The first half of the year concluded for the Hong Kong stock market on June 30th. Reviewing the market performance for the period, all three major indices ended in negative territory. The Hang Seng Tech Index fell nearly 20%, the Hang Seng Index declined over 10%, and the HSCEI dropped more than 15%. The semiconductor sector led the gains, rising close to 125% year-to-date. Knowledge Atlas, dubbed the "world's first large language model stock," surged over 1700%, securing the top spot as the best-performing stock for the first half.
In today's session, the Hang Seng Index fell 0.63% to close at 22,881.02 points. The Hang Seng Tech Index gained 1.8%, while the HSCEI declined by 0.62%. Looking at specific sectors, technology stocks were mostly lower. Lenovo Group rose over 8%, Baidu gained more than 5%, while Xiaomi fell over 1%. The optical communications sector showed strength throughout the day, with Yangtze Optical Fibre and Cable advancing over 6%. Semiconductor stocks were among the top gainers, with Chang Guang Chen Xin soaring more than 21%. Oil stocks broadly declined, with PetroChina dropping over 3%. Four new stocks debuted on the market today.
Key Sector Performance
The optical communications sector demonstrated consistent strength during the trading session. Central China Securities expressed a positive outlook for the second half, anticipating a series of AI industry catalysts both domestically and internationally. These could include mid-year financial reports from companies across the supply chain, capital expenditure guidance from global cloud service providers, mass production shipments of Nvidia's CPO switches, and architectural innovations from emerging technologies like XPO, NPO, CPO, and OCS. The firm maintains a favorable view on high-growth segments such as optical modules, chips, and devices, fiber optic cables benefiting from volume and price increases, and telecom operators transitioning towards token-based business models.
Semiconductor Strength and Price Hikes
Semiconductor stocks were prominent gainers. The high-growth momentum from the AI supercycle continues to ripple upstream, with nearly 20 global analog and power semiconductor companies set to implement a new round of price increases starting July 1st. Reports indicate these hikes, ranging from 10% to 25%, will affect areas including AI servers, data center power management, industrial automation, and energy storage. Analysis from China Securities points out that due to the relatively small scale of component suppliers in the semiconductor chain, high fixed costs, and long expansion cycles of 12 to 18 months, supply elasticity is limited. Consequently, price increases may translate directly into improved profitability.
Oil Sector Under Pressure
Oil stocks experienced broad declines. Goldman Sachs released a research note stating that the significant drop in oil prices over recent weeks has provided relief for major oil-importing economies in Asia. Market optimism surrounding the potential reopening of the Strait of Hormuz contributed to Brent crude falling from a high near $120 per barrel in late April to around $72 currently. Goldman Sachs' commodities team forecasts oil prices will reach $80 per barrel in the fourth quarter. Despite the sharp correction, this level remains slightly above pre-conflict prices. The bank predicts refining margins will stay elevated due to damage to facilities in the Gulf region and Russia.
New Listings Activity
Four new stocks commenced trading today. Jiangxi Biotech fell over 12%, Genuine Health Medical-B surged more than 216%, Sturgeon Technology gained over 50%, and Life Harmonic declined more than 14%.
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