Today, the Hong Kong stock market experienced a downward trend, with the Hang Seng Technology Index seeing its losses widen towards the close. A lithium battery industry leader's first-half earnings forecast exceeded market expectations, coupled with a surge in energy storage demand from AI data centers, leading related energy storage battery ETFs to rise against the broader market decline.
At the close, the Hang Seng Index fell 1.4% to 24,493.95 points, with a total turnover of HK$249.85 billion. The Hang Seng Tech Index dropped 2.24% to 4,658.65 points.
Among major Hong Kong-listed ETFs by size, the Tracker Fund (02800) closed down 1.51% at HK$24.86. The CSOP 2x Long SK Hynix ETF (07700) rose 5.98% to HK$128.45. The CSOP Hang Seng Tech ETF (03033) fell 2.27% to HK$4.562.
Sector Performance
The lithium battery sector saw a key player's first-half earnings forecast surpass expectations. This, combined with the explosive demand for energy storage from AI data centers, propelled related energy storage battery ETFs higher.
The GF Energy Storage Battery ETF (159305) gained 4.41% to 1.018 yuan. The E Fund Energy Storage Battery ETF (159566) rose 4.37% to 2.293 yuan. The China Universal Battery ETF (159796) increased 3.76% to 1.075 yuan.
On the news front, Eve Energy Co.,Ltd. (300014) reported a better-than-expected earnings forecast for the first half of 2026. The company's announcement indicated that, based on an estimated net profit of 3.13 to 3.371 billion yuan for the first half, the net profit for the second quarter is projected to be between 1.684 and 1.925 billion yuan, showing significant sequential growth.
Regarding shipment volumes, in the first quarter of this year, the company's power battery shipments reached 14.34 GWh, a year-on-year increase of 40.93%. Energy storage battery shipments were 20.38 GWh, up 60.82% year-on-year. Shipment volumes are expected to grow further in the second quarter.
Analysts believe that looking ahead to the second half of 2026, considering demand and the position in the capacity cycle, the current lithium battery cycle remains in an upward trend, and industry consolidation may prolong this upturn.
From a fundamental perspective, the lithium battery sector entered a reversal trend starting in the third quarter of 2025. Profit margins are currently still in an expansion phase, supported by improving supply-demand dynamics leading to price stabilization and recovery, as well as the release of economies of scale from rising capacity utilization. Ongoing developments in solid-state and sodium-ion battery technology are expected to continue driving sector profit improvement in the second half of 2026.
In terms of production and sales, data from the China Automotive Battery Innovation Alliance shows that in May, China's combined production of power and energy storage batteries reached 191.7 GWh, a month-on-month increase of 4.2% and a year-on-year surge of 55.2%. Sales of power and energy storage batteries in May were 182.2 GWh, up 11.0% month-on-month and 47.4% year-on-year.
Other analysts suggest that safety considerations combined with rising AI-driven energy storage demand provide dual growth engines for lithium batteries. Global lithium battery production schedules for June show a month-on-month increase of 9.0%, with sequential growth rates expected to improve quarter by quarter. Battery manufacturers' profitability in the second quarter is anticipated to show sequential improvement.
Institutional Outlook
One major securities firm maintains an overall optimistic view on the Hong Kong market's performance in the second half of the year, while also noting potential liquidity disruptions from a peak in share lock-up expiries in the third quarter.
In its view, following the first-quarter earnings season, negative factors related to Hong Kong's fundamentals have largely been priced in. After four significant outflows starting from the fourth quarter of 2025, foreign capital has shown signs of returning since mid-May 2026. Following external disruptions, southbound capital is also expected to accelerate its allocation to Hong Kong stocks.
Against the backdrop of potential signals of a rebound in macroeconomic fundamentals and corporate earnings data in the third quarter, the Hong Kong market could experience a dual boost from valuation expansion and earnings growth in the fourth quarter.
ETF Developments
The Hua An Livestock Farming ETF (159011) debuted today, closing down 1.39% at 0.99 yuan with a turnover of 82.0749 million yuan. The fund tracks the CSI Livestock Farming Industry Index, which primarily covers concepts related to hog farming, feed, and other agricultural sectors.
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