Hong Kong Market Opens Higher; Semiconductor Stocks Lead Gains

Hong Kong's Hang Seng Index opened 1.04% higher, while the Hang Seng Tech Index rose by 1.24%.

The semiconductor sector showed strength, with Montage Tech (HKEX: 06809) surging over 6%.

Other notable gainers included GigaDevice Semiconductor (Beijing) Inc which advanced nearly 5%, Hua Hong Grace Semiconductor Limited climbing over 4%, and SMIC (HKEX: 00981) rising more than 3%.

Market Outlook and Broker Views

Regarding the outlook for Hong Kong stocks, one brokerage noted that the market currently faces multiple headwinds, including heightened expectations for U.S. interest rate hikes, a sharp decline in overseas tech stocks from recent highs, renewed tensions in the Middle East, and tightened cross-border capital flow regulations in mainland China and Hong Kong, which are pressuring market liquidity.

It is anticipated that the Hong Kong market will struggle to perform well in the short term, with market sentiment remaining weak. However, some heavyweight internet companies, having seen valuations fall for an extended period, are now at low levels, which could offer some stability to the market.

Another securities firm expressed the view that negative factors for the Hong Kong market are nearly exhausted, positioning it in a structural bottom with a floor for support but awaiting catalysts for an upward move.

Short-term upside depends on two key catalysts: AI-driven revaluation and marginal improvements in corporate earnings, with mid-year results in August being a crucial verification point.

A further analysis suggests that the risk-reward ratio for Hong Kong stocks is attractive, highlighting a potential window for catch-up gains.

The AI-driven rally in U.S. stocks is spreading from hardware to software and applications, which could create a positive resonance in Hong Kong.

Some capital is expected to rotate into non-tech sectors following the rhythm of the A-share market, potentially leading to a phase of catch-up gains for consumption and property stocks.

The market has not yet priced in expectations for quarter-on-quarter earnings per share (EPS) improvement; it is projected that Hong Kong's full-year EPS could grow by 5-6%, indicating room for some valuation recovery.