China Merchants Securities: Hang Seng Tech Index Expansion, Cloud Players to Benefit from AI Profit Shift
Nashnova编辑部
China Merchants Securities argues that the Hang Seng Tech Index expanding to 50 constituents with a new revenue-growth track, combined with AI profits shifting from hardware and model makers to cloud platforms, forms the twin case for Hong Kong equities.
What changed in the Hang Seng Tech Index?
Constituents expand from 30 to 50. The old industry classifications are scrapped and replaced by six themes: internet platforms & solutions, AI, advanced hardware, robotics & automation, cloud, and frontier tech.
Stock selection now runs on a dual-track mechanism — 40 picks by market cap, plus 10 picks by revenue growth. Revenue growth enters the screening criteria for the first time.
This means → the index no longer selects purely on "who is biggest." It reserves seats for high-growth names, directly addressing the market's complaint that the index lacked real tech exposure.
How fast are the new additions growing?
Per Hang Seng Indexes' simulation using a June 30, 2026 data cutoff, the 10 revenue-growth-track additions posted a trailing-twelve-month revenue growth median of 82.0%.
By comparison, the 10 market-cap-track additions came in at 23.4%, and the existing 30 constituents at just 13.8%.
In plain terms = the new high-growth stocks are growing nearly six times faster than the legacy constituents, sharply boosting the index's overall growth profile.
Why is AI profit migrating to cloud platforms?
China Merchants Securities sees the market's core trade as AI industry profit shifting from hardware and foundation-model makers to cloud platforms.
The key driver: high-performance open-source models like Kimi 3 keep closing the gap with closed-source rivals → the pricing premium that leading model makers charged based on performance edge erodes → developers and enterprises become less dependent on any single closed-source ecosystem → cloud platforms gain room for margin expansion.
This means → the stronger open-source models get, the shallower the closed-source "moat" becomes — and cloud platforms, as the "picks-and-shovels" layer, end up more profitable.
What did North American cloud earnings confirm?
The four major North American cloud providers reported combined cloud revenue of roughly $116.2 billion in the latest quarter, up about 43% year-on-year.
The more telling figure: remaining performance obligations — contracts signed but not yet recognized as revenue — totaled roughly $2.33 trillion, up about 188% YoY, providing high visibility on revenue growth for the next two to three years.
A common pattern across all four reports: cloud revenue growth accelerated across the board, backlog growth far exceeded expectations, and customer demand broadened from a handful of frontier labs to mainstream enterprises.
What does this mean for Hong Kong equities?
China Merchants Securities argues that the North American cloud results create a direct industry-level read-across to Hong Kong-listed cloud names, chiefly Alibaba and Tencent — the same trend should benefit their Chinese counterparts.
Whether the re-rating thesis continues to deliver, however, depends on whether Chinese cloud platforms can confirm the trend in their own upcoming earnings.
This reflects a hard reality: the valuation recovery for HK-listed cloud stocks cannot run on narrative alone — ultimately, the numbers have to speak for themselves.
Content is for reference only, not financial advice.