On July 28, 2026, after experiencing adjustments in the second quarter, the Hong Kong stock market showed signs of stabilization and rebound in the tech sector first. The Hang Seng Tech Index has rebounded more than 8% from its mid-July low, with significant increases in trading volume for heavyweight stocks like Tencent, Alibaba, and Meituan. The Hong Kong Stock Bootcamp review this week pointed out that the current market is in a critical window of valuation recovery and earnings verification, and investors should focus on capturing structural opportunities in tech stocks.
Tech Stocks Have Corrected Significantly, Valuation Attractiveness Prominent
Since their 2025 highs, Hong Kong tech stocks have corrected by an average of over 25%, with the Hang Seng Tech Index's P/E ratio falling to around 20 times, near a three-year low. Bootcamp analysts believe this round of decline was mainly affected by expectations of global liquidity tightening and regulatory policy disruptions in some industries, but the fundamentals of core leading enterprises have not deteriorated substantially. Taking Tencent Holdings as an example, its Q2 2026 financial report showed an 18% year-on-year increase in advertising revenue, narrowing losses in cloud business, and gaming overseas revenue accounting for 35% of total revenue.
Meanwhile, Alibaba announced an increase in its share buyback program from the existing US$15 billion to US$25 billion, a move interpreted by the market as a positive signal that management believes the company's value is undervalued. Meituan maintains a market share of over 60% in the local life services sector, and as subsidy competition eases, its unit economic model continues to optimize.
Capital Flows: Southbound Funds Accelerate Entry, Foreign Sentiment Marginally Improves
According to Southbound fund data tracked by the bootcamp, for the week ending July 26, Southbound funds net bought HK$22.9 billion of Hong Kong stocks, with tech sector accounting for 62% of the funds absorbed. This is the largest single-week net inflow since November 2025. In terms of fund structure, mainland public funds and insurance funds are the main buying forces, while the proportion of individual investors participating through Hong Kong Connect is also increasing.
Regarding foreign investment, although passive funds are still adjusting positions according to index weights, active funds' allocation to Hong Kong has increased from 3.2% in May to 3.8%, and some hedge funds have begun to试探性 establish long positions. The bootcamp emphasizes that this capital rotation is not a comprehensive reversal but a valuation-driven tactical allocation, and truly trend inflows still need to wait for the end of the corporate earnings revision cycle.
Second Half Catalysts: Interest Rate Cut Expectations and US-listed Chinese Companies Returning
In its monthly outlook, the bootcamp has outlined key events that may affect Hong Kong tech stocks in the second half:
- Fed Rate Cut Path: US inflation data continues to decline, with market probability of a September rate cut rising to 70%. If rate cuts materialize, it will ease pressure on Hong Kong dollar liquidity and be conducive to tech stock valuation expansion.
- Acceleration of US-listed Chinese Companies Returning: NetEase, Baidu, etc. have been included in Hong Kong Connect through dual primary listings, and more US-listed Chinese companies are considering returning to Hong Kong, enhancing market depth and liquidity.
- Normalization of Domestic Platform Economy Regulation: Regulators have recently expressed support for innovation in platform enterprises and issued specific rules to regulate competitive behavior, eliminating policy uncertainty.
The bootcamp reminds that despite positive catalysts, the market still faces risks of overseas economic recession and geopolitical disturbances, and investors need to flexibly adjust positions.
Practical Strategies: Focus on Leading Companies, Watch for Oversold Stocks
For the current market environment, the Hong Kong Stock Bootcamp proposes the following trading strategies:
- Select Oversold Leaders: Prioritize leading companies with stable market share, abundant cash flow, and clear recovery in profitability, such as Tencent, Alibaba, and Meituan. Use options or covered call strategies to reduce holding costs.
- Focus on New Economy Sub-sectors: Medium-sized companies in short video, cloud computing, SaaS services, etc. may have excess return opportunities, but strict screening of valuation and earnings matching is required.
- Diversify with Sector Index ETFs : For investors who cannot conduct in-depth research, consider Hang Seng Tech Index ETF or Hong Kong Tech 50 ETF to capture overall sector rebound benefits at low cost.
In terms of risk control, the bootcamp suggests setting an 8%-10% stop-loss line and using a pyramid method for adding positions, avoiding excessive chasing at the beginning of the rebound. At the same time, monitor the USD/HKD exchange rate and Hong Kong dollar interbank liquidity indicators as barometers of market sentiment.
Conclusion: Patience Needed in Bottom Area, Left-side Layout is Timely
After nearly a year of adjustment, Hong Kong tech stocks have returned to reasonable valuation levels. Coupled with marginal improvements in policy and capital aspects, the second half is expected to experience a阶段性 recovery. However, the bootcamp emphasizes that investors should still be alert to the impact of global economic growth slowdown on earnings and the risk of individual company earnings disappointments. In terms of strategy, it is recommended to adopt a "core + satellite" portfolio, with leading stocks as the core, supplemented by some elastic varieties, and gradually establish positions during market fluctuations.
Looking back at history, every deep adjustment in Hong Kong stocks has孕育ed structural opportunities. For investors with certain risk tolerance, the current time may be a good opportunity to position in Hong Kong tech stocks.
