Hong Kong's three major stock indices delivered mixed results on Tuesday, with the Hang Seng Tech Index underperforming after sliding more than 2% in the afternoon session. The Hang Seng Index edged up 0.07% to 25,471.15 points with total turnover reaching HK$255.541 billion, while the Hang Seng Tech Index declined 0.9% to 4,739.18 points. Among the top Hong Kong-listed ETFs by asset size, Tracker Fund of Hong Kong and Hang Seng China Enterprises Index ETF finished flat, whereas CSOP Hang Seng TECH Index Daily (2x) Leveraged Product (07226) dropped 1.93% to HK$3.458.
Rising Treasury yields triggered a selloff across Japanese and South Korean markets. CSOP Samsung Electronics Daily (2x) Leveraged Product (07747) plunged 10.47% to HK$80.56, while CSOP SK Hynix Daily (2x) Leveraged Product (07709) tumbled 9.56% to HK$36.9. Meanwhile, CSOP Nikkei 225 Daily (2x) Leveraged Product (07262) lost 5.7% to HK$189.35. US bond yields continued their upward trajectory on Tuesday, with the 30-year Treasury yield climbing to 5.3242%, its highest level since 2007. Japan's 30-year government bond yield also rose 6 basis points to 4.135%. Market analysts suggest that persistent Middle East geopolitical tensions have heightened concerns that the current global order could leave economies more vulnerable to supply shocks and sustained inflationary pressures. With US government debt surpassing the $40 trillion mark, bond investors are increasingly worried about Washington's ability to control fiscal spending, which could stimulate the economy but also keep interest rates elevated for an extended period.
Nine grain-focused ETFs rallied strongly on intensifying fears of a severe El Ni帽o event potentially triggering a food crisis. Grain ETF Southern (159063.SZ) hit the daily limit up, settling at RMB 1.095, while Grain ETF Invesco (159072.SZ) advanced 8.33% to RMB 1.158 and Grain ETF GF (159587.SZ) gained 7.76% to RMB 1.236. According to monitoring by the National Climate Center, the El Ni帽o phenomenon strengthened continuously from June to July, with increasing odds of it evolving into a super-strength event that could persist at least until next spring. This raises risks of farmland waterlogging and pest outbreaks for domestic autumn grain production. JPMorgan projects global food inflation could accelerate from approximately 2.8% in the first half of 2026 to around 5% by the first half of next year, attributing the drivers to what it calls the "five Ws" (war, weather, warehousing, water, and waste). Climate-related pricing pressures are expected to persist through the critical autumn grain season and into the first half of 2027.
Oil prices reclaimed the $90 per barrel threshold after the 60-day US-Iran negotiation window expired without a resolution, lifting energy ETFs. S&P Oil & Gas Exploration ETF Fullgoal (513350.SH) rose 2.92% to RMB 1.306, while F Samsung Crude Oil Futures (03175) climbed 3.35% to HK$10.48. On August 17, the 60-day truce memorandum negotiation period between Washington and Tehran came to an end, with former US President Donald Trump explicitly stating he would not seek an extension. This left US-Iran relations in a stalemate, with Tehran potentially shifting toward a more aggressive military posture. Additionally, the UK Maritime Trade Operations office reported on August 18 that a vessel was struck by an unidentified projectile while departing the Strait of Hormuz. International oil benchmarks surged, with Brent crude futures exceeding $91 per barrel and New York crude approaching $85 per barrel.
Institutional perspectives: China Galaxy Securities noted that Hong Kong stocks are gradually emerging from multiple pressures, but whether a full reversal occurs hinges on tangible improvements in fundamentals and capital flows. The recent rally appears closer to a valuation recovery following oversold conditions. August presents three sequential verification windows: mid-year earnings results providing fundamental anchors (shaping market pricing benchmarks and structural direction), policy implementation delivering macro support (influencing recovery scope and pace), and external risk assessments offering conditions for valuation repair (including US Treasury yields and Middle East dynamics).
Guotai Junan Securities highlighted that domestic grain prices are benefiting from policy support, particularly for wheat. On August 10, the National Grain and Strategic Reserves Administration officially announced the activation of the 2026 minimum purchase price mechanism for wheat in Henan Province starting August 11. Following this intervention, wheat prices began to rise. Additionally, under El Ni帽o conditions, climate-related disasters could intensify challenges to agricultural output. The firm recommends focusing on opportunities from rising bottom prices for crops like corn, as well as high-yield, stress-resistant seed varieties.
ETF market developments: Cloud Computing ETF Yinhua (159095.SZ) made its debut on the Shenzhen Stock Exchange, closing down 2.24% at RMB 1.003 with turnover of approximately RMB 76.49 million. The fund tracks the CSI Cloud Computing 50 Index, which selects 50 listed companies involved in providing cloud services such as infrastructure-as-a-service, platform-as-a-service, and software-as-a-service, as well as hardware equipment suppliers including servers and storage for cloud computing.
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