Hong Kong's three major stock indices faced renewed downward pressure, with the Hang Seng TECH Index falling nearly 2% in the afternoon session. At the close, the Hang Seng Index was down 1.48% or 379.81 points at 25,253.4, with a total turnover of HK$270.23 billion. The Hang Seng China Enterprises Index fell 1.1% to 8,501.91, and the Hang Seng TECH Index dropped 1.61% to 4,975.36.
CCB International believes market expectations have been repeatedly revised since the start of the year. On the macro front, surging oil prices due to geopolitical conflicts have reversed market expectations for interest rate cuts. On the micro level, the memory supercycle and strong earnings from global tech giants have driven the continuation of the AI thematic rally. In the long term, this AI innovation cycle still has significant room for development, and "bubble" indicators have not reached unsustainable levels. However, crowded trading and front-running of expectations in the secondary market are likely to cause short-term volatility.
Blue Chip Performance
AIA Group Ltd (01299) trended lower throughout the day. At the close, it was down 6.75% at HK$76.7, with a turnover of HK$4.975 billion, dragging the Hang Seng Index down by approximately 92.53 points. UBS noted in a recent report that AIA's MCV insurance business differs from cross-border securities trading. This business has operated within the existing regulatory framework since 2004, with the core requirement being that insurance applications must be completed within Hong Kong. AIA also emphasized that the direction of this business aligns with the Greater Bay Area integration development strategy, such as establishing insurance service centers in the region to enhance cross-border customer service capabilities.
Among other blue chips, Techtronic Industries Co Ltd (00669) rose 1.69% to HK$120.4, contributing about 4.63 points to the Hang Seng Index. CITIC Ltd (00267) gained 1.39% to HK$13.82, contributing about 1.75 index points. Contemporary Amperex Technology Co., Limited (03750) fell 7.01% to HK$723.5, dragging the index down by about 11.49 points. CMOC Group Limited (03993) dropped 6.91% to HK$18.47, contributing to an index decline of about 8.14 points.
Key Sector Movements
In terms of market performance, major technology and internet stocks continued their decline, with Alibaba falling over 2% and Tencent down more than 1%. Semiconductor and chip industry chain stocks were active against the market trend. The cryptocurrency sell-off persisted, dragging down related concepts and ETFs. Rising energy prices pushing up inflation levels put pressure on non-ferrous metals. The optical communications concept, strong yesterday, saw profit-taking. The broader financial, automotive, and lithium battery sectors were generally lower.
Semiconductor Stocks Show Strength
Semiconductor stocks were active against the broader market decline. At the close, GigaDevice Semiconductor (Beijing) Inc (03986) rose 6.87% to HK$786.0. Hua Hong Semiconductor Ltd (01347) gained 3.16% to HK$156.5. Innoscience (Suzhou) Technology Co., Ltd. (02577) increased by 2.04% to HK$75.15. Montage Technology Co., Ltd. (06809) edged up 0.79% to HK$406.2.
According to the latest memory industry survey by TrendForce, first-quarter price increase forecasts for DRAM and NAND Flash products have been revised upward. The overall Conventional DRAM contract price is now expected to rise 90% to 95% quarter-over-quarter, up from the 55% to 60% increase forecast in early January. In power semiconductors, U.S.-listed Navitas Semiconductor's stock closed up 19.26% overnight. The company announced a collaboration with NVIDIA's MGX ecosystem to advance 800 VDC AI infrastructure. Navitas CEO Chris Allexandre stated that as AI workloads continue to expand, power delivery has become one of the most critical challenges in building next-generation gigawatt-scale AI factories.
Passive Components Gain Attention
The passive components concept was in favor. At the close, Man Yue Technology Holdings Limited (00894) surged 36.43% to HK$7.34. China Tianli Holdings Group Limited (00117) rose 2.78% to HK$7.4, having gained over 15% in the afternoon session.
Benefiting from the high growth in AI server demand, the passive component MLCC sector has seen strong recent momentum, with the positive trend spreading to aluminum electrolytic capacitors and film capacitors. Northeast Securities pointed out that the acceleration of server generation updates and the significant increase in single-rack power consumption form the fundamental support for the surge in capacitor demand. Data shows that an H100 server rack consumes 50kW, while NVIDIA's GB300 NVL72 full rack power consumption rises to 200kW, a 3.5-fold increase. The upcoming Rubin platform is expected to have single-rack power consumption exceeding 300kW, marking the official entry into an explosive growth phase for computing power density. With rack power consumption continuing to rise and the simultaneous expansion of GPUs, power delivery paths, and power supply components, the scale of capacitor usage and product value are experiencing multiplicative growth.
