Hong Kong's three major stock indices all closed lower in the morning session. At the midday break, the Hang Seng Index was down 0.47% at 24,099.89, the Hang Seng Tech Index fell 1.42%, and the Hang Seng China Enterprises Index declined 0.43%.
In terms of sector performance, technology and internet stocks were broadly lower, with Baidu (ASX: BIDU) shares plunging more than 8%, while Lenovo and Bilibili both fell over 2%. Oil stocks bucked the downward trend to move higher, with PetroChina gaining more than 3%. Semiconductor shares continued their adjustment, with Huahong Grace falling over 5%. The optical communications sector was among the worst performers, with General Cable diving more than 7%.
Oil Sector Defies Broader Market Weakness
Oil stocks rose against the general market downtrend, with PetroChina climbing over 3%. This movement follows a recent sharp escalation in military tensions between the US and Iran in the Strait of Hormuz. An analysis report from Everbright Securities noted that this latest small-scale conflict stems from a fundamental disagreement between the two nations over control of passage through the Strait of Hormuz. Although technical negotiations based on a previous memorandum of understanding are ongoing, the crude oil market remains concerned about the prospects for peace between the US and Iran. The securities firm anticipates that negotiations between the US and Iran regarding Strait passage rights, sanctions, and the nuclear issue are unlikely to reach an agreement in the short term. During this period, military clashes and potential local blockades of the Strait could continue to amplify volatility risks in oil prices.
Semiconductor Stocks Continue Adjusting
Chip stocks continued their adjustment, with Huahong Grace dropping more than 5%. Goldman Sachs commented that the single-day plunge of 9% in South Korea's KOSPI index was not triggered by a deterioration in fundamentals but rather a forced liquidation of positions ignited by the concentrated deleveraging of leveraged ETFs on a single stock. Combined net selling by foreign and domestic institutions exceeded $2.6 billion, while net long institutions remained unusually silent. Goldman Sachs views this as a liquidity crisis, not a cyclical peak, suggesting that such extreme volatility might present a window for positioning in memory chip stocks.
Optical Communications Sector Among Worst Performers
The optical communications sector led the declines, with General Cable tumbling over 7%. A research report from China Galaxy Securities pointed out that as large model training and inference become routine, the construction of massive-scale data center campuses is driving a new wave of data center interconnectivity and the trend of "optical replacing copper." These scenarios are creating exponential growth in demand for low-loss, high-specification optical fibers and optical cable structures with extremely high fiber core counts. In this round of industry restructuring, the sector has completely moved away from a competition model reliant on low-price, cutthroat tactics. Leading companies with core technological reserves, strong upstream self-sufficiency in preform production, and the ability to closely follow AI-era trends to drive technological innovation are likely to gain a significant competitive edge in the future market. These firms may lead the entire industry towards a healthier development path characterized by technological upgrades and profit recovery.
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