Hong Kong's major stock indices opened lower and extended losses throughout the session, with the Hang Seng Index managing to hold above the 23,000-point level near the close.
Storage and Korea-focused ETFs demonstrated significant strength for the entire trading day, buoyed by positive news from Micron Technology's quarterly results and SK Hynix's plans for a U.S. listing.
Conversely, expectations for further interest rate hikes from the U.S. Federal Reserve continued to weigh on precious metals, leading to sustained declines in gold-related ETFs.
At the market close, the Hang Seng Index was down 1.43% at 23,076.91 points, with a total turnover of HK$325.785 billion.
The Hang Seng Tech Index fell 1.63% to finish at 4,405.92 points.
Among the largest Hong Kong-listed ETFs by size, the Tracker Fund of Hong Kong (02800) closed down 1.26% at HK$23.5.
The CSOP Hang Seng Tech Index ETF (03033) ended the session 1.59% lower at HK$4.33.
Sector Performance Analysis
Storage and Korea-Focused ETFs Lead Gains
Strong quarterly results from Micron Technology and market enthusiasm surrounding SK Hynix's planned U.S. listing drove significant gains for storage and Korea-tracking ETFs.
The CSOP 2x Long Hynix ETF (07709) surged 18.44% to close at HK$182.4.
The CSOP 2x Long Samsung ETF (07747) rose 9.86% to HK$197.25.
The TR Korea ETF (02848) advanced 7.62% to HK$2,133.
SK Hynix's plan to raise $29.4 billion through a Nasdaq listing via American Depositary Receipts has captured significant market attention.
HSBC Research has assigned a 20% premium to the SK Hynix ADR listing, citing benefits such as improved access to U.S. investors, more shareholder-friendly policies, and a higher beta due to a smaller profit base.
Micron Technology reported a remarkable 346% year-over-year revenue increase for its fiscal third quarter, with gross margins reaching 84.9%, and provided fourth-quarter guidance that significantly exceeded expectations.
Micron's CEO anticipates that tight supply-demand conditions will persist beyond the 2027 calendar year.
Driven by AI demand, High Bandwidth Memory has become the most constrained critical computing resource for AI.
Nomura believes price increases in the third quarter will far exceed prior expectations, and the profitability gap between HBM and general DRAM is expected to gradually close around 2027.
Guotai Haitong notes that the current upcycle in the storage sector, supported by AI demand, exhibits structural growth characteristics distinct from the high volatility of historical commodity cycles.
The valuation logic for the storage sector may shift from cyclical speculation based on industry sentiment expectations to a re-rating based on earnings certainty.
Valuations could transition from traditional peak-cycle multiples to a premium for AI core infrastructure assets with long-term contract support and visible cash flows, potentially raising the sector's overall valuation center.
Gold ETFs Face Continued Pressure
The international gold price continued its retreat, falling below the $4,000 per ounce threshold.
Strengthening expectations for Federal Reserve rate hikes continued to suppress the performance of precious metals, keeping gold stock ETFs in a downtrend.
The ChinaAMC Gold Stock ETF (159562) dropped 4.99% to 1.77 yuan.
The Guotai Gold Stock ETF (517400) declined 4.74% to 1.286 yuan.
The Yongying Gold Stock ETF (517520) fell 4.68% to 1.631 yuan.
Hualian Futures analysis indicates that gold experienced a significant correction in the second quarter, erasing its first-quarter gains and releasing short-term risk.
In the medium term, gold's financial attributes are more pronounced.
Since May, the Federal Reserve has signaled no intention to cut rates, with expectations for further hikes intensifying, particularly in June.
As these rate hike expectations have surpassed market forecasts, medium-term risks for gold persist.
While short-term risks have been released, medium-term risks remain, though the long-term positive factor of de-dollarization remains unchanged.
Consequently, gold is expected to trade with a weak and volatile bias.
CICC points out that the key to overseas liquidity lies in Federal Reserve policy, U.S. Treasury yields, and the dollar's trajectory.
A transmission chain of "geopolitical conflict -> rising oil prices -> elevated inflation -> central bank tightening," fueled by geopolitical, inflation, and policy risks, is causing significant market anxiety.
CICC suggests these three risks may be "false risks" preceding a resumption of easing trades and that overseas liquidity will not tighten trendwise in the second half of the year.
Given that the U.S.-Iran dynamic is not an "asymmetric" game and the U.S. midterm elections are approaching, CICC expects U.S.-Iran tensions to cool, with the market gradually desensitizing to geopolitical risks.
Institutional Perspectives
Guorong Fund's view suggests that while marginal relief has been seen from factors like large tech listings and geopolitically-driven high inflation, insufficient time in the consolidation phase leaves the market's structure somewhat unstable, potentially adding complexity to future price action.
However, it is evident that the market has shown strong resilience following this recent corrective phase, supporting a positive outlook for subsequent performance.
From a long-term development perspective, the semiconductor industry's valuations and fundamentals continue to support further share price appreciation, and the fund maintains a positive long-term view on the sector's prospects.
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