Hang Seng returns above 21,000: Tech and consumer leaders surge in afternoon; southbound net buying exceeds HK$12B in a day

Hang Seng turns positive in afternoon, reclaims 21,000 psychological level

On August 3, after morning consolidation, the Hong Kong market showed strong resilience in the afternoon. Driven by both tech and consumer leader stocks, the Hang Seng Index turned from losses to gains and ultimately closed above the 21,000-point mark. At the close, the HSI stood at 21,058.36 points, up 1.85%. The Hang Seng Tech Index performed even more strongly, rising 2.6% to close at 4,685.24 points. This trend not only boosted market confidence but also reaffirmed that Hong Kong stocks possess strong valuation appeal at current levels.

On the chart, early trading saw the HSI open lower and dip to around 20,600 points, pressured by overnight declines in US tech stocks and geopolitical uncertainties. However, as mainland A-shares stabilized and southbound capital entered aggressively, Hong Kong's core assets quickly gained buying support. In the afternoon, major tech stocks such as Tencent Holdings (00700.HK), Meituan-W (03690.HK), and consumer leaders Anta Sports (02020.HK) and Haidilao (06862.HK) collectively strengthened, pulling the index rapidly off its lows.

Tech and consumer leaders soar together; sector rotation evident

Today's rebound was not a one-sector show, but clearly featured sector rotation and co-movement. Tech stocks, a heavyweight sector in Hong Kong, regained favor after a period of adjustment. Tencent Holdings rose nearly 3%, while Meituan-W surged over 4%, with market expectations that its core local commerce business will see more significant profit release in the second half. Additionally, as AI large-model applications continue to gain traction, certain SaaS and internet healthcare concept stocks also attracted investor interest.

At the same time, the rise of the consumer sector was another highlight of the afternoon market. Against the backdrop of the National Development and Reform Commission repeatedly emphasizing 'prioritizing the recovery and expansion of consumption,' consumer leader stocks entered a valuation repair phase. Anta Sports hit a three-month high on better-than-expected second-quarter retail sales. Restaurant giant Haidilao also attracted active positioning due to improved table turnover from refined operations. Analysts noted that this pattern of both tech and consumer stocks advancing simultaneously reflects a confluence of rising market risk appetite and defensive allocation demand.

Southbound net buying exceeds HK$12B; undervaluation acts as a magnet

In terms of fund flows, the most striking figure today was the substantial net buying by southbound capital. According to HKEX data, the southbound channels of the Shanghai and Shenzhen Stock Connect schemes recorded combined net buying of over HK$12 billion in Hong Kong stocks today, the highest daily net buying since March this year. Among the most actively traded were Tencent Holdings, Meituan-W, China Mobile (00941.HK), and Tracker Fund (02800.HK).

Institutional analysis suggests that southbound capital's accelerated entry into Hong Kong stocks at this point is based on two main considerations. First, from a valuation perspective, the Hang Seng Index's forward P/E ratio remains at a trough among major global indices. Even after the recent rebound, its valuation remains one standard deviation below the historical average, making Hong Kong's core assets clearly attractive for long-term investors seeking stable returns. Second, with the continued deepening of mainland stable-growth policies, expectations for economic recovery in the second half have warmed, providing upward catalysts for fundamentally solid Hong Kong blue chips. Some fund managers said the current period is an ideal window for cross-market rebalancing and increasing Hong Kong stock allocations.

Outlook: Sustainability of the rebound hinges on policy implementation and external disturbances

Despite today's strong performance, institutions remain rational and cautious about the outlook. Several strategy analysts pointed out that whether the HSI can effectively hold above 21,000 points and break higher still depends on several key variables. First, with the interim earnings season approaching, whether tech leader earnings meet market expectations will directly determine the height of the tech sector's rebound. Second, the specifics of mainland consumption stimulus policy implementation will affect the sustainability of the consumer sector's gains.

Additionally, external disturbances cannot be ignored. The Fed's future rate path and fluctuations in the US dollar index remain key factors affecting capital flows into emerging markets. While the market generally expects the hiking cycle to be near its end, high interest rates may persist longer than expected. Therefore, investors should actively participate in the rebound while also managing positions and risk control. Overall, undervaluation and capital inflows provide solid support for Hong Kong stocks, but whether the market can achieve a true reversal still requires further confirmation of fundamental signals.