Clarifying the Scope

This time, I will only calculate the correlation using rates of return, rather than calculating it directly using price levels. Price levels have long-term trends; if we calculate the price correlation directly, it is very easy to mistakenly consider any two assets that have risen over the long term as being “strongly correlated.”

Hang Seng Tech and A-share broad market indices both appear to be called “China assets,” but their components are vastly different. The top ten weights listed in the official Hang Seng Tech factsheet for April 2026 basically include Meituan, SMIC, BYD, Alibaba, NetEase, Xiaomi, Tencent, JD, Baidu, and Kuaishou. It is not focused on banking, insurance, resources, or dividends, nor is it an index that “will definitely rise just because China assets rise.”

Why A-Shares Are Strong While Hang Seng Tech Is Pulling Back

I am more inclined to break this down into three layers.

First layer, compositional structures are different.

The recent strengthening of the SSE Composite Index and CSI 300 tends to benefit finance, core manufacturing, large-cap weights, and certain high-dividend assets more significantly. Hang Seng Tech operates on a different playbook: internet platforms, semiconductors, consumer electronics, and smart vehicle supply chains. These companies are more sensitive to valuation, overseas liquidity, risk appetite, and geopolitical sentiment.

Second layer, the source of funds for pricing differs.

A-shares are more a reflection of local capital, local policies, and local risk appetite. Although Hang Seng Tech is also influenced by southbound funds, it is fundamentally an offshore market asset. The offshore market assigns higher weight to “regulatory expectations, US dollar interest rates, ADR risk premium, and overseas fund positioning.” When A-shares pursue a trend of “stable growth + large market weight,” Hang Seng Tech may completely undergo a cycle of having risen too quickly previously and now retracing some gains.

Third layer, that previous uptrend was fundamentally not on the same beat/pace.

Over the past two years, Hang Seng Tech has experienced several very steep rallies; its uptrends tend to be faster than A-shares, but its pullbacks are also more severe. According to the 1-year annualized volatility provided in the Hang Seng Index Company’s April 2026 factsheet, Hang Seng Tech stands at 30.80%, while HSI is only 14.08%, and the SOE index is 12.62%. High-volatility assets are more prone to premature profit realization during periods of divergence.

I would summarize this phenomenon in one sentence: This round of A-shares is more like “local blue-chip asset recovery,” while Hang Seng Tech is more like the “re-pricing of offshore Chinese growth stocks.” The two will move in the same direction, but they will not be synchronous.

Are Hang Seng Tech and Chinese Concept Stocks Strongly Correlated?

Conclusion first: Yes, very strong at week and month scales; medium-to-high correlation at daily scale.

I aligned the common trading dates from 2020-08-17 to 2026-05-19, and calculated Pearson correlation using daily return, 5-day return, 20-day return, and 60-day return. The results are very straightforward:

This result is very interesting.

• Hang Seng Tech and China Concept Dragon are, in the short to medium term, two exchange listings that can be viewed as essentially the same type of risky asset.
• China Concept Dragon and the NASDAQ are not as closely linked as people imagine. They are correlated, but not bound.
• Hang Seng Tech and the NASDAQ are weaker/less coupled. They are separated by a layer of “China assets’ own risk premium.”

Another detail worth noting is…

Many people think that when Hong Kong stocks open during the day, they should primarily follow the movements of the US market from the previous night. However, if we truly align the daily rise and fall of Hang Seng Tech with “the China Concept Golden Dragon” from the previous trading day, the correlation actually diminishes. This indicates that it is not simply “blindly following” last night’s US market, but rather being driven by the same round of offshore China beta along with the Chinese concept golden dragon.

China Concept Gold Dragon and NASDAQ: Is there a strong correlation?

My assessment is: Moderate correlation, not strong correlation.

Simply noting that they are all traded in the U.S. can lead to a misunderstanding. Although the China Concept Gold Dragon Index is listed on US exchanges, its definition tracks Mainland Chinese companies, not domestic American tech leaders. Its movements are influenced by two categories of factors:

• One type concerns USD growth stock risk preferences represented by the NASDAQ.
• Another type relates to China’s policy, audit regulation, ADR discount, RMB expectations, platform economy, and real estate sector risks.

