China's "Top Ten Giants".
Author | Shenpeng
Data support | Goushi Big Data ()
Just as the Hong Kong stock market continues to adjust, Goldman Sachs dropped a bombshell, attracting market attention.
Both the Hang Seng Index and the Hang Seng TECH Index rebounded today.
This bombshell concerns China's private economy.
In a newly released series of analysis reports, Goldman Sachs first introduced the concept of "Chinese Prominent 10," selecting ten of the most representative private enterprises in China.
These companies span multiple high-growth sectors including Internet Technology, smart hardware, New energy Cars, and consumption services, with a total market cap reaching 1.6 trillion USD. Their weight in the Msci China Index exceeds 40%, with an average daily trading volume of 11 billion USD, and a projected compound annual growth rate of profits of 13% over the next two years.
Goldman Sachs believes they are expected to become the core driving force behind the high-quality development of China's economy.
Since the low point in stock prices in 2022, the average increase of the "ten giants" is 54%, with an increase of 24% from the beginning of 2025 to now, outperforming the Msci China Index by 33 and 8 percentage points respectively. The Hang Seng TECH Index ETF (513180), which covers eight of these companies, has seen an increase of 32.95% in the past year.
Goldman Sachs also pointed out that the "ten giants of China" possess a market dominance similar to the "seven sisters of US stocks," reminding global investors to pay special attention.
01
Who exactly are the "ten giants"?
The list of the "ten giants" released by Goldman Sachs includes:
Tencent, Alibaba, Xiaomi, BYD, Meituan, NetEase, Midea, Hengrui Pharmaceuticals, Ctrip, Anta.
This is selected by the Goldman Sachs research team based on dimensions such as market capitalization, industry position, globalization potential, and technological innovation capability.
For example, Tencent has the latest market cap of 4.58 trillion HKD, making it the largest listed company in terms of market value in the country, while Alibaba's market cap reached 2.11 trillion HKD.
Also, for instance, BYD is the 'champion' of domestic new energy vehicles, surpassing Tesla in European sales; Meituan is the 'champion' of the domestic food delivery platform, actively entering markets such as Hong Kong and Brazil in recent years; Hengrui Pharmaceuticals, the 'champion' of domestic innovative drugs, is also actively doing 'license out.'
Benefiting from globalization, the proportion of overseas income for China's private enterprises has increased from 10% in 2017 to 17% in 2024, and some companies have significantly higher profit margins overseas than domestically.
It is particularly worth mentioning that in areas such as AI and other innovative technologies, many among the 'Ten Giants' are also actively participating, such as Alibaba, which announced a 380 billion yuan AI investment plan this year, surpassing some large American technology companies in scale; Tencent is also actively exploring the commercialization path of AI technology and its own business; and there are Xiaomi, BYD (intelligent driving), Hengrui (AI + Medical), Midea (AI + Manufacturing), and so on.
Goldman Sachs also mentioned in the report that AI technology is reshaping the competitive landscape, with large private enterprises performing more prominently in AI investment, development, and commercialization due to their customer base, data accumulation, and investment capabilities.
The report estimates that the widespread application of AI technology could drive a 2.5% annual profit growth for Chinese enterprises over the next decade, with private enterprises accounting for as much as 72% in its defined AI-technology universe.
Goldman Sachs' analysis of over 1,300 earnings call transcripts shows that technology companies led by private enterprises (such as media, software, IT services, and medical) have a significantly higher focus on AI compared to their peers. Companies that are likely to become long-term winners are those that already possess a large customer base and data, are embracing new AI technologies, and are committed to reshaping their business models.
02
The Hong Kong stock market shines with stars.
Notably, the 10 companies filtered by Goldman Sachs are all listed in Hong Kong stocks, some are listed independently, while others adopt the A+H model, and some use the H+US stock model.
In this light, Goldman Sachs' analysis report indeed considers Hong Kong companies as 'myriad stars shining.'
Why is this the case?
The reason is simple: the Hong Kong stock market concentrates a large number of high-quality Chinese private enterprises, encompassing both traditional and emerging industries. These companies choose the Hong Kong stock market because it offers unique advantages in terms of systems, funding, and global connectivity.
Over the past 30 years, global investors have witnessed a large number of high-quality Chinese companies listed on the Hong Kong stock market, growing stronger along the way.
From the experimentation with H shares by state-owned enterprises in the 1990s, to the large state-owned enterprises and private companies, including Internet and other emerging technology companies going public on H shares in the 2000s, and after 2010, companies in mobile Internet, New energy, new consumption, and innovative drugs listing on H shares.
It can be said that H shares have participated in virtually all of China's reform and economic development history from the 1990s to the present, providing a continuous flow of global funding for domestic companies while also offering irreplaceable assistance to China's economic reform, transformation, upgrade, and the process of establishing modern systems in Chinese enterprises to integrate into the global community.
The high-quality companies listed on the Hong Kong stock market have also rewarded global investors with tangible performance.
The most typical example is Tencent, which has increased its stock price by about 600 times (after adjustments) since going public in 2004; BYD went public on H shares in 2002 and has also risen nearly 20 times (after adjustments) since then.
Of course, the strong rise of the Hong Kong stock market this year inevitably leaves some investors feeling that "it’s cold at high altitudes."
Is there still a cost-performance advantage for the overall Hong Kong stock market or specifically for these 10 companies?
This question can be viewed from two major valuation dimensions.
First, from an overall perspective, the latest PE ratio (TTM) of the Hang Seng Index is 10.35 times, positioned at the 58.16th percentile of the past 10 years, which is approximately at the mean or median level, not high, but it should also be acknowledged that it is not as low as it was at the end of October 2022.
