Hong Kong technology stocks such as Shunyu Optics and Lenovo rebounded strongly, southbound capital frantically “swept away goods”

In early trading on April 10, the three major indices of Hong Kong stocks collectively opened higher. The Hang Seng Index rose 3.42% to 20953.12 points, and the Hang Seng Technology Index rose 4.35%. After the opening of the market, the Hang Seng Technology Index continued to expand, rising more than 6% at one point. In terms of mainstream ETFs, the Hang Seng Technology Index ETF (513180) followed the index's strong upward trend, with holdings such as Shunyu Optical Technology, Lenovo Group, BYD Electronics, and Kuaishou showing the highest gains. Recently, a large amount of capital has actively “swept away” the Hong Kong stock technology sector. The Hang Seng Technology Index ETF (513180) received a net inflow of about 4.27 billion yuan in capital in the past 5 days.

CITIC Securities released a research report saying that with the cessation of Windows 10 updates and the development of AI PCs, the global PC market is expected to recover in 2025H2. Lenovo Group (00992.HK) may benefit from continued investment in data centers in North America and the active expansion of domestic manufacturers such as Ali. The ISG business is expected to realize more profits as the scale effect continues to be promoted. Furthermore, due to the company's outstanding capabilities in supply chain management and global factory layout, it is expected that the company's PC and server business will be controlled by tariffs. In the medium to long term, the popularity of end-side AI applications is expected to enable PC manufacturers to have a higher level of participation in AI applications and AI ecosystems. Lenovo is expected to rely on the hardware base to expand to software and application levels to achieve better business models and open up a new growth curve. The bank was optimistic about the company's investment value, gave a target price of HK$13 per share, and maintained a “buy” rating.

Since this year, the flow of south-bound capital into the Hong Kong stock market has accelerated. As of press release, Southbound Capital has made a net purchase of nearly HK$6 billion in Hong Kong stocks today. Previously, Southbound Capital had maintained net purchases for 13 consecutive trading days. On April 9, Southbound Capital's net purchase of Hong Kong stocks exceeded HK$35.5 billion, which not only continued the recent strong inflow trend, but also set a record high of daily net purchases in history. According to Huatai Securities, there is still room for relative earnings for Hong Kong stocks from a medium-term perspective. The reasons are: 1) in terms of fundamentals, the domestic PMI expanded for two consecutive months, signs of real estate bottoming out, and countercyclical policy adjustments increase expectations; 2) in the Hong Kong stock structure, the characteristics of listed companies dominated by technology and finance make corporate profits relatively less sensitive to tariffs; 3) in terms of capital, the continued inflow of southbound capital provides financial support for Hong Kong stocks.

In terms of valuation, after more than a month of adjustments, the Hang Seng Technology Index has once again returned to a historically undervalued range. As of the close of April 9, the price-earnings ratio (PETTM) of the Hang Seng Technology Index was only 19.49 times, at the valuation fraction of 7.35% since the index was released on July 27, 2020. That is, the current valuation of the index has been lower than 92% since the index was released, which is a historical underestimation range. CICC believes that the current “Chinese asset revaluation” process continues, and that in the midst of market fluctuations, more attention should be paid to endogenous growth momentum and policy catalytic resonance. At the crossroads of changing global economic narratives, the relative resilience and valuation advantage of the Chinese market are creating a strategic allocation window for long-term investors.