Hong Kong's tech sector has recently witnessed fluctuations, yet constructive changes on the policy and capital fronts continue to build up.

On September 15, a joint administrative guidance was issued to online hotel reservation platforms by two government bodies, further standardizing the competitive landscape within the platform economy. Concurrently, global capital is rotating from crowded AI hardware segments toward software and cybersecurity names.

According to Wind data, the Hang Seng Tech Index currently trades at a price-to-earnings ratio of 22.63 times, placing it at the 30.94% historical percentile since its inception on July 27, 2020. This valuation level is drawing investor attention to the sector's recovery potential.

Why the current environment matters for investors

On September 15, the State Administration for Market Regulation, in collaboration with the Ministry of Culture and Tourism, issued administrative guidance to regulate competitive practices on online hotel booking platforms, curbing behaviors such as "lowest price across the web" that fuel excessive competition. The policy direction aims at fostering healthy industry development rather than constraining the platform economy.

As competitive norms become more defined, this could help alleviate the erosion of platform profitability caused by subsidy wars, shifting the competitive focus from pricing toward service quality and innovation. Within the Hang Seng Tech Index constituents, profit margin recovery expectations for online travel and local life services heavyweights are gaining momentum.

AI capital redistribution takes center stage

Simultaneously, a capital rebalancing is unfolding within the AI sector. The CEO of a major overseas AI enterprise has called for a slowdown in iteration pace, prompting markets to reassess the relationship between hardware capital expenditure and application software monetization. On the night of September 14, US software application stocks rallied against the broader market trend, with capital flowing from crowded computing power segments into enterprise software and cybersecurity directions.

Wind data reveals that southbound capital has recorded net inflows into Hong Kong stocks for seven consecutive trading days, with cumulative net purchases reaching HK$30.682 billion since September. Among Hang Seng primary industries, the information technology sector ranked first in net inflows.

How investors are positioning through ETFs

Market participants are simultaneously channeling funds into Hong Kong tech assets via ETFs. The popular product, Hang Seng Tech ETF HuaTai柏瑞 (513130), has seen net inflows on 9 of the 11 trading days this month, with an average daily turnover of RMB 4.192 billion year-to-date. The ETF carries a management fee of 0.2% per annum and supports same-day T+0 trading on the exchange.

The Hang Seng Tech Index, closely tracked by Hang Seng Tech ETF HuaTai柏瑞 (513130), brings together core technology enterprises including Chinese internet platforms, cloud computing service providers, and AI technology companies. The index spans the entire industrial chain, from computing power infrastructure and AI model capabilities to application scenarios and commercial monetization, positioning it to potentially benefit significantly from the rapid development of large language models.

The index's top ten constituents are Tencent Holdings, NetEase, Meituan-W, Alibaba-W, Xiaomi Corporation-W, BYD Company, SMIC, Lenovo Group, JD.com-SW, and Baidu-W, in that order.

Investor adoption and accessibility

According to the 2026 interim fund report, Hang Seng Tech ETF HuaTai柏瑞 (513130) boasts 446,600 holder accounts. The number of holders serves as a key indicator of market recognition, highlighting the ETF's visibility and acceptance among a broad base of investors. Off-exchange investors may consider the HuaTai柏瑞 Hang Seng Tech ETF feeder fund (Class A: 015310 / Class C: 015311).

HuaTai柏瑞 Fund is among the first batch of ETF managers in China, with over 19 years of experience in index investing. The firm offers transparent, easily tradable, and low-cost index tools such as CSI 300 ETF HuaTai柏瑞 (510300) and A500 ETF HuaTai柏瑞 (563360). As of the end of June 2026, the company's ETFs have generated cumulative profits exceeding RMB 180.6 billion for holders over the past two years.

Risk disclosure

Funds carry risks; investment requires caution. Investors should review investor suitability regulations, complete risk assessments in advance, and purchase fund products matching their risk tolerance. Past performance does not indicate future results, and performance of other funds managed by the same manager does not guarantee this fund's performance. Investors should carefully read the fund contract, prospectus, and product summary to understand the fund's specifics. The Hang Seng Tech ETF HuaTai柏瑞 may invest in overseas securities markets and faces risks including exchange rate fluctuations and overseas market volatility in addition to standard market risks. The Hang Seng Tech Index is compiled and published by Hang Seng Indexes Company, which takes all necessary measures to ensure index accuracy but does not guarantee it.