Hong Kong Stock Connect Index hits a seven-year high; sector welcomes definitive valuation recovery

Since 2026, the Hang Seng Red Chip Index has been bucking the trend and strengthening. As of the close on May 14, its year-to-date gain was close to 13%. This week, it even briefly broke through 4,669 points to record a new high in more than seven years, significantly outperforming major Hong Kong stock indices. The dormant red-chip sector has recently surged, driven by a certain and predictable valuation repair of existing assets backed by state-owned capital and large red chips. However, over the past two years, the number of Hong Kong IPOs by privately owned small red-chip companies has sharply declined; this year alone, only MiniMax and Qunhe Technology have listed. On the other hand, as the A-share return channel continues to remain open and smooth, the Hong Kong red-chip sector is entering a new cycle. (Sina Finance)