372 Billion Hong Kong Dollars in Record Volume Sweep! Triple Recovery Resonance Revitalizes HK Tech Stocks, Invesco HK Tech ETF Positioned at Current Liquidity Inflection Point

Recently, a highly noticeable capital signal has emerged in the Hong Kong stock market: southbound funds are entering a new round of large-scale “shopping spree.” On March 9, mainland funds through the Stock Connect channel had a single-day net purchase of HKD 37.213 billion, setting a new historical high, surpassing the previous peak of HKD 35.876 billion on August 15, 2025, with an increase of over 3.7%.

This data not only marks a qualitative change in the strength of southbound capital inflows but also reflects a strategic reassessment by mainland institutional investors of the asset allocation value of Hong Kong stocks.

Chart: Large-scale “Shopping Spree” by Southbound Funds on March 9

Data source: Wind As of: 2026.03.12

Currently, the Hong Kong tech sector faces triple pressures:

First, ongoing geopolitical tensions continue to escalate, with repeated disruptions to market risk appetite due to expectations of global supply chain restructuring; second, the Federal Reserve’s monetary policy path remains uncertain, with the phased strengthening of the US dollar index raising concerns about liquidity tightening in emerging markets; third, industry competition patterns are worsening, with price wars in e-commerce, local services, and new energy sectors, leading to profit growth pressure on leading companies and market doubts about future earnings visibility.

However, the essence of value investing lies in contrarian positioning based on expectations gaps. When these negative factors are fully priced in by the market, stock prices often have already undergone corresponding risk release. From a marginal game perspective, further downward space tends to converge. At this point, any unexpected marginal improvement could serve as a catalyst for valuation recovery.

Geopolitical Environment: Pulsed Shocks, Long-term Valuations May Revert

Although the current Middle East situation and major power rivalries temporarily disturb market sentiment, historical patterns suggest that extreme geopolitical states are difficult to sustain long-term. Geopolitical conflicts impact capital markets in a “pulsed” manner—risk premiums spike sharply in the short term but tend to quickly revert to the mean as the situation becomes more controllable.

For example, during the last round of geopolitical friction in February 2022, the China Securities Hong Kong Stock Connect Technology Index (931573.CSI) fell from 2,850 points to around 1,500 points at its lowest. But as the market confirmed a easing cycle in geopolitical tensions, the previously overestimated risk premiums were rapidly unwound, triggering a V-shaped valuation recovery. The index rebounded to above 3,500 points.

Chart: Performance of the China Securities Hong Kong Stock Connect Technology Index during the last geopolitical friction

Data source: Wind As of: 2026.03.12

Additionally, the market holds positive expectations for improving China-U.S. trade relations. Recent communication channels between China and the U.S. on trade issues remain smooth. Substantial progress in tariffs, technological cooperation, or other areas could become key catalysts for foreign capital to re-enter Hong Kong stocks. If subsequent breakthroughs occur in Middle East ceasefire agreements or China-U.S. trade negotiations, the passive rebalancing of funds and active bottom-fishing could resonate.

Macro Liquidity: Worries about Tightening Fade, Easing Expectations Rise

As a typical offshore US dollar market, Hong Kong stocks are highly sensitive to USD liquidity conditions, with valuation levels showing a significant negative correlation with Federal Reserve policy expectations.

With US inflation data continuing to cool and the labor market weakening marginally, the Fed’s policy focus has shifted from “fighting inflation” to “stabilizing the economy.” Market panic over rate hikes has largely subsided, indicating a systemic improvement in global USD liquidity: the 10-year US Treasury yield has fallen from a high of 4.8% to around 4.2%, directly raising the valuation center of risk assets.

