Hong Kong's three major stock indices opened higher but closed lower collectively by the end of the session. South Korean ETFs showed strength all day, while Sci-Tech ETFs experienced a significant decline from their highs. As of the close, the Hang Seng Index fell 1.03% to 25,386.52 points, with a full-day turnover of HKD 298.552 billion. The Hang Seng Tech Index dropped 2.15% to 4,768.9 points. Among major Hong Kong-listed ETFs by size, the Tracker Fund (02800) closed down 0.93% at HKD 25.62. The CSOP Hang Seng Tech Index ETF (03033) closed down 2.14% at HKD 4.668. The CSOP 2x Long Hynix ETF (07709) closed up 13.74% at HKD 93.06.
**Sector Performance** **1. South Korean Stock Market Rebounds Strongly, Related ETFs Surge All Day.** By the close, the CSOP 2x Long Hynix ETF (07709) rose 13.74% to HKD 93.06. The CSOP 2x Long Samsung Electronics ETF (07747) gained 10.84% to HKD 153.9. The TR Korea ETF (02848) increased 8.33% to HKD 1,852.5. The temporary resolution of the Samsung Electronics union strike crisis, coupled with the positive sentiment from Nvidia's better-than-expected earnings report boosting the AI sector overnight, led to a significant rebound in the KOSPI index. According to a statement issued by Samsung Electronics late Wednesday local time, the company and its labor union have reached a preliminary agreement on wages and a collective bargaining pact. The union subsequently confirmed that the strike planned from May 21 to June 7 has been suspended. The new agreement introduces a long-term special performance bonus scheme for the semiconductor division. The emergency overnight talks convened by South Korea's Labor Minister Kim Young-hoon were a key factor in reaching the final settlement. A Nomura Securities research report dated May 20 noted that progress in Samsung's labor talks and the union's suspension of the major strike have stimulated gains in related Hong Kong-listed ETFs. The report indicated that Nomura has raised its 2024 target for the South Korean KOSPI index from the previous range of 7,500-8,000 points to 10,000-11,000 points, primarily driven by corporate earnings and the return on equity (ROE) cycle. Nomura believes that the general memory and High Bandwidth Memory (HBM) sectors are currently in a super-cycle, which will be the main driver of earnings growth and ROE for KOSPI constituent companies in 2024 and 2025. Additionally, the South Korean government's push for reforms of the small-cap KOSDAQ index and South Korea's inclusion on MSCI's watchlist for developed market status are seen as additional catalysts.
**2. Sci-Tech Innovation Board 50 Index Rises Then Falls, Semiconductor and CPO Sectors Plunge Late, Related Sci-Tech ETFs Drop from Highs.** By the close, the ChinaAMC Sci-Tech Semiconductor ETF (588170) fell 6.80% to CNY 2.534. The Guotai Sci-Tech Innovation 100 ETF (588120) dropped 5.31% to CNY 1.802. The Harvest Sci-Tech Innovation Chip ETF (588200) declined 5.23% to CNY 3.569. Stimulated by strong gains in overseas AI chip stocks, the Sci-Tech Innovation Board 50 Index surged in early trading. However, the index's losses expanded to over 3% in the afternoon session. The semiconductor and computing hardware supply chain experienced significant adjustments, with the CPO and memory sectors leading the decline. After the U.S. market close on Wednesday local time, Nvidia reported better-than-expected Q1 earnings, but its stock price fell for the fourth consecutive time in after-hours trading. Notably, the company's management explicitly stated that its current-quarter guidance includes no data center computing revenue from China, indicating lingering uncertainty. Furthermore, during the latest earnings conference call, Nvidia CEO Jensen Huang revealed that the company plans to begin production and shipment of its next-generation rack-scale AI system, Vera Rubin, in the second half of this year. Bank of America Securities analysts believe that in the short term, as Vera Rubin adopts Blackwell's rack architecture, product transition period gross margins will remain relatively stable. However, in the medium to long term, the rising proportion of HBM memory costs presents a persistent pressure point. Market consensus expects Nvidia's Q1 gross margin to fluctuate within the 74%-75% range. Bank of America Securities emphasized that any gross margin performance exceeding expectations would be a positive catalyst.
**Institutional Views** China Merchants Securities holds the view that looking ahead, the probability of Hong Kong's stock market experiencing volatile upward movement remains relatively high. The upward drivers are mainly from three aspects: First, the moderate recovery in domestic price data has alleviated market concerns about price levels, creating room for marginal upward revisions in corporate earnings expectations. Second, high-level interactions between China and the U.S. have reduced short-term geopolitical tail risks. If substantive progress is made in areas such as trade, energy, aviation, financial opening, and chip supply, it will continue to improve market risk appetite. Third, the AI industry trend remains clear. Capital expenditure, revenue guidance, and commercialization progress from leading companies like Alibaba and Tencent provide important valuation support for the technology sector.
**ETF Developments** On May 21, three new ETFs debuted on the exchange: 1. The Huatai-PineBridge N Battery ETF (560910) listed for the first time, closing down 2.06% at CNY 0.999, with a turnover of CNY 157 million. The fund tracks the CSI Battery Theme Index, covering power batteries, energy storage batteries, consumer electronics batteries, and their upstream and downstream industrial chains, with battery-related constituent stocks accounting for 67%. 2. The GF Nonferrous Metals ETF (159029) listed for the first time, closing down 2.41% at CNY 0.93, with a turnover of CNY 26.5869 million. The fund tracks the CSI Nonferrous Metals Mining Theme Index, focusing on the mining, smelting, and processing industrial chains of nonferrous metals such as copper, gold, lithium, and rare earths. 3. The E Fund Grain Industry ETF (159038) listed for the first time, closing down 2.33% at CNY 0.965, with a turnover of CNY 26.4935 million. The fund tracks the SZSE Grain Industry Index, covering core segments of the grain industry chain including seeds, planting, and fertilizers.
Comments