Metals Sector Under Pressure
Non-ferrous metal stocks were under pressure across the board. At the close, CMOC Group Limited (03993) fell 6.91% to HK$18.47. MMG Limited (01208) dropped 5.32% to HK$9.26. Jiangxi Copper Company Limited (00358) declined 4.33% to HK$36.7. Zijin Mining Group Company Limited (02259) was down 4.40% at HK$119.5.
On June 3 local time, the Federal Reserve's Beige Book indicated that rising energy prices are pushing up inflation levels. Since the second quarter of this year, repeated rebounds in U.S. inflation data, stronger-than-expected labor market resilience, coupled with renewed strength in global energy prices, have fundamentally shifted market expectations for Fed monetary policy. Cleveland Fed President Beth Hammack stated on Tuesday that if currently high inflation pressures intensify further, the Fed may need to restart interest rate hikes soon.
Cryptocurrency ETFs Continue Declines
Cryptocurrency ETFs extended their losses. At the close, CSOP SOL ETF (03460) fell 7.61% to HK$2.792. Bosera Bitcoin ETF (03008) dropped 5.49% to HK$4.886.
Bitcoin plunged today, briefly breaking below $62,000, hitting its lowest level since the Iran conflict and the lowest since February 6. Michael Saylor, Executive Chairman of MicroStrategy, is famous in the crypto community for his mantra "never sell Bitcoin." However, the company stated on Monday that it sold 32 bitcoins last week for a profit of about $2.5 million, planning to use the proceeds for preferred stock dividends. Other analysis suggests that the hot AI wave in the U.S. stock market and the successive launches of super IPOs may be continuously drawing funds away from the cryptocurrency space.
Notable Movers
Shougang LanzaTech (02553) saw a significant climb. At the close, it was up 62.58% at HK$34.24. Shougang LanzaTech is a company engaged in the carbon capture, utilization, and storage (CCUS) industry, primarily focusing on producing low-carbon products like ethanol and microbial protein through carbon capture and utilization technology. Currently, the company has successfully put four large-scale production facilities into operation across three different provinces in China.
Kingboard Laminates Holdings Ltd (00148) performed strongly. At the close, it rose 6.61% to HK$66.9. Citi issued a research report raising the target price for Kingboard Group from HK$65 to HK$90, maintaining a "Buy" rating. Based on a sum-of-the-parts valuation, Citi expects a 2027 P/E of about 10 times and raised its 2026 to 2028 profit forecasts by 34% to 53%, primarily benefiting from better-than-expected price increases for Kingboard Laminates' electronic glass fiber cloth.
ZTE Corporation (00763) moved higher against the market trend. At the close, it gained 5.27% to HK$28.38. ZTE's WeChat public account revealed that the company is actively engaging in ecosystem cooperation, partnering deeply with Tencent to launch an AI cloud computer equipped with Tencent's native WorkBuddy. This integrates Tencent Cloud's computing power and Hunyuan large model capabilities, deeply adapting to the WorkBuddy intelligent agent and Tencent ecosystem applications, targeting students, professionals, one-person companies, and small teams.
Luye Pharma Group Ltd (02186) shares plunged. At the close, they were down 14.75% at HK$1.85. Luye Pharma announced its intention to simultaneously repurchase $180 million of its 6.25% convertible bonds due 2028. As of the announcement date, it had received commitments from bondholders to sell $89.74 million principal amount of the existing convertible bonds, with the remaining outstanding principal amount being $90.26 million. Additionally, the company proposed to issue $180 million of 5.25% convertible bonds due 2031, with net proceeds of approximately $177.2 million intended for refinancing existing debt and general corporate purposes.
Power Glory Development (01277) was under pressure throughout the day. At the close, it fell 8.96% to HK$1.93. Power Glory Development announced a proposed placement of 170 million new shares at a price of HK$1.85 per share, a discount of approximately 12.74% to the previous day's closing price. The net proceeds from the placement are expected to be approximately HK$309.3 million, which will be used mainly for procurement related to mining and transportation operations of its South African subsidiary, supplementing the working capital of MC Mining Limited, expenses related to the Sierra Leone rutile mine project, and other general working capital purposes.
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