Hong Kong's three major indices opened lower and extended losses through the morning session. By the midday close, the Hang Seng Index had fallen 2.87% to 22,971.63, the Hang Seng Tech Index had dropped 4.64%, and the China Enterprises Index had declined 3.12%.
Across the board, internet technology stocks broadly declined, with Lenovo Group Ltd (ASX: 00992) shares falling more than 8% and NetEase dropping over 6%. Memory chip concept stocks bucked the trend, with the Southern Maximum Two Times Long Hynix product gaining over 10%. Lithium battery shares suffered sharp losses, with CATL declining more than 10%. Automobile stocks were among the biggest decliners, with Voyah Auto falling over 4%.
The optical communication sector led declines, as Yangtze Optical Fibre and Cable dropped more than 9%. Meta released its third-quarter earnings report, raising its full-year 2026 capital expenditure forecast to $135 billion to $145 billion, lifting the lower end of the range by $5 billion from $130 billion.
Tesla's earnings report showed third-quarter capital expenditure of $4.73 billion, more than double the same period last year, but approximately $1 billion less than the second quarter. Tesla simultaneously lowered its full-year 2026 capital expenditure target from over $25 billion to approximately $20 billion, a reduction of about 20%.
Founder Securities previously published a research report noting that continued expansion of cloud厂商 capital expenditure is an important support for this round of AI hardware market momentum, but rising investment scale and stock price gains do not always move in sync. Whether the market expectation that cloud厂商 capital expenditure growth has peaked proves valid may have significant guiding implications for the sustainability of future AI hardware stock performance.
AI application stocks collectively fell, with Zhipu dropping over 8%. The U.S. Department of Homeland Security previously issued a notice on October 20 prohibiting federal civilian employees from using DeepSeek and third-party services developed based on that model, and requiring its removal from federal civilian agency IT systems. The signal is clear: policy risks for Chinese large models in overseas markets are moving from "discussion" into the "execution" phase. For AI application stocks whose valuations depend heavily on long-term penetration rate assumptions, any evidence pointing to an "overseas ceiling" will trigger valuation downgrades.
Lithium battery stocks continued to decline, with CATL falling more than 5%. CATL's third-quarter net profit was 21.2 billion yuan, up 15% year-on-year, yet 12% below Morgan Stanley's expectations, with unit net profit margin plunging from 0.10 yuan per watt-hour to 0.08 yuan per watt-hour. Deteriorating product mix combined with 1.5 billion yuan in new consumption tax costs, while energy storage market price wars compressed quality premiums. Morgan Stanley warned that consensus earnings expectations face substantial downward revisions, but maintained its overweight rating on the stock.
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