Summary of Key Points
The Hang Seng Tech Index (referred to as "Hang Tech") was once one of the best-performing tech indices globally in 2017, but it has now dropped to the bottom of the list, losing over 30% in the first half of 2026. The market value of internet giants has shrunk by 40%, earning it the nickname "Delivery Index." However, during the recent global market correction, the Hong Kong stock market has shown resilience, leading institutions to call it a "relative safe haven." The main question on everyone's mind is: Is this resilience a short-term rebound or a long-term reversal?
Why is the Hang Seng Tech Index called the "Delivery Index?"
This nickname is not meant as an insult; it arises from the index's composition, which is heavily weighted by companies related to food and shopping, such as Meituan, JD.com, and Alibaba. For example, Meituan's delivery services and JD.com's e-commerce logistics are everyday internet services that people use. Therefore, the index's performance is closely tied to the performance of these companies. If Meituan's delivery orders increase, its stock price may rise; if consumer spending decreases, the index may fall. Over time, investors jokingly referred to it as the "Delivery Index," as it effectively reflects the popularity of delivery services.
What mistakes did Hang Tech make to fall from being the best to the bottom?
In 2017, Hang Tech outperformed globally due to the booming Chinese internet industry: widespread mobile payment, explosive e-commerce growth, and a surge in social platform users, attracting investors from around the world. However, its decline can be attributed to three major factors:
1. Tighter regulation: Anti-monopoly policies (such as penalties for Alibaba and Tencent) and new data security regulations slowed down the growth of internet companies and reduced their profit margins.
2. Growth stagnation: User numbers have reached their limits (e.g., almost everyone uses WeChat), and new businesses (like community group buying) have not been profitable, leading to weaker performance.
3. Rising global interest rates: Tech stocks are valued based on future earnings prospects. Higher interest rates reduce the value of future earnings, making investors less willing to buy them. Since most companies in the Hang Tech index are tech firms, they were significantly affected.
These factors combined led to its decline from the top to the bottom, with the market value of the giants shrinking by 40%.
Why has the Hong Kong stock market shown resilience recently? Is it a reliable "safe haven?"
Despite the global market downturn, the Hong Kong stock market has remained stable for two main reasons:
1. Low valuations: After years of decline, the Hang Tech index's price-earnings ratio is at a historical low, making it seem like a bargain. Many institutions believe it has little room for further decline and are willing to buy.
2. Mildly relaxed policies: Recent regulatory changes have eased the pressure on platform businesses, and supportive policies have boosted market confidence.
3. Risk-aversion by investors: With global market volatility, some sectors in the Hong Kong stock market (such as consumer and financial sectors) are relatively stable. Additionally, Hong Kong's close economic ties to the Chinese mainland provide a safe haven for investors seeking to avoid risks.
However, being a "relative safe haven" does not mean it will not decline at all; it simply experiences smaller drops compared to other markets. For example, if the U.S. stock market falls 5%, the Hong Kong stock market might only fall 1%.
Is this a rebound or a reversal? What should ordinary investors do?
It's important to distinguish between a short-term rebound and a long-term trend change. Currently, it seems more like a rebound rather than a reversal:
- Short-term positives: Low valuations, relaxed policies, and risk-aversion by investors can drive stock prices up for a while, but long-term issues remain unresolved, such as the growth momentum of internet companies and the direction of global interest rates.
- What is needed for a reversal? Reversal would require significant improvements in company performance (e.g., increased profits for Meituan's delivery services or Alibaba's e-commerce revenue) or a broader economic improvement (e.g., increased consumer spending).
For ordinary investors, if they want to buy into the market, it's best to start with a small position and wait for clear signs of improved performance (e.g., company earnings exceeding expectations) before increasing their holdings. If they are just watching the market, it's wise to avoid buying at high prices, as we are not yet at a point of genuine reversal.
Conclusion
Hang Tech's decline from prominence to a low position is the result of both industry cycles and external factors. The recent resilience is due to a combination of factors, but for a long-term upward trend, companies need to find new sources of growth. Investors should remain cautious and not be misled by the notion of a "safe haven."