Hong Kong's three major stock indices closed mixed on August 19. The Hang Seng Index rose 0.09% to 25,495.07 points, the Hang Seng Tech Index fell 1.21%, and the Hang Seng China Enterprises Index gained 0.21%.
Tech and internet stocks showed mixed performance, with Baidu (NASDAQ: BIDU) plunging over 11% while Xiaomi advanced more than 4%. Banking shares were active, with Agricultural Bank of China climbing over 2%. Chip stocks weakened, as Hua Hong Semiconductor dropped more than 11%. The optical communications sector also declined, with Zhongji Innolight falling over 10%.
Mainland banking stocks remained buoyant, led by Agricultural Bank of China rising over 2%. According to the latest data from the National Financial Regulatory Administration, the net interest margin of commercial banks stood at 1.41% at the end of the second quarter, up 1 basis point from the low recorded at the end of the first quarter. This marks the first quarter-on-quarter increase in commercial banks' net interest margin since the first quarter of 2022, breaking a four-year trend of stagnation or decline.
Analysts attribute the improvement in net interest margins primarily to sustained cost reductions on the liability side. As higher-yielding time deposits from earlier periods mature and are repriced, they are being replaced by deposits with lower interest rates, effectively lowering funding costs.
In the chip sector, Hua Hong Semiconductor fell more than 11%. China Xin Securities noted that SMIC achieved record quarterly revenue in Q2, surpassing $3 billion for the first time, up 36.1% year-on-year and 20.0% quarter-on-quarter. Along with Hua Hong Semiconductor, both companies posted strong Q2 results, signaling a rise in domestic wafer foundry momentum. Despite the improving industry fundamentals, the Hong Kong-listed information technology sector currently faces elevated valuations. Combined with sentiment spillover from overnight weakness in U.S. tech stocks, short-term correction pressure in the sector still needs to be absorbed.
The optical communications segment also dropped, with Zhongji Innolight down over 10%. BOCOM International stated that optical communication technology continues to advance, and Zhongji Innolight maintains its leading position. The brokerage noted that Co-Packaged Optics (CPO) could see large-scale deployment in the second half of 2027, while Near-Packaged Optics (NPO) may begin ramping up in 2026. According to Frost & Sullivan forecasts, the company's market share in the optical module data communications market is projected to reach 23.1% globally in 2025, ranking first worldwide. With the company's first-mover advantage in 1.6T products becoming more evident, its market share is expected to rise further in 2026.
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