Food Delivery Price Wars Stir Investor Concerns; Hong Kong Tech Stocks Rebound as 60% of Global Sovereign Wealth Funds Plan Increased Exposure

Amid the intensifying food delivery subsidy war, ultra-low pricing has temporarily benefited consumers, driven order volume for merchants, and increased income for delivery riders. However, investor sentiment toward listed tech companies in the Hong Kong stock market has weakened, with several large-cap internet technology stocks recording net outflows for two consecutive months. The viability of investing in the sector has thus become a focus of debate.

Several private equity institutions have recently suggested that while excessive subsidies are unsustainable, current depressed valuations of internet tech stocks present attractive risk-reward opportunities. Artificial intelligence remains a key driver, reducing the threat of technological disruption and disintermediation at internet traffic entry points. Platform-based internet companies, shielded by ecosystem stickiness, are viewed as strategically sound assets capable of both growth and resilience. The Hong Kong technology sector, accordingly, is seen as entering a new configuration window.

The battle in the food delivery space has grown fierce. Meituan, JD.com, and Taobao have each committed substantial investment to this arena through subsidy strategies, technological upgrades, and ecosystem expansion. According to a Goldman Sachs research report, these three firms alone invested RMB 25 billion in the second quarter of this year.

This competitive pressure has heightened investor concerns and contributed to capital outflows from Hong Kong-listed tech stocks. Data from the Hong Kong Stock Exchange shows that in June, mainland investors offloaded a combined HKD 46.4 billion in shares of Tencent Holdings, Alibaba, and Xiaomi（01810.HK）via the Stock Connect program. These three large-cap tech firms saw net selling for a second straight month and ranked as the top three most sold stocks by southbound capital year-to-date. The trend is attributed to concerns over intensifying e-commerce competition and increased profit-taking after an earlier rebound, with the Hang Seng Tech Index subsequently underperforming the broader market since April.

Market sentiment, however, has shown early signs of recovery. On July 15, the three major Hong Kong stock indices opened higher and closed on strong gains. The Hang Seng Index rose 1.6%, and the Hang Seng Tech Index increased 2.8%, led by Bilibili surging over 7%, Alibaba gaining more than 6%, and Meituan climbing over 4%.

Meanwhile, trading volumes in major technology-focused ETFs surged. The Hang Seng Tech Index ETF (513180), the largest A-share fund in the sector, saw its net asset value reach a 20-day high and recorded a turnover of RMB 7.48 billion—its highest level since mid-April, following the announcement of the U.S. “reciprocal tariffs” policy. The Hang Seng Internet ETF (513330), managing over RMB 23 billion in assets, also reported a turnover exceeding RMB 4.6 billion, marking a similar high since April.

A report from Invesco indicated that 60% of global sovereign wealth funds plan to increase allocation to Chinese assets, with the figure rising to 73% among North American institutions. The report noted that these funds are shifting toward active portfolio management, boosting Chinese exposure, and pursuing diversified reserves to navigate global uncertainty. Interest in Chinese assets—especially in the tech sector—is rising, with nearly 60% of funds planning to increase their China allocations within the next five years.

According to Xuanyuan Investment, a private equity firm managing over RMB 10 billion, valuations in the tech sector appear fair after recent re-pricing. Given the current environment of relatively abundant liquidity and limited high-quality assets, attention should be paid to Q2 capital expenditure data and cloud/AI business updates from leading internet firms.

The former is trading at 17.84x earnings, placing it in the 25th percentile historically, while the latter stands at 20.1x earnings, also at the 25th percentile. At a recent mid-year strategy conference, Cai Haihong, Founder and Chief Investment Officer of RuiPu Investment, shared updated perspectives on e-commerce platforms. He noted that although the business moat for e-commerce platforms may be weaker than that of social platforms—and subject to ongoing competition from video-based platforms, discount platforms, and instant retail services—companies have responded with management restructuring, core business focus, and refined positioning, achieving some degree of success.

AI has become the defining factor for these companies’ secondary growth curves. The open-source development model is increasingly mainstream among large AI models. As a result, the future focus of competition in the tech platform space will move beyond model performance toward application scenarios and commercial viability—shifting from owning leading models to successfully deploying and monetizing them. This transition enhances accessibility while mitigating earlier risks stemming from closed-source, underperforming self-developed models. Internet companies are thus positioned to explore long-term growth within stable ecosystems, while leading e-commerce players continue to invest heavily in foundational cloud computing and AI infrastructure. The next stage will require breakthroughs in real-world application and revenue models.

Yu Xiaochang, Research Director at Xiangju Capital, observed that while competitive pressure and unsustainable subsidies persist in some segments, the depressed valuations of many internet stocks offer favorable entry points. AI remains a catalyst for sector development, supporting the case for these assets as both offensive and defensive positions. Although no standout AI applications have yet emerged domestically or internationally, the technology is expanding through broad application and integration. As the industry continues to evolve and accumulation builds, its value proposition is expected to become more visible. With investor sentiment gradually improving, the technology sector is now approaching a new strategic allocation window.