10 Most Undervalued Hong Kong Stocks To Buy According To Hedge Funds

Published May 31, 2023 at 4:49 pm EDT Updated August 19, 2026 at 9:51 am EDT

In this article, we will take a look at the 10 most undervalued Hong Kong stocks to buy according to hedge funds.

While the rest of the world is still debating whether or not financial markets are currently going through recession, Hong Kong happily reported that it has already come out of recession, with the country’s economy expanding 2.7% in the three-month period ending March 31, surpassing estimates of just 0.5% growth. It was the first quarterly gain in gross domestic product in more than a year. It’s also important to note that Hong Kong’s economy saw a decline of 4.1% in the last quarter of 2022.

The biggest impetus for this growth was the lifting of pandemic controls and full reopening of the economy. This caused a massive growth in retail sales and tourism. Bloomberg in a report quoted Hong Kong government figures which said visitor arrivals in Hong Kong jumped to 2.5 million in March, showing a whopping 68% growth from February. Government and independent analysts now believe Hong Kong will continue to see healthy growth for the rest of 2023.

Eric Zhu, an economist working for Bloomberg Economics, said in a note that based on the strong GDP growth in the first quarter, he was upping the 2023 forecast to 5.2%, up from 3.2% growth projection previously given in February.

“That would more than make up the ground lost in 2022 when GDP shrank 3.5%,” Zhu said.

What Makes Hong Kong Special?

Being a financial hub and home to some of the major banking companies’ headquarters, Hong Kong has always been the point of attention for international economists. Jitters in the global economy and financial system are directly felt in Hong Kong, whose strength and weakness lies in its reliance on external factors.

Thomas Helbling, the IMF’s deputy director for the Asia and Pacific department, said during a briefing on May 2 that Hong Kong is expected to gain from the rebound in demand in the region. However, Helbling said IMF is “most worried about external” risks as the global economy “has been slowing.” Helbling also said that further tightening of credit in the US and Europe could also hit Hong Kong through “trade channels.”

Hong Kong’s Dramatic Comeback

According to a report by investment banking firm Natixis, Hong Kong lost a whopping $27 billion in potential gains due to COVID-related restrictions and overall effects of the pandemic. Earlier this year, the firm said in a report that had the pandemic not happened, Hong Kong’s economy would have grown an average annual 2.8% over the past three years.

But the new Hong Kong leader John Lee, who came in power back in the summer of 2022, took several measures to spur growth in the Hong Kong economy, including lifting restrictions, taking measures to attract global talent and slow down the exodus of top professionals from the region which started in 2020. Lee is also taking key measures to revive business conferences in the region, according to Bloomberg.

Investment Opportunities in Hong Kong

Hong Kong remains one of the biggest emerging markets in the world. Despite the volatility and risks, the region remains full of growth prospects. Lazard Asset Management said in a latest report on emerging markets that despite a lot of capital exodus, several asset classes in emerging markets are “under-owned and attractively valued.” The firm said that earnings growth in the region is expected to remain higher in the region in 2023 and 2024, fueled by “emerging Asia.”

The Lazard reports highlights how emerging markets were the first ones to get hit amid the financial turmoil that started amid rising inflation and rate hikes. However, Lazard said an important trend to note here is FIFO (first in, first out), since the firm believes emerging markets are now coming out of the crisis and it’s the developed world that is facing the brunt of the economic downturn. This trend is evident in Hong Kong’s economy trajectory, too. Lazard believes emerging markets are set to continue on their path of growth for several years to come.

Most Undervalued Hong Kong Stocks To Buy According To Hedge Funds

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Our Methodology

For this article we scanned Insider Monkey’s database of 943 hedge funds and picked the top 10 stocks that meet the following conditions:

PE ratios less than 25

Headquartered/founded in Hong Kong or have a significant presence in Hong Kong or trading on Hong Kong Stock Exchange

We ranked the selected stocks based on the number of hedge fund investors as of the end of the first quarter of 2023.

Some notable names in the list include Alibaba Group Holding Limited (NYSE:BABA), HSBC Holdings plc. (NYSE:HSBC) and Baidu, Inc. (NASDAQ:BIDU).

Most Undervalued Hong Kong Stocks To Buy According To Hedge Funds

10. Highway Holdings Limited (NASDAQ:HIHO)

Number of Hedge Fund Holders: 1

Hong Kong-based Highway Holdings Limited (NASDAQ:HIHO) makes metals, plastics, and electronic components. Highway Holdings Limited is trading at around $2.10 as of May 30. It is a high-yield dividend stock, with a yield of about 15% as of May 30. Highway Holdings Limited recently upped its quarterly dividend by a whopping 100%.

