Mainland‑listed Chinese tech stocks are outperforming their Hong Kong peers, underscoring investors’ enthusiasm for artificial intelligence hardware and earnings visibility.
The ChiNext Index, which counts battery giant Contemporary Amperex Technology Co. Ltd. as a member, has nearly doubled in the past year, reaching an 11-year high this week. By contrast, Hong Kong’s Hang Seng Tech Index, which includes Tencent Holdings Ltd., has fallen 4% over the same period.
ChiNext’s gains stem from its concentration in hardware makers — such as Nvidia Corp.’s optical transceiver supplier Zhongji Innolight Co. — with AI demand and tech breakthroughs in other areas like lithium batteries make earnings growth easier to forecast. Hang Seng’s tech stocks depend more on China’s consumption recovery and, in sectors like food delivery, face intense competition.
“The gap in performance is mostly due to the level of visibility ahead,” said Xiadong Bao, fund manager at Edmond de Rothschild Asset Management. “The clearer order-book from hard-tech in a world looking for resilience and certainty makes them better choices for investors who have little patience to wait for the consumption recovery” in China.
Some Hang Seng Tech heavyweights, including Alibaba Group Holding Ltd. and Baidu Inc., are making progress in AI. Yet with broad diversification into e‑commerce and advertising, they remain exposed to fierce price wars and margin pressures that have also weighed on electric-vehicle makers and other sectors in the index.
Consensus forward earnings‑per‑share estimates for the Hang Seng Tech Index have fallen about 26% from their July peak, Bloomberg-compiled data show.
For ChiNext, the picture is very different. Stronger links to AI and the global energy transition have boosted demand for Chinese exports, driving the index’s consensus forward earnings estimates up 42% from a June low to a record high, Bloomberg-compiled data show.
Shares of CATL, as the world’s biggest battery manufacturer is also known as, have surged about 90% over the past year, while optical‑device makers Innolight and Eoptolink Technology Inc. have each rallied more than 800%.
“If I really want growth in China, ChiNext is the place for me to go,” said Leonid Mironov, fund manager at Gavekal Capital Ltd. “Optics success has been phenomenal, and it’s underpinned by exceptionally strong earnings growth. So it’s not just speculation, but you do end up with a very top-heavy index.”
The top seven members in ChiNext now make up nearly half the weighting, raising concerns that even modest sentiment shifts may amplify market swings, leaving the index vulnerable to sharper and faster declines. CATL alone accounts for about a fifth of the index’s weighting.
For now, investors appear focused on earnings. CATL posted stronger‑than‑expected results this month, while Innolight announced a 263% profit surge.
The Chinese regulator’s announcement this month that ChiNext‑linked futures will be introduced also drew fund flows, said Jason Lui, head of AC equity and derivative strategy at BNP Paribas. All major derivative products in China are tied to broad‑based indexes like the CSI 300, 500, and 1,000, Lui said.
“You don’t have sector‑specific or NASDAQ‑style index futures,” he added. “ChiNext will likely be the closest thing to an onshore, technology‑focused index future, so it will draw up a lot of expectations.”
This article was generated from an automated news agency feed without modifications to text.
