Recently, the Hong Kong stock market has shown a clear warming of sentiment due to a trading logic called &#34;TACO (Trump Always Chickens Out),&#34; with the Hang Seng Index futures rising more than 3% during the night session. However, in stark contrast, the Hang Seng TECH Index did not rise alongside it, leaving many investors puzzled.
First, let’s briefly introduce the Hang Seng TECH Index: it selects the 30 core technology leading companies in the Hong Kong stock market, including major firms like Tencent, Alibaba, Xiaomi, NetEase, and Baidu, making it the Hong Kong version of the Nasdaq, characterized by high elasticity and strong growth, representing China's technology internet sector.
Table: Top Ten Constituents of the Hang Seng TECH Index and Their Weightings
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<tr>
<th></th>
<th></th>
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<td>Stock Name</td>
<td>Weight</td>
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<td>BYD Company</td>
<td>9.0%</td>
</tr>
<tr>
<td>Meituan-W</td>
<td>8.4%</td>
</tr>
<tr>
<td>Xiaomi Group-W</td>
<td>8.4%</td>
</tr>
<tr>
<td>Tencent Holdings</td>
<td>8.1%</td>
</tr>
<tr>
<td>NetEase-S</td>
<td>7.4%</td>
</tr>
<tr>
<td>Alibaba-W</td>
<td>7.4%</td>
</tr>
<tr>
<td>SMIC</td>
<td>6.8%</td>
</tr>
<tr>
<td>JD Group-SW</td>
<td>5.0%</td>
</tr>
<tr>
<td>Kuaishou-W</td>
<td>4.7%</td>
</tr>
<tr>
<td>Baidu Group-SW</td>
<td>4.1%</td>
</tr>
</tbody>
</table>
Data Source: Wind
Recently, the financial reports of leading technology internet companies in Hong Kong have been released, and the results show a relatively consistent structure: revenue continues to grow, but profits are under pressure. For example, some leading companies have seen their cloud business revenue grow by about 30% to 40% year-on-year, with advertising and gaming businesses maintaining steady growth, while overall profit growth is significantly lagging behind revenue growth, and even showing a temporary decline.
Why is this phenomenon occurring? It is primarily due to a significant increase in AI-related investments, which have rapidly raised costs in the short term; although revenue continues to improve, it cannot fully offset the pressure brought by these investments. In other words, the investment in the AI industry has already materialized, while the returns are still gradually being realized. Therefore, from a more macro perspective, the core contradiction in the technology internet sector has shifted from whether AI capabilities exist to when investments will convert into revenue and profits, which also means that the market trend is changing from &#34;relying on AI stories to increase valuations&#34; to &#34;looking at real performance.&#34;
There are two main highlights in the development of the AI industry behind the Hang Seng TECH Index:
First, AI demand is transitioning from concept to reality. Previously, everyone focused on how powerful the models were; now, the focus is on how to implement them profitably. New generation product forms like AI Agent and OpenClaw are continuously emerging, with a dramatic increase in model invocation, directly driving a surge in cloud computing demand. Cloud services have transformed from mere infrastructure to the main profit driver based on usage.
Second, a complete business closed loop is forming. Many leading internet platforms are beginning to change their business models, no longer just being model providers, but gradually forming a complete chain from models, cloud to applications through model system reconstruction, collaboration of computing power and cloud resources, and talent acquisition. Compared to single large model suppliers, this full-chain model is easier to monetize and has higher barriers to entry
From industry data, by 2025, the global API call volume for large models is expected to reach trillions, further opening up the commercial space for AI applications.
In summary, the recent fluctuations in the Hang Seng TECH Index are actually the market returning to rationality, adjusting the sector's valuations to reasonable levels.
So how should we view the current stage of the index's allocation value?
After the adjustment, the valuation percentile of the Hang Seng TECH Index within the global technology sector is at 27%, which has fallen to a relatively low level. Historically, after experiencing a phase of rising, the Hang Seng TECH Index generally undergoes a stage of valuation decline and market expectation adjustment. Although there will be fluctuations during this process, it also lays the foundation for future price trends. Therefore, for those looking to invest in this sector for the long term, now is actually a good entry point. Hang Seng TECH ETF E Fund (513010, Connect Fund A/C: 013308/013309), Wind data shows that this ETF has seen net inflows for 5 consecutive trading days, with the latest product size exceeding 30 billion yuan.
Risk warning: Funds carry risks, and investment should be cautious

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The performance of the Hang Seng TECH ETF in the Hong Kong stock market has attracted attention. Although the Hang Seng Index has risen due to a recovery in sentiment driven by the "TACO" trading logic, the Hang Seng TECH Index has not been able to keep pace. Financial reports from technology companies show revenue growth but profit pressure, mainly due to increased costs from AI investments. Market focus has shifted from AI capabilities to the returns on investments, and the trend in the technology sector is changing to emphasize actual performance. The demand for AI is gradually moving from concept to reality, driving growth in cloud computing demand

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