Jim Simons’ Renaissance Technologies reported owning 197,315 shares of Highway Holdings Limited at the end of the first quarter. It was the only hedge fund in Insider Monkey’s database that held stakes in Highway Holdings Limited.

9. AGM Group Holdings Inc. (NASDAQ:AGMH)

Number of Hedge Fund Holders: 12

Headquartered in Hong Kong, AGM Group Holdings Inc. (NASDAQ:AGMH) is operating in the fintech, crypto mining and blockchain space. AGM Group Holdings Inc. is known for its trading solution called MetaTrader 5.

In December 2022 AGM Group Holdings Inc. posted results for the first half of 2022. Revenue in the period came in at $113.6 million, up 209.5% from $36.7 million in the second half of 2021.

Just one hedge fund in Insider Monkey’s database held stakes in AGM Group Holdings Inc. as of the end of the first quarter of 2023. That hedge fund is of billionaire Izzy Englander. It owns 11,219 shares of AGM Group Holdings Inc..

8. Oriental Culture Holding LTD (NASDAQ:OCG)

Number of Hedge Fund Holders: 2

Headquartered in Hong Kong, Highway Holdings Limited operates an ecommerce platform for artwork and collectibles. Highway Holdings Limited has lost a whopping 80% in value over the past 12 months but gained 14% in the past six months.

Two hedge funds in Insider Monkey’s database had stakes in Highway Holdings Limited and both these hedge fund shareholders are worthy of a mention. Citadel Investment Group of Ken Griffin owns 54,362 shares of Highway Holdings Limited, while Renaissance Technologies of Jim Simons owns 131,078 shares of the company.

OCG is one of the notable stocks in our list, in addition to Alibaba Group Holding Limited, HSBC Holdings plc. (NYSE:HSBC) and Baidu, Inc. (NASDAQ:BIDU).

7. GigaCloud Technology Inc. (NASDAQ:GCT)

Number of Hedge Fund Holders: 3

Hong Kong-based GigaCloud Technology Inc. (NASDAQ:GCT) provides B2B ecommerce solutions. GigaCloud Technology Inc. has gained about 22% year to date through May 30. GigaCloud Technology Inc.’s PE ratio stands at 18.60, making it a relatively undervalued Hong Kong stock to buy. Out of the 943 hedge funds tracked by Insider Monkey, 3 hedge funds had stakes in GigaCloud Technology Inc. as of the end of the first quarter of 2023.

During the first quarter, GigaCloud Technology Inc.’s GAAP EPS came in at $0.39, beating estimates by $0.26. Revenue in the quarter jumped 13.7% year over year to $127.8 million, surpassing estimates by $3.55 million.

6. Tencent Music Entertainment Group (NYSE:TME)

Number of Hedge Fund Holders: 12

Music streaming company Tencent Music Entertainment Group (NYSE:TME) is owned by China-based tech giant Tencent. Both Tencent Music Entertainment Group and Tencent Music are also listed on the Hong Kong stock exchange.

Tencent Music Entertainment Group in May posted strong quarterly results after which several analysts upgraded the stock. Citi upgraded the stock to Buy from Neutral and also increased its price target to $9.70, underscoring the revenue growth of Tencent Music Entertainment Group.

A total of 12 hedge funds tracked by Insider Monkey had stakes in Tencent Music Entertainment Group as of the end of the first quarter. The most notable hedge fund stakeholder of Tencent Music Entertainment Group was John Overdeck and David Siegel’s Two Sigma Advisors which owns a $61 million stake in the company.

In addition to Alibaba Group Holding Limited, HSBC Holdings plc. (NYSE:HSBC) and Baidu, Inc. (NASDAQ:BIDU), TME is a popular stock among elite hedge funds.

Polen Global Emerging Markets Growth made the following comment about Tencent Music Entertainment Group in its Q4 2022 investor letter:

“Tencent Music Entertainment Group (NYSE:TME), China’s equivalent to Spotify, almost doubled over the quarter after reporting third-quarter earnings with revenues and margins coming in better than expected. The company trades on very attractive valuations, and some of the mispricings we have discussed for a while have started to be realized by the broader market.”

5. HSBC Holdings plc (NYSE:HSBC)

Number of Hedge Fund Holders: 13

One of the biggest banking companies in the world, HSBC Holdings plc (NYSE:HSBC) was founded in Hong Kong and has significant presence in the region. HSBC Holdings plc (NYSE:HSBC) has a PE ratio of 6.6 as of May 30.

As of the end of the first quarter of 2023, 13 hedge funds had stakes in HSBC Holdings plc (NYSE:HSBC). The biggest hedge fund stakeholder of HSBC Holdings plc (NYSE:HSBC) was Ken Griffin’s Citadel Investment Group which owns about a $14 million stake in HSBC Holdings plc (NYSE:HSBC).

