CITIC Securities Expects Recovery in Hang Seng Tech as AI Narrative Reignites, Chinese Internet Stocks Down 16% YTD

According to CITIC Securities' research report, as of July 17, 2026, the brokerage sees a rerating opportunity for Chinese AI assets and forecasts convergence and recovery in the Hong Kong internet sector. Hang Seng Tech and China internet indices fell 16% and 29% respectively year-to-date, significantly lagging hardware peers. However, since early July, the divergence has begun reversing: Hang Seng Tech gained 3.4% while the China internet index rose 12%, as global capital shifts from hardware toward cloud and applications amid Hyperscaler model commercialization adjustments.

CITIC expects the sector to hit profit inflection in H2 2026, with consensus forecasting 2026-27 earnings growth of 11% and 22% respectively. Hang Seng Tech trades at 18.9x NTM PE, within the 27.5th percentile of the past five years. Positive catalysts include new iterations of Chinese AI models—such as Kimi K3—narrowing the gap with global flagship models to approximately three months, and expansion across applications, modalities and devices driving sustained AI penetration depth and breadth.