This explains why the daily return correlation for the China concept gold dragon and Nasdaq was only around 0.22 in 2024, but returned to around 0.59 by 2026. It is not a permanently stable US tech beta; it will periodically revert/switch back to a “China asset beta.”

Is There a Cycle Where US Stocks Drop and Hang Seng Tech Surges?

Yes, and more than once.

However, to provide the full context: It was not that Hang Seng Tech decoupled from US stocks; rather, during that period, the force of Chinese asset revaluation outweighed the Nasdaq adjustment.

I’ll select three representative scenarios:

Therefore, the answer is not “no,” but rather “yes, although it rarely occurs during periods of pure global risk sentiment.” When Hang Seng Tech manages to move counter-cyclically against US stock pullbacks, the underlying causes are usually more localized catalysts such as marginal changes in Chinese policy, valuation recovery, and replenishing offshore Chinese capital positions.

How Did Each Major Cycle in Hang Seng Tech Start and End?

I did not count every 10% rebound as a new cycle, as doing so would turn the article into a market report/broadcast. Instead, I used a swing-based segmentation method with a threshold close to 30% to divide the period from 2020-08-17 to 2026-05-19 into major levels, and then marked significant minor drawdowns separately.

In this table/chart, what I value most is not the magnitude of fluctuation, but its manner of conclusion (or how it ends).

The upward trends in the Hang Seng Tech sector rarely proceed gradually; rather, they tend to be:

• Valuation preceded by a long preparatory period;
• Sudden consolidation of sentiment;
• Finally ended with a sharp sell-off.

The downward movement will not be a simple linear drop to rock bottom; instead, it is:

• The main decline period is very long;
• Interspersed with several decent rapid rebounds;
• When truly bottoming out, it is usually accompanied by “marginal policy changes + very light positions + low valuation.”

The most questionable aspect of these assets is here: It looks like an index, but it’s actually more like a highly volatile basket of sectors.

The Last Sentence

If you treat Hang Seng Tech as a “Hong Kong Nasdaq,” it’s easy to misjudge; if you see it as the “China tech growth beta” within Hong Kong stocks, many things become clearer.

A-shares being strong does not mean that the Hang Seng Tech must be equally strong. The Hang Seng Tech is strongly correlated with China’s concept stocks, but only moderately correlated with the Nasdaq. When US stocks fall, the Hang Seng Tech can indeed rise sharply, but that often indicates that the dominant factor has switched from “global tech risk appetite” to “China’s assets being re-evaluated on their own merit.”

So for this market trend, don’t just focus on one direction. First, see who it is following.

References

1. Hang Seng Indexes, Hang Seng TECH Index Factsheet, April 2026
2. Nasdaq, Nasdaq Golden Dragon China Index Methodology
3. FRED, NASDAQ Golden Dragon China Index
4. FRED, NASDAQ Composite Index
5. CSI Index Company Limited, CSI 300 Factsheet, 2026-03-31
6. Sina Finance, Hang Seng Tech Index Page

Writing Notes

Original Prompt

The Shanghai Composite Index for A-shares has risen significantly recently but also corrected once, fluctuating around 4200. However, the CSI 300 ETF is approaching historical peak levels. Investigate why the Hang Seng Tech Index declined during the same period. Is the Hang Seng Tech Index highly correlated with the US China Dragon Fish Index? Is the China Dragon Fish Index highly correlated with the Nasdaq Index? Are there cycles where the Hang Seng Tech Index surges when US stocks fall? Analyze the duration of previous cycles, and how they started and ended.

Writing Idea Summary

• Correct “Golden Dragon Fish Index” to Nasdaq China Dragon Index, and separate the metrics for ETF price, adjusted net value, and total return index.
• Do not calculate correlation directly based on specific levels; only use rates of return, to avoid long-term trends artificially inflating the correlation.
• First address “why there is a desynchronization,” then answer “whether it is strongly correlated,” and finally focus on the major cycle of Hang Seng Tech.
• Anchor relative time to specific dates (2026-05-19 and 2026-05-20) for terms like “recent” or “same period,” to prevent misleading interpretations based on relative timing.
• Deliberately avoided elaborating on individual stock financial reports and single-day news headlines, because the more important focus of this article is the index structure and capital pricing logic.

Extended Brainstorming