Hang Seng Rallies as Alibaba, Tencent and Lenovo Jump

The Hang Seng Index climbed to 24,057 on Wednesday, its highest level since June 18, following broad gains in major technology stocks. The index is about 6.8% above its lowest point this year.

Hong Kong trading saw strength across tech names. The Hang Seng Tech Index rose to 4,687, its strongest level since June 16. Lenovo Group led the market’s winners with a 9.48% gain. Alibaba added 8.14%. Semiconductor Manufacturing International rose 7.5%, Kuaishou advanced 6.8% and Xiaomi increased 5.6%. Other large-cap stocks including BYD, Baidu and NetEase were up more than 4%. Companies that had outperformed earlier in the year, such as WH Group, WuXi AppTec, Contemporary Amperex and Techtronic Industries, lagged in the session.

Investors shifted funds into Chinese technology names that underperformed during a run in other Asian markets, including South Korea and Japan. The Hang Seng Tech Index remains about 30% below its peak from last year while the Kospi and Nikkei 225 have posted stronger gains.

Valuation measures show a gap between Hong Kong equities and some global peers. The Hang Seng’s price-to-earnings ratio is near 11, compared with a forward P/E of about 20 for the S&P 500 and roughly 18 for the FTSE 100, based on FactSet data.

Several companies in the sector face cost pressures. Xiaomi reported a profit decline of more than 50% in its latest results, citing higher semiconductor and memory prices; company management warned that higher retail prices could reduce consumer demand. Alibaba and Tencent have also reported earnings pressure from rising chip costs. Firms that have expanded into electric vehicles face strong competition in China.

On technical charts, the Hang Seng has recovered from a low near 22,570 on June 26 but remains below its 100-day moving average. The index is also beneath a resistance level around 25,122 that traders identify as the neckline of a head-and-shoulders pattern; a move to that level would be a test for the recent advance.

Similar buying of beaten-down software and technology names has been observed in other markets this week. For now, Hong Kong’s gains reflect renewed buying in Chinese technology shares that had lagged earlier in the year.