Amid AI tumult, more Chinese investors seek haven in undervalued Hang Seng Index

Amid AI tumult, more Chinese investors seek haven in undervalued Hang Seng Index Mainland traders poured US$8 billion into Hong Kong equities in July, eyeing refuge from global tech sector volatility, in a market trading at just 12.2 times earnings Mainland Chinese investors bought more Hong Kong stocks than they sold for a second consecutive month in July, rotating into the undervalued market to take shelter from the tumult in artificial intelligence-linked shares. A faltering in the global artificial intelligence trade pummelled the mainland’s yuan-denominated stocks, particularly technology companies, over the past month, prompting investors to seek alternative assets that could relatively withstand the turmoil. The Hang Seng Index is among the cheapest key equity benchmarks globally, partly because of its low exposure to the AI frenzy. The city’s benchmark rose 13 per cent in July, defying sell-offs that roiled most of the world’s major markets, while the mainland’s tech-heavy Star Market 50 Index tumbled 26 per cent – its biggest monthly decline on record. “While risk-aversion rose, global funds didn’t pull out of equities significantly. And instead, they were seeking rebalancing across markets and sectors,” said Melody Lai, an analyst at SPDB International in Hong Kong. “Hong Kong stocks absorbed part of the capital seeking reallocations because of the relatively low valuation and investors’ reassessment of the internet platforms.” Even after the rebound, the Hang Seng Index is valued at just 12.2 times earnings, according to data provider Wind. That compares with a multiple of 25.8 for the S&P 500 and 14.2 for the CSI 300 Index of yuan-denominated stocks. [Image text:] HKEX SEAEHANG SENGINDI 25,132.29 8,360.68 EEHANGSENGTECHINDEX 4,814.83 46.32 MSCA5O 2,841.20 42.1.67% HHET 5O02OPENNT141393EASHSFUTURESEXNT