Hong Kong stocks are staging a fierce comeback after languishing for much of the year in a prolonged slump, as investors rotate away from frothy hardware stocks into undervalued Chinese internet platforms. The Hang Seng Index climbed as much as 3.5% on Thursday, the most among Asian benchmarks, with Alibaba Group Holding Ltd. and Tencent Holdings Ltd. leading the way. The Hang Seng Tech Index jumped nearly 6% and is set to advance for a fifth straight session, its longest winning streak since July 2025.
The rebound reflects shifting sector preferences following the US midterm elections, which cast doubt over the pace of data center buildout in the US. China's beaten-down internet giants have emerged as key beneficiaries as investors move into value and consumer shares after a long run-up in AI-linked stocks. Companies such as Alibaba and Tencent combine low valuations with sprawling consumer operations.
Marvin Chen, a strategist at Bloomberg Intelligence, said Hong Kong stocks are benefiting from several rotation trends in Asia: a North Asia regional rotation into China as Korea and Taiwan come under pressure, a value rotation as China has stayed at trough valuations while the rest of the world rallied, and an AI rotation as investors diversify away from tech hardware and pure AI plays. The Hang Seng Tech Index had earlier fallen to the brink of erasing all of its gains since China's 2024 stimulus pivot, underscoring the depth of investor skepticism.
Sentiment also improved as Beijing ramped up efforts to stabilize its capital markets. Alibaba and Tencent each rose more than 6%, while food delivery firm Meituan climbed as much as 9.6%. Leonid Mironov, portfolio manager at Gavekal Capital, said some investors are trying to do "bottom fishing" because Hong Kong names have become very cheap.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing