According to Bloomberg data, Hong Kong-listed shares of Alibaba Group Holding now trade at a monthly average premium of 1.1% compared to its ADRs, a significant increase from the historical average of 0.19% since the e-commerce giant’s debut in Hong Kong in November 2019. On March 6, this premium surged to 3.6%, marking the highest level for the month. Notably, one Alibaba ADR represents eight Hong Kong-listed shares. Alibaba owns the South China Morning Post.
Similarly, rival JD.com’s Hong Kong shares traded at an average premium of 1.4% in March, up from its historical average of 0.16%. Meanwhile, the price gap for electric vehicle manufacturer Li Auto expanded to nearly 1% from 0.4%, and video gaming company NetEase’s premium widened to 1.1% from a historical average of 0.1%.
This widening price discrepancy coincides with a broader revaluation of Chinese tech stocks, which have regained investor confidence following the rapid rise of AI start-up DeepSeek. The company’s success has fueled optimism about China’s competitiveness in cutting-edge technologies, contributing to a more than 30% surge in the Hang Seng Tech Index this year. Global investment banks, including Goldman Sachs and China International Capital, have indicated that this upward trend is likely to continue.
“As long as the current momentum persists, the trend of widening premiums is expected to endure for some time,” said Dai Ming, a fund manager at Huichen Asset Management in Shanghai. “This is largely driven by market sentiment and liquidity dynamics.”
Under normal circumstances, the price difference between these two types of securities should be minimal due to their fungibility. However, the recent divergence reflects contrasting investor sentiment and capital flows in the U.S. and Hong Kong markets. In the U.S., concerns over the Trump administration’s tariff policies, overstretched valuations of the so-called “Magnificent Seven” tech stocks, and diminishing expectations of Federal Reserve rate cuts have unsettled investors. In contrast, China has bolstered its fiscal deficit ratio to 4%—a level not seen in years—to stimulate demand, while also signaling further monetary easing during its recently concluded annual parliamentary meetings.
Citigroup recently adjusted its stance on U.S. equities, downgrading them to “neutral” from “overweight,” while upgrading Chinese stocks to “overweight” due to their attractive valuations and advancements in technological innovation.
The widening price gap is also partially supported by robust buying from mainland Chinese investors, who lack access to major tech stocks in onshore markets. According to data from the Hong Kong Stock Exchange, mainland investors have injected a combined HK$350 billion (US$45.1 billion) into Hong Kong-listed equities this year, with significant allocations to companies like Alibaba and Tencent Holdings. In February alone, net buying reached HK$152.8 billion, the second-highest monthly figure on record.
The revaluation of Chinese tech stocks has also positively impacted other segments of the Hong Kong market. The rally has narrowed the discount of so-called H-shares—dual-listed Chinese companies—relative to their yuan-denominated A-share counterparts on the mainland. For companies such as China Mobile and ICBC, this discount has shrunk to a five-month low of 24%, compared to the three-year average of 31%, as measured by the Hang Seng Indexes.
“We are witnessing growing interest from foreign institutional investors in acquiring Chinese tech stocks,” said Brook McConnell, president of South Ocean Management. “If geopolitical tensions ease and China continues to implement economic stimulus measures, the undervalued Hong Kong stock market holds significant potential for further gains.”
This dynamic underscores the shifting investor sentiment and the growing appeal of Chinese tech equities, driven by both domestic policy support and global market trends.