Viewing the Hang Seng Tech Index from a Higher Latitude

Hang Seng Tech Index (HSTECH) differs from US stocks. In its market movements, it is difficult to see a broad-based rally across individual stocks. A broad rally requires valuations to be sufficiently low; more often, the index is led higher by individual stocks.

HSTECH Market Analysis: For example, the broad rally of Xiaomi, Alibaba, and Tencent from January to March last year. From April to October, Tencent played a stabilizing role for the HSTECH index. From September to October, Alibaba, fueled by the AI concept surge, led the HSTECH to a sharp rise and final peak. By October, the HSTECH index needed a correction due to its significant prior gains.

During the period from November 21 to January 12 this year, HSTECH actually showed a willingness to rebound. The market logic at the time was that the pause in the food delivery war boosted Meituan's valuation repair. Meituan was the top-weighted stock in HSTECH at that time, with Alibaba, Xiaomi, and even Tencent having lower weights. Unexpectedly, Alibaba's pressure on Meituan caused the entire HSTECH to face downward pressure.

Under these circumstances, from January 12 to January 28, Alibaba replaced Meituan as the main force leading the HSTECH higher.
Starting January 28, HSTECH declined all the way. This is because the Nasdaq began a series of adjustments from that time, citing excessive M7 spending as the reason, and currently, the impact of war factors has been added.

Currently, HSTECH needs individual stocks that can sustainably lead the market. From the current situation, Tencent and Alibaba seem unlikely to take on this role. Next, we'll see if Xiaomi can lead HSTECH to an independent rally tomorrow. The above time points can be argued separately.