The Hang Seng Index opened the trading session 0.5% lower, while the Hang Seng Tech Index fell by 0.38%.
Gold stocks were among the notable decliners, with CHIFENG GOLD (06693) shares dropping close to 5%.
Other gold producers also saw significant losses, with shares of Lingbao Gold falling nearly 4%, and both Zijin Mining Group and Shandong Gold declining by more than 3%.
Brokerage Views on the Hong Kong Market Outlook
Looking ahead for the Hong Kong market, one brokerage firm highlights its attractive risk-reward profile and suggests watching for a potential catch-up rally. The firm notes that the AI-driven rally in U.S. markets is broadening from hardware to software and applications, a trend that could positively influence Hong Kong stocks. Additionally, as some capital rotates within the A-share market towards non-tech sectors, consumption and property sectors in Hong Kong may see a temporary rebound. The market has yet to price in expectations for sequential earnings improvement, and the brokerage estimates full-year EPS growth for Hong Kong stocks could reach 5-6%, indicating room for valuation recovery.
Another securities firm, considering the backdrop of emerging overseas liquidity risks, suggests a short-term focus on sectors that have faced heavy selling pressure during recent corrections but now show stabilizing profit expectations. These include discretionary retail and select media stocks, as well as high-dividend defensive plays like core banking stocks. Regarding the AI hardware supply chain, this firm believes it currently lacks strong conditions for generating absolute or excess returns in the short term, with the next key catalyst likely being the U.S. earnings season in July.
A further analysis points out that expectations for Federal Reserve monetary tightening are currently the core external variable affecting the Hong Kong market. The market's primary concern has shifted from the timing of rate cuts to the interplay between inflation and a hawkish Fed. Recent economic reports indicating rising inflation, coupled with geopolitical tensions pushing oil prices higher, have led to a sharp increase in market expectations for a Fed rate hike in December—jumping from 9% a month ago to over 49.1%. This has driven U.S. Treasury yields higher and strengthened the U.S. dollar, prompting a global flow of capital back to the United States. As funds exit emerging markets, Hong Kong's market liquidity has been noticeably impacted, resulting in a weaker rebound compared to U.S., Japanese, and South Korean markets. Consequently, interest-rate-sensitive sectors in Hong Kong with higher valuations, such as technology and biopharmaceuticals, are facing pressure for valuation adjustments.
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