Chart: The downward trend of the 10-year US Treasury yield since 2025

Data source: Wind As of: 2026.03.12

Against this macro backdrop, the Hong Kong tech sector has become the biggest beneficiary. Tech growth stocks, with long-duration asset characteristics, are highly sensitive to changes in discount rates. When risk-free rates decline, it often coincides with a weakening US dollar index, easing pressures on emerging market currencies, and boosting the inflow of international funds into undervalued markets like Hong Kong. Therefore, the implied valuation elasticity of the Hang Seng Tech Index is significantly higher than that of traditional cyclical sectors.

Industry Competition: From “Money-burning Involution” to “Rational Profitability”

In recent years, platform economy has been mired in vicious “prisoner’s dilemma” style competition—sectors like community group buying, local services, and live e-commerce have experienced frequent losses in hundreds of billions, with high risk premiums.

However, the industry ecosystem has undergone fundamental improvements:

First, competition intensity among platforms has significantly cooled. Leading companies are shifting from “full-scale competition” to “core position defense,” with strategic contraction of non-core businesses and rational coexistence in overlapping markets becoming mainstream. Overall marketing expense ratios are trending downward.

Second, “cost reduction and efficiency enhancement, anti-involution” has evolved from emergency measures to industry consensus. Organizational flattening, AI replacing human labor, and supply chain optimization continue to release operational leverage, significantly improving unit economics.

Once concerns about “unsustainable business models” from overseas institutions are alleviated, Hong Kong tech stocks are re-integrated into the core global emerging market allocations. As profit growth and valuation become more aligned, the sector will shift from a “trading theme” to a “core asset” for allocation.

Wind data shows that since early 2026, southbound funds have accumulated net inflows exceeding HKD 180 billion. Unlike the 2024 trend of mainly flowing into high-dividend defensive sectors, this round of funds has significantly increased holdings of Hang Seng Tech components and leading biotech stocks, indicating a marginal improvement in risk appetite. On March 9, Tencent Holdings, Meituan-W, Xiaomi Group-W, and WuXi Biologics were among the top ten net inflow targets.

Which ETF should I choose to invest in Hong Kong tech stocks?

There are many investment products related to Hong Kong tech stocks. The China Securities Hong Kong Stock Connect Technology Index (931573.CSI), as the core benchmark reflecting the overall performance of tech industries within the Stock Connect scope, shows significant differentiation in its composition and structure under current market conditions.

Besides traditional tech sectors like electronics and computing, the index has a clear overweight in emerging fields such as biomedicine and new energy vehicles compared to other Hong Kong tech indices. Its broader industry distribution helps diversify risks associated with single sectors and better aligns with the diversified development trend of future technology, benefiting from high growth potential in emerging industries.

Chart: Industry distribution comparison of Hong Kong tech indices (% as of 2026.01.31)

Data source: Wind As of: 2026.01.31

Since 2025, among various Hong Kong tech-related indices, the China Securities Hong Kong Stock Connect Technology Index has the highest increase, up 41.03%; Hang Seng Tech rose 36.34%, exceeding Hang Seng Tech by 4.69%. In terms of valuation, the PE (TTM) of the China Securities Hong Kong Stock Connect Technology 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 buffers.

Chart: Risk-return metrics comparison of indices since 2025

Data source: Wind As of: 2026.01.31

Invesco (513980), a Hong Kong tech ETF, is among the first to closely track the China Securities Hong Kong Stock Connect Technology Index. With precise positioning and efficient operation, it has established a notable competitive advantage within the Hong Kong tech ETF camp.

Thanks to Invesco Great Wall’s market maker network in the ETF space, Invesco Hong Kong Tech ETF (513980) enjoys ample liquidity in the secondary market, with a current scale exceeding HKD 20 billion and an average daily trading volume of over HKD 1 million, highlighting its liquidity advantage among peers.

Additionally, the fund is equipped with comprehensive off-market connection funds (Class A 016495, Class C 016496), catering to diversified needs such as regular investment and conversions, making it suitable for retail investors’ convenience and institutional strategies alike.

Risk reminder: The brands mentioned are for illustrative purposes only and do not constitute recommendations for specific companies or stocks. Market risks exist; please invest cautiously!