The three major Hong Kong stock indices all closed lower in the morning session. By midday, the Hang Seng Index had fallen 1.1% to 24,294.47, the Hang Seng Tech Index dropped 1.69%, and the Hang Seng China Enterprises Index declined 0.49%.
Across the market, technology and internet stocks showed mixed performance. Lenovo Group shares tumbled more than 9%, while Xiaomi Corporation fell over 4% and Alibaba Group dropped more than 3%. In contrast, Kuaishou Technology, Tencent Holdings, and NetEase all gained more than 3%.
Domestic banking stocks bucked the downward trend, with China Construction Bank rising over 1%. A research report from Galaxy Securities noted that a turning point in bank fundamentals is largely established, with performance expected to enter an improvement channel by 2026. The report anticipates steady credit growth, a continued trend of stabilizing net interest margins with signs of recovery, and optimization of funding costs as a key source of earnings elasticity. Opportunities for expanding non-interest income businesses remain, while contributions from financial markets business are expected to be stable. Overall asset quality is projected to remain steady, though risks in key areas still require attention. The report suggests fundamentals are entering a new normal of stable volume and improving quality, supporting a valuation recovery for the banking sector and highlighting its dividend value.
Power equipment stocks were among the biggest decliners, with Dongfang Electric Corporation dropping over 9%. The global expansion of AI computing infrastructure, intensifying power grid bottlenecks, and rising power supply standards for A-grade data centers are driving the diesel generator set industry into a new cycle of demand growth. In some North American regions, clients often use diesel generator sets as a primary power source. The sustained rise in international oil and gas prices may substantially suppress demand for gas turbine units.
Gold-related stocks fell collectively, with Zijin Mining Group declining more than 8%. Spot gold fell below $4,190 per ounce today, hitting a new two-and-a-half-month low. The cumulative pullback from the near $5,600 historical high seen earlier this year now exceeds 29%. U.S. non-farm payroll data for May came in "hot," with 172,000 new jobs added, far exceeding the expected 85,000. Market expectations for a Federal Reserve rate hike within the year have surged sharply, with the probability of a hike by December soaring from 9% a month ago to between 49.1% and over 60%. Although there have been signals of a phased easing in Middle East tensions, uncertainties remain in U.S.-Iran negotiations. On June 10th, renewed conflict erupted between the U.S. and Iran. Coupled with upcoming U.S. inflation data that may further boost Fed rate hike expectations, the U.S. dollar index remains strong, continuing to pressure gold prices.
The optical communications sector experienced a pullback, with Yangtze Optical Fibre and Cable Joint Stock Ltd. plunging over 10%. A report from SemiAnalysis indicated that mass production of 800VDC and CPO (Co-Packaged Optics) has been delayed until after 2028, leading to a sharp decline in U.S. optical communications stocks. Concurrently, an interview cited an Nvidia executive stating that CPO volumes would ramp up in the second half of the year. Online discussions are intense, with some arguing the delay does not alter AI demand fundamentals. Multiple viewpoints suggest the CPO delay does not equate to vanished demand, and may instead benefit pluggable optical modules and the NPO (Near-Packaged Optics) sector.
Comments