The Technology stock concentration camp -- Hang Seng TECH Index, PE (TTM) is 19.55 times, located at the 7.06% quantile since the index was released on July 27, 2020, which is a historically low range.
In comparison, the latest PE (TTM) of the S&P 500 Index is 26.8 times, while Nasdaq Index is 40.41 times, located at the 79.85% and 63.72% quantiles respectively over the past 10 years.
Looking at the localized dimension, such as "the ten giants" vs. "the seven sisters."
The average PE of "the ten giants" is 16 times, with a forward-looking PEG ratio (fPEG) of 1.1 times, significantly lower than the 28.5 times and 1.8 times fPEG of the U.S. "seven sisters."
Even with a valuation premium of 22% relative to the Msci China Index, it is still far below the historical average.
In terms of stock price performance this year, "the ten giants" have clearly outperformed "the seven sisters."
03
The re-evaluation of Hong Kong technology stocks is still ongoing.
Goldman Sachs also mentioned in the report that the concentration of the Chinese stock market is relatively low, with significant dispersion of returns over the years. The top ten companies in China account for only 17% of the total market cap, far lower than the 33% in the U.S. and 30% in the Emerging Markets (excluding China).
As leading companies in the Industry gradually expand their dominance, market concentration is expected to rise from 17% to a higher level in the coming years.
Let’s make a hypothesis: if the 'ten giants' can achieve a valuation premium similar to the 'seven sisters', then their market concentration would increase from 11% to 13%, corresponding to an increase in market cap of 313 billion USD.
Secondly, the investment interest of private enterprises will support their future organic growth and acquisition growth, so a more transparent and relaxed M&A framework should be favorable for corporate acquisition growth, thereby driving higher industry consolidation.
Goldman Sachs' panel regression analysis of over 7,000 Chinese and American listed companies shows that capital expenditure, R&D investment, and concentration have a significant positive correlation with subsequent ROI and market share representation, which means that private enterprises with a dominant position in profit pools, capital expenditure, and R&D are more likely to maintain or even expand their leading position in the future.
Goldman Sachs also revealed a significant piece of information, estimating that among 496 global mutual funds, 86% are underweight in Chinese stocks, with a total managed asset scale of only 0.9 trillion dollars.
If global active funds were to adopt equal-weight allocation to Chinese stocks, it could potentially bring in up to 44 billion dollars in inflow, benefiting large private enterprises the most due to their size, liquidity, and index weight.
At the same time, given the rapid growth of Chinese stock ETFs' assets over the past five years, the index's heavyweight stocks will continue to attract passive funds.
Data on capital trends also shows that during the recent adjustments of the Hang Seng TECH Index, funds have been buying through ETFs. Among them, the Hang Seng TECH Index ETF (513180) has attracted 1.647 billion yuan in the last 5 trading days, with its latest scale at 27.482 billion yuan and an average daily transaction volume of 5.597 billion yuan this year, ranking first in both scale and liquidity among similar ETFs, supporting T+0 trading.
The underlying index of the Hang Seng TECH Index ETF features both hardware and software technology, with constituent stocks comprising core Chinese AI assets as well as technology leaders that are relatively scarce compared to A-shares, earning it the nickname "Hong Kong version of Nasdaq."
Additionally, the Hang Seng TECH Index ETF Connect (A:013402, C:013403) provides tools for off-site investors to invest in scarce technology leaders.
04
Conclusion.
In recent years, Hong Kong stocks, especially private enterprises in Hong Kong, have experienced many dark moments.
However, with the policy shift, the "924" in 2024, this year's symposium on the private economy, and breakthroughs in innovative technologies such as Deepseek and Yushu Robotics, the rise of new consumption, and the trend of diversified capital allocation have reignited global investors' interest in Chinese assets, marking a historic re-evaluation moment for Chinese assets.
As the vanguard of this round of market movement, Hong Kong stocks have been hot for IPOs, with stock indices entering a technical bull market, showcasing remarkable performance.
According to the latest disclosure from the Hong Kong Stock Exchange, as of the end of May 2025, the total market value of the Hong Kong securities market reached 40.9 trillion HKD, up 24% from 32.9 trillion HKD in the same period last year; the average daily transaction amount for the month was 210.3 billion HKD, an increase of 50% from 139.8 billion HKD in the same period last year. In the first five months of 2025, the average daily transaction amount on the Hong Kong Stock Exchange was 242.3 billion HKD, up 120% from 110.2 billion HKD in the same period last year.
Data on capital trends disclosed by various institutions indicates that the funds that left the US market at the beginning of this year, apart from some that flowed to Europe and Japan, were predominantly attracted to Hong Kong stocks. Combined with the continuously flowing domestic funds, the total could reach 2-3 trillion USD.
A significant inflow of hot money occurred, and there was even a moment when the Hong Kong dollar triggered the strong-side Convertibility Guarantee under the Linked Exchange Rate System for the first time since October 28, 2020, prompting the Monetary Authority to inject 116.614 billion HKD urgently.
At the beginning of June, the overnight Hibor rate in Hong Kong briefly dropped to 0, a decrease from 4 over just a few months, which is further strong evidence of the continuous inflow of funds into the Hong Kong market.
Currently, the liquidity in the Hong Kong market is very abundant, with a significant surge in the balance of base currency held by the Hong Kong Monetary Authority, and the rate of increase in base currency is the fastest since the pandemic.
These factors not only benefit innovative Technology stocks but also favor high-quality industry leaders.
The beta of a great era and the alpha of good companies are all gathered here, along with the continuously inflowing hot money; no one should and cannot ignore the Hong Kong market. (The end of the article)
