Hong Kong stocks are drawing a fresh round of bullish calls, with Michael Burry and Goldman Sachs making the case from two different angles.
Burry, the investor known for calling the 2008 U.S. subprime mortgage crisis and later portrayed in The Big Short, said recently that now is an “excellent time” to look for cheap stocks in Hong Kong. His argument rests on a possible cooling in the global AI chip trade, with money potentially rotating out of South Korea, Japan and semiconductor names and into markets trading at lower valuations.
Goldman Sachs has framed the opportunity differently. Wang Yajun, the bank’s head of equity capital markets for Asia ex-Japan, said Hong Kong has in effect entered the AI era, even if the city’s main stock indexes have yet to show it.
Taken together, the two views point to the same gap: weak index performance on one side, stronger activity inside the market on the other. That disconnect is becoming part of the investment case for Hong Kong equities.
Burry says Hong Kong offers value after the AI chip trade cools
Michael Burry, founder of Scion Asset Management, wrote on X on July 17: “Now is the perfect time to look for cheap Hong Kong stocks, which should do well after the luster fades from Korea, Japan, and SOXX (semiconductor ETF).”
The call comes against a clear market backdrop. Global chip stocks have been hit by broad selling, while doubts have been building over whether AI companies can turn heavy technology spending into real profits. High capital expenditure has added pressure to the semiconductor sector, which had been one of the market’s strongest performers worldwide. Hong Kong stocks, by contrast, have fallen this year, leaving valuations looking relatively cheaper.
Bloomberg reported that Burry had already acted earlier this month. He increased his stake in Chinese e-commerce company JD.com and opened new positions in DraftKings and Flutter. The report suggests his positive stance on Hong Kong stocks and related Chinese names is not limited to public comments.
Hong Kong has lagged major global markets this year
On the numbers, Hong Kong’s relative weakness is hard to miss. The Hang Seng Index is down about 7% year to date, while the Hang Seng Tech Index has fallen 15.22%. The report said the main drags include soft consumer spending and weak confidence in the outlook for China’s e-commerce sector.
That stands in sharp contrast to other key markets. Bloomberg data shows South Korea’s benchmark index has climbed 62% this year, helped by strong performances from two major chipmakers. Japan’s Nikkei 225 is up 26%, and the iShares SOXX ETF, which tracks semiconductor stocks, has jumped 76%.
That gap is central to Burry’s thesis. If global investors start to reassess how durable the AI boom really is, he argues, Hong Kong equities that were left behind could become catch-up trades.
Goldman says the indexes are lagging the market’s AI reality
Goldman Sachs sees the problem less as outright market weakness and more as a delay in how indexes capture what is happening underneath.
Speaking at a recent media briefing, Wang Yajun said Hong Kong has already entered the AI era, but the main stock indexes have not yet reflected that shift. He said this is the reason the city’s IPO market has been hot while benchmark index performance has remained weak.
According to Wang, AI has been the most active theme in Hong Kong this year. AI-related shares have led in trading activity, market performance and fundraising volume. He added that changes to index constituents take time, creating a mismatch between the indexes and the market’s actual structure.
Wang said Hong Kong’s total equity financing this year could reach a record high. He also said IPO fundraising for the full year could exceed the record set in 2021, with more AI companies expected to list in the city in the second half.
On fundamentals, Wang said continued growth in end demand should support ongoing capital spending by AI companies, providing a base for the sector’s longer-term performance.
Bullish calls are building, but doubts remain
Burry is not alone in his view. Bloomberg also reported that Morgan Stanley has recently urged investors to buy Hong Kong stocks, citing an upbeat outlook for corporate earnings and saying the impact from lockup expirations should be relatively limited.
Still, the bullish case is not without challenges. The Hang Seng Index’s decline this year reflects persistent worries over the pace of China’s consumer recovery and the profit outlook for the e-commerce industry. Those structural pressures have not disappeared.
Wang’s point about a mismatch between the indexes and the market cuts both ways. Investors who look only at the headline indexes may underestimate the structural opportunities developing inside Hong Kong equities, but they may also miss the pressure still weighing on traditional heavyweights.
For investors, Burry’s bargain-hunting signal and Goldman’s AI narrative sketch out a more layered picture of Hong Kong stocks: broad indexes remain under pressure, while parts of the market are showing stronger momentum. How to position between those two realities remains the central question.