As flags of China and Hong Kong are flying on screens, the hanging index outside the Exchange Square will be held on January 21, 2021 in Hong Kong, China.
Zhang Wei | China News Service by NebraskaDailyNews
Hong Kong-listed tech stocks fell into corrections on Monday as investors booked profits, while uncertainty in the trade war and the gradual U.S. restrictions on high-end technology access in Beijing also shocked people by emotions.
The Hang Seng Tech index tracks some mainland Chinese technology companies listed in Hong Kong, down more than 12% since its March 18 high and more than 3% on Monday.
Chinese and international institutional investors began returning to Chinese stocks after Beijing announced stronger stimulus measures last September. Investor inflows pushed the Hang Seng Tech index to its three-year high earlier this month.
Since the release of the R1 model of AI startup DeepSeek in January, Chinese tech stocks (Chinese tech stocks) have raised questions about the U.S.-led AI ecosystem, claiming that it is much lower than other established AI players.
Hong Kong stocks, especially Alibaba and Tencent, have bought net purchases from mainland Chinese investors, and have only recently set a record.
“There are also a lot of fake rallies in the last three years in China’s tech stocks, and that’s probably the same,” said Dan Niles of Niles Investment Management.
Clearnomics CEO James Liu told NebraskaDailyNews that the Chinese market is still more volatile than the U.S. and other developed markets, adding that factors such as the growing trade war may continue to increase volatility.
“For most investors, investing in Chinese tech stocks should be seen as a diversified way to diversify portfolios that may have been over-focused on U.S. technology,” Liu said.
“There is no specific bad news for Chinese tech stocks, so the recent corrections are largely due to profitability and a relatively gentle Chinese recovery,” said Vincent Chan, a Chinese strategist at Aletheia Capital.
The pullback was “normal” after a strong rally this year, echoing Vey-Sern Ling, senior equity adviser at UBP, who believes investor sentiment remains positive about the country’s technology sector.
“Innovation is back and the government is clearly supporting it,” Lin said, adding that Chinese tech stocks can still enjoy higher income seasons in good income seasons, while low valuations relative to their global peers.
According to FACTSET data, the MSCI China Index is currently trading at 12.58 times the estimated 1-year return, while the S&P 500 index is trading at 1-year, and the S&P is trading at 20.21 times the expected 1-year return.
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