Analysis of the Profound Impact of Domestic Internet Giants' Collective Entry into Hong Kong on the Hong Kong Stock Market Pattern and Industrial Transformation

Currently, the Hang Seng Index stands at 25,818.93 points [0], in a relatively stable trading range. However, the internal structure of the market is undergoing profound changes.

• Sinicization of the IPO Market:
  According to the provided data, Chinese-funded enterprises account for 86% of Hong Kong IPOs, raising approximately HK$286.3 billion in 2025. This means Hong Kong’s capital market has shifted from being dominated by international capital to a financing platform mainly for Chinese-funded enterprises.

• Restructuring of Market Participants:
  Historically, Hong Kong’s economy was dominated by local family consortia (such as Li Ka-shing, Lee Shau Kee, Cheng Yu-tung, etc.), forming the pattern of “Li’s City”. Today, Chinese internet giants represented by Alibaba, Tencent, JD.com, Meituan, Pinduoduo, Xiaomi, Kuaishou, etc., are reshaping the market power structure.

• Remolding of Market Value Structure:
  Chinese tech stocks have occupied important weights in the Hang Seng Index; the market value and influence of companies like Tencent (0700.HK), Alibaba (9988.HK), Meituan (3690.HK) have surpassed traditional Hong Kong-funded enterprises.

• Early Model (1990s-2010s):
  Hong Kong served as a financing platform for Chinese-funded enterprises to “go global”, with funds mainly flowing to the mainland for investment.
• Current Model (2020s):
  Chinese-funded enterprises not only raise funds in Hong Kong but also reverse-output capital, business, talent, and technology to Hong Kong, forming a two-way capital cycle.

• Real Estate Investment:
  JD.com acquired parts of the China Construction Bank Tower for HK$3.498 billion; Alibaba and Ant Group purchased 13 floors of One Island East for approximately RMB 6.6 billion.
• Retail Business Expansion:
  JD.com acquired Jiabao Supermarket, directly challenging traditional Hong Kong-funded retail giants like ParknShop and Wellcome.
• Tech Infrastructure:
  Investment in infrastructure such as servers, data centers, R&D centers, and cloud computing.

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Chinese internet giants’ entry is promoting the digital transformation of Hong Kong’s traditional industries:

1. Retail Revolution:
   • Traditional supermarket models (ParknShop, Wellcome) are facing challenges from new retail models (JD Retail, Hema model)
   • Accelerated O2O (Online to Offline) integration
   • Supply chain efficiency improved, with cold chain logistics and intelligent warehousing technologies introduced

2. Fintech Deep Integration:
   • Popularization of mobile payments (Alipay HK, WeChat Pay Hong Kong)
   • Development of virtual banks (Ant Group participated)
   • Increased penetration rate of digital financial services

3. Smart City Construction:
   • Implementation of cloud computing, big data, and AI technologies
   • Smart logistics, smart retail, smart office
   • Data center construction and improvement of digital infrastructure

Hong Kong’s economy has historically relied on traditional pillar industries such as trade, finance, real estate, and tourism. The entry of Chinese tech giants is promoting industrial diversification:

1. R&D Center Aggregation:
   • Establishment of regional headquarters and R&D centers
   • Attraction of high-end tech talents
   • Promotion of industry-university-research cooperation

2. Startup Incubation:
   • Chinese-funded enterprises invest in local Hong Kong startups
   • Establishment of startup incubators and accelerators
   • Active venture capital and private equity funds

3. International Tech Cooperation:
   • Leveraging Hong Kong’s advantages in international legal jurisdiction and common law system
   • Connecting the Chinese mainland with the international tech ecosystem
   • Attracting international tech companies and talents

• Increase in high-skilled positions such as tech, R&D, and data analysis
• Salary levels increased, especially in the tech industry
• Diversified employment options for young talents
• Reduction in brain drain (some talents return from overseas)

• Traditional industries like retail and trade face pressure for digital transformation
• Need for retraining and skill upgrading
• Structural unemployment may occur in the short term

