On the morning of November 20, the three major Hong Kong stock indices opened higher but moved lower, with the Hang Seng Tech Index falling over 1%. Among mainstream ETFs, the largest A-share ETF tracking the same sector, the Hang Seng Tech Index ETF (513180), followed the index and fluctuated downward. Among its holdings, Midea Group, Baidu Group, and Kuaishou led gains, while Kingsoft, XPeng Motors, and Xiaomi Group led declines, with Kingsoft falling over 10%.

Recently, expectations for a Fed rate cut in December have continued to cool, which may have caused some liquidity impact on Hong Kong stocks, where foreign capital accounts for a relatively high proportion. It is worth noting that southbound funds continue to be net buyers of Hong Kong stocks. Specifically, as of November 19, southbound funds have been net buyers of Hong Kong stocks for four consecutive trading days. CITIC Securities believes that, from a liquidity perspective, the "wealth effect" in Chinese stock markets has become increasingly significant this year, and the phenomenon of residents "moving deposits" is likely to continue. Given the current under-allocation of Hong Kong stocks by mainland investors, it is judged that southbound funds will continue to increase their allocation to Hong Kong stocks, and the trend of retail funds flowing into Hong Kong stocks through ETFs is expected to persist.

The institution pointed out that Hong Kong stocks not only have domestic companies with a complete AI industry chain (including infrastructure, hardware and software, and applications) but are also seeing an increasing number of high-quality leading A-share companies listing in Hong Kong. It is expected that Hong Kong stocks will benefit from liquidity spillovers from both domestic and international markets and the continued catalysis of the AI narrative. With the bottoming out and recovery of Hong Kong stocks' fundamentals and their still significant valuation discount, the institution judges that the Hong Kong stock market will see a second round of valuation repair and further earnings recovery in 2026. Investors are advised to seize five medium- to long-term opportunities, one of which is the technology sector, including AI-related sub-sectors and consumer electronics.

Public information shows that as of November 19, the latest valuation (PE TTM) of the Hang Seng Tech Index ETF (513180)'s underlying index is 21.74x, lower than other major global tech indices. Additionally, the index valuation is at about the 21.18th percentile since the index's launch, meaning the current valuation is lower than nearly 80% of historical periods. Hang Seng Tech is already in a historically undervalued range, highlighting its cost-effectiveness, while its high volatility and high growth characteristics give it greater upward momentum. Investors without a Hong Kong Stock Connect account can use the Hang Seng Tech Index ETF (513180) to one-click allocate to China's core AI assets.