Hong Kong's major stock indices showed strength throughout the trading session today, with the Hang Seng Tech Index performing exceptionally well, surging over 5% at one point. The technology and internet sector in Hong Kong saw a broad-based rebound, driving related ETFs higher. Conversely, the global memory chip sector faced significant selling pressure, leading to further declines in South Korea-focused ETFs.
By the market close, the Hang Seng Index had risen 2.99% to 24,199.46 points, with a total turnover of HK$375.835 billion. The Hang Seng Tech Index jumped 4.97% to 4,731.02 points. Among major Hong Kong-listed ETFs, the Tracker Fund (02800) closed up 3.09% at HK$24.66. In contrast, the CSOP Hang Seng TECH Index Daily (2x) Leveraged Product (07709) fell 9.77% to HK$82.74, and the CSOP Hang Seng TECH Index Daily (-2x) Inverse Product (07747) dropped 13.43% to HK$106.7.
Sector Performance
Hong Kong Tech and Internet Sector Rebound
The Hong Kong-listed technology and internet sector staged a comprehensive rally, with the intensive rollout of AI industry catalysts serving as a key driver, propelling related ETFs higher.
At the close, the Fullgoal ChinaAMC Hong Kong Stock Connect Internet ETF (159792.SZ) gained 6.06% to 0.595 yuan. The E Fund Hong Kong Stock Connect Internet ETF (513040.SH) rose 5.82% to 0.964 yuan. The CSOP Hang Seng TECH Index ETF (03033) increased 5.02% to HK$4.64.
Recently, the frequent launch of AI industry catalysts has become the core driver for the rebound in the Hang Seng Tech Index and Hong Kong's tech and internet stocks. Analyzing this, Fang Junyi from China Merchants Fund's Hong Kong Stock Connect Technology ETF pointed out that the rebound stems from the convergence of several factors. First, the release of TENCENT's Hunyuan Hy3 model and Alibaba's full switch of its Tongyi Qianwen model to a self-developed base, integrating enterprise-level agents, indicate that major tech firms' AI initiatives are transitioning from an "investment phase" to a "commercialization realization phase." With Alibaba Cloud's AI-related annual recurring revenue exceeding 35 billion yuan, accounting for over 30% of its external revenue for the first time, the market is beginning to revalue these companies as "AI beneficiaries" rather than "cash burners." Second, southbound capital provided a floor with net inflows, recording over HK$13 billion in net purchases today, indicating stronger willingness from mainland capital to deploy. Third, the central bank's statement about continuing to increase allocations to Hong Kong assets in foreign reserves, coupled with a clear policy shift towards "empowering innovation" for the platform economy, provided support.
Data from Soochow Securities Research shows that as of the end of June, the Hang Seng Tech Index's rolling price-to-earnings ratio was 21.90 times, sitting at the 23.60th percentile since its inception. This indicates the index's valuation is at a historically low level, providing room and impetus for a valuation rebound. Concurrently, marginal improvements in liquidity conditions have been a significant driver of this rebound. After signs of cooling in the labor market strengthened, market concerns about further Federal Reserve rate hikes eased temporarily, causing the US dollar index to dip. This helps alleviate capital outflow pressure from emerging markets, offering positive support for Hong Kong's market liquidity.
Global Memory Chip Sell-off Hits South Korea ETFs
The global memory chip sector faced large-scale selling, leading to another decline in related South Korea-focused ETFs.
At the close, the CSOP Hang Seng TECH Index Daily (-2x) Inverse Product (07747) fell 13.43% to HK$106.7. The CSOP Hang Seng TECH Index Daily (2x) Leveraged Product (07709) dropped 9.77% to HK$82.74. The TR Korea ETF (02848) declined 3.6% to HK$1,740.
Despite Samsung Electronics reporting better-than-expected preliminary second-quarter operating profit, its stock price fell. Market concerns about whether the memory super-cycle is nearing an inflection point overshadowed the positive earnings. Morgan Stanley's Asia-Pacific technology team analysis suggests the memory chip industry is approaching a "peak rate of change," with DRAM price growth narrowing year-on-year and inventory improvements flattening. The sector faces short-term pressures from concentrated positioning, increased volatility, and fund rotation, potentially weighing on stock prices temporarily.
Sinolink Securities believes the pressure on the memory sector stems more from positioning levels than fundamentals. As one of the market's most concentrated holdings, recent increased volatility has made it challenging for institutions to maintain net exposure. In overnight US trading, most chip stocks led losses, with the Philadelphia Semiconductor Index plunging over 4%.
Notably, since 2026, the scale of South Korean leveraged ETFs has expanded dramatically. According to The Kobeissi Letter, their assets under management have risen to a historical peak of approximately $45 billion, growing about 800% year-to-date. CICC statistics show the current total global size of South Korea-focused leveraged ETFs is $46.9 billion, accounting for 1.5% of South Korean stocks' free-float market capitalization. After the launch of domestic South Korean single-stock leveraged ETFs, capital and trading have become highly concentrated in semiconductor heavyweights like Samsung Electronics and SK Hynix. Previously, the Bank of Korea warned in its July 6th financial stability report that leveraged ETFs linked to individual stocks like Samsung Electronics and SK Hynix could exacerbate structural concentration risks in the domestic stock market and amplify pro-cyclical market volatility.
Institutional Views
Looking ahead, CSOP Fund's view indicates that the core logic of this rebound is a triple resonance of "oversold rebound + industry catalysts + capital inflows," rather than mere sentiment-driven movement. In terms of potential, even after nearly a week of gains, sector valuations remain at historically extreme lows, with considerable distance from a reasonable central range. Regarding pace, short-term consolidation may follow the continuous rise, but a sustained recovery remains possible in the medium term.
CSOP Fund identifies three key variables to monitor: first, whether southbound capital inflows can be sustained rather than being a short-term pulse; second, whether AI industry catalysts can continue to materialize, particularly subsequent large model iterations and application scenario expansions; third, the impact of signals from the July Federal Reserve FOMC meeting on overseas liquidity expectations. If these factors align positively, the sector could transition from an oversold rebound to a fundamentally driven, trend-based upward movement.
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