The Hong Kong stock market rebounded sharply on November 5, driven by undervalued Chinese big tech companies. Following the U.S. midterm elections, investment funds shifted from AI semiconductor and hardware stocks to relatively undervalued Chinese internet and consumer companies.
On this day, the Hang Seng Index closed at 24,809.4, up 3.72% from the previous trading day.
Notably, the tech-focused Hang Seng Tech Index rose nearly 6%, marking its fifth consecutive day of gains. Shares of Alibaba and Tencent increased by more than 7%, while food delivery service Meituan saw its stock rise as much as 9.6% during the session, reflecting a broad rally among big tech stocks.
Bloomberg reported that this rebound in the Hong Kong market aligns with a shift in investor funds observed in Asian markets following the U.S. midterm elections. Investors are turning their attention from AI-related stocks to undervalued value and consumer stocks.
Alibaba and Tencent are particularly seen as undervalued, with their extensive business operations spanning e-commerce, social media, gaming, and finance enhancing their investment appeal. Last month, the forward price-to-earnings ratio (PER) of the Hang Seng Tech Index hit 13, the lowest since 2024. The PER is a measure that indicates how high or low a stock is valued relative to its earnings.
The relative weakness of the stock markets in South Korea and Taiwan has also contributed to the flow of Asian investment funds into China, benefiting the Hong Kong market. Analysts suggest that efforts by the Chinese government to restore investor confidence through market support measures have also bolstered the rebound.
However, it remains uncertain whether this rebound will lead to a sustained upward trend. The Hong Kong market has a significant proportion of companies reliant on the Chinese domestic market, and intensifying competition within various sectors in China is putting pressure on corporate profitability. The continuation of stock purchases by mainland Chinese investors in Hong Kong will also be a key factor.
Nonetheless, Hao Hong, Chief Investment Officer at Lotus Asset Management, noted to Bloomberg that the overly pessimistic outlook among investors regarding the Hong Kong market could mean that this rebound has the potential to extend beyond a mere technical bounce.
* This article has been translated by AI.
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