent, Alibaba, Meituan, and other core Hong Kong tech stocks, which hold vast C-end traffic and deep data assets, are naturally the preferred scenarios for AI model commercialization. They are also expected to accelerate the conversion of technological dividends into actual performance, opening up dual opportunities for valuation re-rating and earnings upgrades.

Chart: Domestic C-end AI Applications Monthly Active Users Continue to Grow

Source: Wind

Trend analysis: Over the past year, domestic C-end AI applications have continued rapid growth and are now dominated by major internet firms.

3. Policy Support and Market Confidence Restoration

Beyond valuation recovery and fundamental earnings improvement, positive policy changes form the third pillar supporting contrarian capital to bottom fish Hong Kong stocks. Currently, a favorable window of synchronized domestic and international policy cycles is injecting strong upward momentum into the market.

From the domestic perspective, regulatory focus is shifting from “financing function” to “investment function” balance. Recent measures include continuous optimization of the Stock Connect mechanism—expanding Hong Kong Stock Connect constituents, coordinating trading calendars, and stabilizing RMB exchange rate tools—significantly reducing cross-border trading costs and currency risks, thereby enhancing liquidity depth.

Internationally, geopolitical upheavals are reshaping global capital allocation. With escalating tensions in the Middle East, traditional safe-haven assets like Saudi Arabia and the UAE are experiencing capital outflows due to increased geopolitical risk premiums.

In this context, Hong Kong stocks, with their unique combination of “valuation discount + Chinese asset anchor + offshore market convenience,” have become the preferred destination for Middle Eastern capital fleeing regional risks. Compared to high-valued US stocks and energy-constrained European stocks, Hong Kong stocks offer scarce growth assets and benefit from continuous southbound fund inflows, jointly improving liquidity conditions.

Which Hong Kong tech ETF is the best choice?

There are many ETFs tracking Hong Kong tech stocks. The CSI Hong Kong Stock Connect Technology Index (931573.CSI), as a core benchmark reflecting the overall performance of the tech industry within the Stock Connect scope, shows significant differentiation in its composition and allocation strategy under current market conditions.

Besides traditional tech sectors like electronics and computing, it has a notable overweight in emerging fields such as pharmaceuticals, biotech, and new energy vehicles. Its broader industry distribution helps diversify risk and better aligns with future technological development trends, benefiting from high-growth potential in emerging sectors.

Chart: Industry Distribution of Hong Kong Tech Indexes (% of total)

Source: Wind, as of 2026.01.31

As of January 31, 2026, among various Hong Kong tech-related indices since 2025, the CSI Hong Kong Stock Connect Technology Index has the highest gain at 41.03%, outperforming the Hang Seng Tech Index by 4.69% (36.34%).

Valuation-wise, the PE (TTM) of the CSI Hong Kong Stock Connect Tech Index is 25.5x, at the 30th percentile over the past five years, with a P/B ratio of 3.59, at the 68th percentile, leaving ample risk buffer.

Chart: Risk-Return Comparison of Indices Since 2025

Source: Wind, as of 2026.01.31

Invesco Hong Kong Tech ETF (513980), one of the first on-market ETFs closely tracking the CSI Hong Kong Stock Connect Technology Index, benefits from precise positioning and efficient operation, establishing a competitive edge within Hong Kong tech ETFs.

The fund manager’s Q4 report indicates that, looking into 2026, macro interest rates are likely to remain in a downward trend, providing ample liquidity and easing valuation pressures on US stocks. From a global liquidity perspective, expectations of rate cuts could continue to pressure Hong Kong stock valuations. After this quarter’s correction, the latest valuation remains below the 30th percentile of the past five years, offering high safety margins and room for upside.

Thanks to Invesco Great Wall’s market-making network in ETFs, the Invesco Hong Kong Tech ETF (513980) has ample secondary market liquidity, with assets exceeding HKD 20 billion and average daily trading volume over HKD 100 million, highlighting liquidity advantages among peers.

Additionally, the fund is complemented by well-established off-market linked funds (Class A 016495, Class C 016496), catering to both retail dollar-cost averaging and institutional complex strategies, making it suitable for both retail investors and institutional needs.

Risk warning: The brands mentioned are for illustrative purposes only and do not constitute recommendations for specific companies or stocks. Markets are risky; invest cautiously!