Today's Hong Kong market opened lower and continued its descent, with the Hang Seng Index narrowing its losses by the close and the Hang Seng Tech Index performing weakly. Securities ETFs collectively strengthened against the trend, buoyed by signals of capital market reforms, while most semiconductor and chip ETFs rose as price increases spread across the industry chain. At the close, the Hang Seng Index fell 0.65% to 23,768.52 points, with a full-day turnover of HK$348.616 billion; the Hang Seng Tech Index dropped 1.19% to 4,549.41 points.
Among major Hong Kong-listed ETFs by size, the Tracker Fund of Hong Kong (02800) closed down 0.49% at HK$24.16. Samsung KODEX 2X Long SK hynix ETF (07709) surged 16.55% to close at HK$187.65. The CSOP Hang Seng Tech Index ETF (03033) fell 1.06% to close at HK$4.464.
Market Performance Breakdown
1. Securities ETFs rallied against the broader market decline, spurred by positive signals regarding capital market reforms. By the close, the East Money Securities ETF (159692) gained 8.34% to 1.273 yuan. The Penghua Securities ETF (159993) rose 7.98% to 1.232 yuan. The E Fund Securities ETF (512570) increased 7.77%, closing at 1.138 Hong Kong dollars.
Recently, the chairman of the China Securities Regulatory Commission outlined a series of reform measures at the 2026 Lujiazui Forum, focusing on the integration of technology and finance, improvement of market systems, and investment-side development. China Securities noted that the expansion of the STAR Market's fifth set of standards to include large AI models, coupled with the opening of derivative products and innovation in cross-border business, will open clear incremental space for investment banking and FICC businesses. Simultaneously, the central bank's creation of a non-bank liquidity support tool and the establishment of a multi-layered risk mitigation mechanism, along with the proportion of direct financing exceeding loans for the first time, are expected to provide structural support for the long-term ROE of securities firms. China Post Securities believes that, in the short term, these policy signals will directly boost market expectations for securities firms' asset management and financial product innovation businesses, particularly benefiting those with leading public fund subsidiaries. Sector sentiment may be catalyzed. In the medium to long term, the successful launch and scaling of active ETFs would open a significant light-capital income growth curve for securities firms, driving their transformation from traditional channel businesses to genuine asset and wealth management institutions. Industry concentration is expected to increase further, with firms possessing full-chain service capabilities likely to command a relative valuation premium.
2. With expectations for the global wafer fabrication equipment market size being continuously revised upwards and price increases spreading through the semiconductor and chip supply chain, most related ETFs advanced. At the close, the Samsung Global Semiconductor ETF (03132) rose 4.13% to HK$74.58. The E Fund Asia Pacific Semiconductor ETF (03486) gained 3.94% to HK$25.3. The ChinaAMC Semiconductor Chip ETF (159995) increased 3.69% to 2.92 yuan.
According to CITIC Securities, benefiting from aggressive capital expenditure guidance and capacity expansion plans from major downstream clients, demand for semiconductor equipment is expected to remain robust. It is forecast that the global Wafer Fabrication Equipment (WFE) market size will grow by 26% and 35% year-on-year in 2026 and 2027, reaching $147.8 billion and $199.5 billion respectively, with the downstream memory segment's share increasing further. Considering the gradual release of equipment capacity and new product iterations, semiconductor equipment manufacturers may gain enhanced pricing power. On the industry front, Huatai Securities indicated expectations for a potential 280% year-on-year increase in traditional DRAM ASPs for 2026. Driven by upstream HBM cost increases exceeding 50%, domestic AI chips are entering a price hike window, with high visibility for earnings in the memory, CCL, MLCC, and other AI hardware price increase chains. Regarding sector momentum, Industrial Securities recently pointed out that tech growth, represented by AI, remains a direction with strong earnings certainty and sustained favorable momentum. Recent market fluctuations do not constitute a signal for a systemic style shift. Awaiting the start of the July earnings season, the verification of earnings momentum and industrial trends at the micro level is expected to serve as another catalyst for the global AI theme.
Institutional Perspectives
A Hong Kong market strategy report from Huatai Securities noted that the rapid AI rally last week, under tight liquidity conditions, has seen its "crowding-out" effect spread from internet software to stable assets like dividend stocks. Furthermore, factors such as expected oil price declines due to ceasefire anticipation and heightened expectations for a hawkish FOMC rate hike have also weighed on dividend assets, with the Hong Kong Stock Connect Dividend Index falling 6% for the week.
Looking ahead, Huatai Securities suggests the investment value of dividend stocks requires differentiation based on two investor profiles: 1) For total return investors, while short-term pricing of rapid "peace" and "hawkish" expectations may fluctuate, the medium-term direction of factors like falling oil prices and tight liquidity is relatively certain. Dividend assets should be positioned as diversification within a portfolio rather than for speculative rebounds, focusing on industries with stable fundamentals, cash flows, and dividends such as banks and utility-like dividends (e.g., highways, railways). 2) For investors more focused on dividend yield, the current trailing twelve-month dividend yield of the Hong Kong Dividend Low Volatility Index is around 5%, still near the lower end of its historical range, indicating the index level has not yet fallen to a compelling valuation. It is advisable to focus on specific stocks with stable payout ratios, expected dividend yields above 6%, and improving ROE, such as those in the food & beverage sector and some industrial stocks.
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