In recent years, the rapid development of cutting-edge technologies such as AI, Big Data, and Cloud Computing has led to profound changes in the Global technology industry. A number of outstanding technology companies, leveraging their strong innovation capabilities, continue to disrupt traditional industries and create new business models, becoming the core driving force for social growth.

From the USA,$NASDAQ 100 Index (.NDX.US)$to the Sector Index of Electronic Technology in Taiwan, these indexes not only gather the most innovative and competitive technology companies but have also become synonymous with long-term outperformance and substantial returns in Capital Markets.

The Hong Kong stock market, as an important financial bridge connecting China and the world, brings together a group of technology companies with significant growth potential. Since the beginning of the year, driven by$Alibaba (BABA.US)$, XIAOMI-W, TENCENT, and other technology companies,$Hang Seng Index (800000.HK)$Surpassing the Nasdaq Composite Index with an increase of over 20%, in the context of the explosion of AI Technology in China, can the related Hong Kong Stock Exchange Technology Index grow into a 'Chinese version of the NASDAQ 100'?

Taking the Hang Seng TECH Index as an example, why can the Hong Kong stock market better represent this wave of Technology?

With the explosive growth of the 'AI+' Industry Chain triggered by DeepSeek at the beginning of the year, the market is gradually realizing that the integration speed of Technology with various Industries is entering the 'second curve.' The Hong Kong stock market has keenly captured this trend, transitioning from the traditional 'dividend bull' to the vibrant 'AI bull' phase full of innovation.

In fact, taking the Hang Seng TECH Index as an example, we can find that it can fully benefit from this wave for the following two reasons:

① The high concentration of symbols.

In terms of specific symbols, the Hang Seng TECH Index includes a number of the highest quality companies in terms of Technology attributes, with$SMIC (00981.HK)$Companies like Alibaba, XIAOMI-W, $TENCENT (00700.HK)$and other technology giants, leveraging their deep technical accumulations in their respective fields, have seen significant increases in their stock prices since the beginning of the year, invigorating the entire Technology Sector.

② The high generalization of processes.

From a specific perspective, the Hang Seng TECH Index encompasses the entire AI Industry Chain from Cloud to Application to Chip to Terminal, with AI-related symbols accounting for 71%, effectively capturing all potential investment opportunities in the AI wave.

Since the beginning of the year, the topic of "value reassessment" in China's Technology sector has become a new hot topic in the market, with international capital focusing on China's "Seven Sisters" in Technology — $BYD COMPANY (01211.HK)$ 、 $BABA-W (09988.HK)$ 、 $LENOVO GROUP (00992.HK)$ 、 $MEITUAN-W (03690.HK)$ 、$Semiconductor Manufacturing International Corporation (688981.SH)$、 $TENCENT (00700.HK)$ 、 $XIAOMI-W (01810.HK)$ The potential and value recognition of companies continue to rise. Foreign institutions, represented by Goldman Sachs and Deutsche Bank, were the first to voice their opinions, suggesting an increase in the allocation to Chinese Technology companies. Comparing the significantly different performances of the 'Seven Sisters' in the USA and China during this market cycle, the market has already recognized China's core Technology assets as one of the important symbols that cannot be ignored by 2025.

Although the Hang Seng Index Technology Sector has seen some degree of increase in the early stage, for investors who want to seize this wave of AI market, both in terms of historical valuation levels and compared to foreign similar technology indexes, the technology assets in the Hong Kong stock market are still at a relatively low position (around the 30th percentile in the past five years). This undervaluation not only reflects the market's rational expectations for the future development of enterprises, but also provides room for potential value recovery.

What are the respective focuses of the Hang Seng TECH Index and the Hong Kong stock technology sector?

Tech assets in the Hong Kong stock market exhibit significant investment advantages in the current market environment, providing professional investors with a diverse range of investment choices. The Hang Seng TECH Index and the CSI Hong Kong Technology Index stand out as leaders, each possessing unique characteristics and advantages.

The Hang Seng TECH Index, as a well-established representative index of the Hong Kong Stock Technology sector, has high recognition and market influence. Its constituent stocks are mainly concentrated in areas such as internet giants, semiconductor chips, and new energy vehicle manufacturers, showing high concentration. As an index with an 'AI content' of 71%, we also analyzed why the Hang Seng TECH benefits from this round of market from the perspective of its symbols.

It should be particularly noted that the weighted stocks of the Hang Seng TECH Index mostly possess both consumer attributes (stable cash flow) and technology attributes (AI, Cloud Computing). Against the background of a clear policy direction to "support platform economy," relevant companies can leverage their technological accumulation and deep user base to bring good returns to investors.

However, combined with the characteristics of this market cycle, there is another "aggressively" stronger index, the CSI Hong Kong Technology Index (hereinafter referred to as "Hong Kong stock technology"), which is worth paying attention to. Compared to the Hang Seng TECH Index, the sample size of Hong Kong stock technology has increased from 30 to 50, including larger market cap technology leaders in the Hong Kong stock market with higher R&D investments and better revenue growth, focusing on the "hardcore technology" field, excluding symbols with stronger financial and consumer attributes, resulting in a higher purity of technology.

In terms of specific industry distribution, the Hong Kong stock technology sector not only includes traditional Internet giants but also encompasses key areas such as Semiconductors, Electric Vehicles, Biotechnology, and AI Chips. It also includes the Terrific 10 summarised by Wall Street, which covers the core leading enterprises in the Chinese technology sector, possessing significant market influence and competitiveness. The weight of these ten technology stocks in the Hang Seng TECH Index accounts for over 70%. This high-purity configuration not only grants the index a similar 'moat' but also provides investors with the greatest certainty in technology investment opportunities.

Epilogue.

In 1943, Warren McCulloch and Walter Pitts proposed the basic model of artificial neural networks, laying the theoretical foundation for the development of AI. Due to limitations in computational power and a lack of data resources, the development of AI fell into its first trough in the 1970s, known as the "AI winter." Many research projects stagnated due to funding shortages, and researchers' enthusiasm was extinguished.

However, humanity's pursuit of intelligence has never stopped. In 2012, AlexNet achieved groundbreaking results in the ImageNet image classification competition, and deep learning technology began to emerge, propelling AI into a rapid development phase.

By 2025, in a whirlwind of advancement, AI is building a new paradigm for our lives and work, from voice recognition to intelligent driving, from medical diagnosis to financial risk prediction. The Hong Kong stock market has gathered a large number of enterprises with deep technological accumulation and innovative capabilities in the AI field. These companies not only invest heavily in technological R&D but have also achieved significant results in market applications, injecting strong momentum into the development of the Hong Kong Technology Sector.

Risk warning: The views presented are for reference only and do not represent investment advice. The market carries risks, and investment should be cautious. Past performance does not guarantee future results. Investors should carefully read the legal documents of the Fund, such as the 'Fund Contract' and 'Prospectus', before purchasing the Fund, to understand the risk and return characteristics of the Fund and determine whether the Fund is suitable for their risk tolerance based on their investment objectives, investment horizon, investment experience, and asset situation.

Editor/danial