4. Futu Holdings Limited (NASDAQ:FUTU)

Number of Hedge Fund Holders: 16

Hong Kong-based Futu Holdings Limited (NASDAQ:FUTU) provides digitalized securities brokerage and wealth management services. Futu Holdings Limited is known for its Futubull and Moomoo digital platforms.

Recently, Futu Holdings Limited posted its first quarter results. GAAP EPADS in the period came in at $1.08, beating estimates by $0.22. Revenue in the quarter jumped about 52.3% year over year to $318.5 million, beating estimates by $50.73 million.

A total of 16 hedge funds tracked by Insider Monkey had stakes in Futu Holdings Limited as of the end of the first quarter of 2023. The total worth of these stakes was $242 million. The biggest stakeholder of Futu Holdings Limited was D1 Capital Partners which had a $94 million stake in the company.

3. Silicon Motion Technology Corp. (NASDAQ:SIMO)

Number of Hedge Fund Holders: 34

Silicon Motion Technology Corp. (NASDAQ:SIMO) develops NAND flash controllers for SSDs and other solid state storage devices. Silicon Motion Technology Corp. has a significant presence in China and Hong Kong.

Out of the 943 hedge funds tracked by Insider Monkey, 34 hedge funds had stakes in Silicon Motion Technology Corp.. The total worth of these stakes was $468 million. The most significant shareholder of Silicon Motion Technology Corp. was Michel Massoud’s Melqart Asset Management which owned a $64 million stake in the company.

California-based MaxLinear recently announced it will acquire Silicon Motion Technology Corp. for about $3.8 billion. However, the deal is under review in China as of May 30.

2. Baidu, Inc. (NASDAQ:BIDU)

Number of Hedge Fund Holders: 43

Baidu, Inc. is in the spotlight after the company’s management announced that the large language model powering the company’s Ernie bot will soon be unveiled. In March, Baidu fell after the company revealed its Ernie bot in a pre-recorded video rather than live demonstration.

Baidu, Inc. is also listed on the Stock Exchange of Hong Kong Limited (SEHK) since March 2021. Baidu, Inc. has a PE ratio of 23 as of May 30. Baidu, Inc. is up 5.8% year to date.

As of the end of the first quarter of 2023, 43 hedge funds tracked by Insider Monkey were long Baidu, Inc.. The biggest hedge fund stakeholder of Baidu, Inc. was John W. Rogers’ Ariel Investments which owns a $428 million stake in the company.

Horos Asset Management made the following comment about Baidu, Inc. in its Q4 2022 investor letter:

“As I mentioned at the beginning of this quarterly letter, we took advantage of the meltdown in technology platforms to initiate new positions in companies in which we had already been shareholders in the past and whose valuation did not, until now, provide a sufficiently high margin of safety. Such is the case of PayPal and Baidu, Inc. (NASDAQ:BIDU).

In the case of Baidu, as many will know, it is known as the “Chinese Google”. The company has been the leading Internet search engine in the Asian country for years, which has given it a historically privileged position to monetize, through online advertising, a huge user base. However, the rise of two types of applications has called into question the sustainability of its business model. On the one hand, mobile social apps, such as ByteDance’s well-known TikTok, have emerged as a new model of online consumption, generating a new platform through which to monetize Internet users. On the other hand, even more disruptive in the long term, is the emergence of the so-called super apps: a sort of virtual Swiss Army knives that allow users to access many products and services without having to leave their interface at any time, making Baidu’s traditional search engine less attractive. In this field, Tencent (with its super app Weixin/WeChat), Alibaba (Alipay) and Meituan certainly stand out. These two factors have caused Baidu’s online advertising market share to drop from 17% in 2017 to less than 7% estimated for 2022.34 To this deterioration, we should add the collapse in market value of its stake in iQiyi (video platform controlled by Baidu) and its equity holdings such as Trip.com (hotel and flight platform) …” (Click here to read the full text)

1. Alibaba Group Holding Limited (NYSE:BABA)

Number of Hedge Fund Holders: 128

We include Alibaba Group Holding Limited in our list of Hong Kong stocks loved by hedge funds since the Chinese ecommerce retailer is listed on the Hong Kong stock exchange as well as it received its listing in the country last year. In fact, Alibaba Group Holding Limited had plans to have its primary listing in Hong Kong. However, Bloomberg in November 2022 reported that Alibaba Group Holding Limited’s plans to convert its listing in Hong Kong to primary listing were delayed.

Alibaba Group Holding Limited has a PE ratio of 20.82 as of May 30 morning. Alibaba Group Holding Limited is one of the most popular stocks among elite hedge funds. Out of the 943 hedge funds in Insider Monkey’s database, 128 hedge funds held stakes in Alibaba Group Holding Limited, significantly up from 113 hedge funds in the previous quarter.

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