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• Rise of Southbound Funds:
  Mainland funds continue to flow into Hong Kong stocks through the Stock Connect
• Increased Influence of Chinese-funded Institutions:
  Enhanced voice of Chinese-funded securities firms and fund companies
• Transfer of Pricing Power:
  Pricing of Chinese-funded stocks is more affected by mainland market sentiment and policies

1. Chinese Tech Stocks:
   • Greatly affected by mainland policies and regulatory environment
   • Strong correlation with Chinese concept stocks and A-share tech sectors
   • Valuation center may move closer to A-shares

2. Traditional HK Stocks:
   • Greatly affected by international capital flows
   • Strong correlation with global markets (especially US stocks)
   • Valuation may face “liquidity discount”

3. Emerging Fusion Stocks:
   • Increased cooperation and M&A cases between Chinese-funded and Hong Kong-funded enterprises
   • New valuation models and investment logics may emerge

• Policy Risks:
  Mainland regulatory policies, Hong Kong local policies, international geopolitics
• Liquidity Risks:
  Southbound fund flows, international capital flows
• Industry Risks:
  Tech regulation, anti-monopoly, data security

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1. Institutional Advantages:
   • Unique status under One Country, Two Systems
   • Common law system and mature legal environment
   • Free capital flow and tax incentives

2. Bridge Role:
   • Super connector linking the Chinese mainland and international markets
   • Test bed for RMB internationalization
   • Investment and financing platform for the Belt and Road Initiative

3. Diversified Development:
   • From traditional finance (stocks, bonds) to digital finance
   • From offshore RMB center to digital asset center
   • From regional financial center to global innovative financial center

1. Over-concentration Risk:
   • Excessively high proportion of Chinese-funded enterprises may lead to market systemic risks
   • Increased correlation with the mainland economic cycle
   • International investors’ demand for diversified allocation may decrease

2. Regulatory Coordination Challenges:
   • Coordination between mainland regulatory policies and Hong Kong’s regulatory system
   • Cross-border data flow and privacy protection
   • Unification of anti-monopoly and competition policies

3. International Trust:
   • Western investors’ doubts about the Hong Kong market
   • Impact of geopolitical tensions on market confidence
   • Internationalization level of talents and enterprises

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• Traditional Pillars:
  Finance, trade, logistics, tourism, professional services
• Emerging Pillars:
  Tech, innovation, digital economy, green finance
• Industrial Upgrading:
  Transition from low value-added to high value-added

• Hong Kong as the international innovation and tech center of the Greater Bay Area
• Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone
• Integrated development of industry, university, and research

• Provide financial and professional services for Chinese-funded enterprises to “go global”
• Attract enterprises from Belt and Road countries to list in Hong Kong
• Propeller for RMB internationalization

• While maintaining Hong Kong’s unique institutional advantages, deeply integrate into the overall national development
• Fusion development model led by the market, with enterprises taking the lead and government guidance
• Form a benign interaction mechanism of mutual benefit and win-win

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• Chinese-funded enterprises continue to expand investment and business layout in Hong Kong
• The proportion of Chinese-funded enterprises in Hong Kong’s IPO market may further increase
• Accelerated digital transformation, intensified competition in new retail, fintech, etc.

• Improve regulatory coordination mechanisms to balance development and risk
• Strengthen support for digital transformation of local Hong Kong enterprises
• Promote win-win cooperation between Chinese-funded and Hong Kong-funded enterprises

• Hong Kong’s tech innovation ecosystem basically formed
• Industrial structure becomes more diversified and high value-added
• International financial center evolves into an innovative financial center

• Increase R&D investment and talent training efforts
• Improve the support system for innovative enterprises and startups
• Strengthen international tech cooperation and talent introduction

• Hong Kong becomes one of the world’s leading tech innovation centers
• Fundamental transformation of the economic structure
• Form a new ecosystem where Chinese-funded, Hong Kong-funded, and international enterprises thrive together

• Maintain institutional advantages and an open attitude
• Balance the relationships between development and regulation, innovation and stability, localization and internationalization
• Build a sustainable innovation ecosystem

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[0] Jinling API Data - Hang Seng Index Real-time Quotes, US Stock Index Data, Sector Performance Data