The Hong Kong market experienced a gap-down opening, with the Hang Seng Index falling 0.64%, as investors remained cautious due to several pending negative catalysts and heightened geopolitical tensions. The market's fragile state was further rattled by renewed conflict between the US and Iran, though trading remained relatively stable throughout the day. The tech sector's decline was linked to a recent report from SemiAnalysis, which suggested delays in the implementation of 800VDC and CPO technologies. This news triggered a sell-off in the US optical communications sector, with stocks like Coherent, Lumentum, Ciena, Corning, and Arista all seeing significant drops. The performance of the Hong Kong tech sector continues to be heavily influenced by its US counterparts, with limited offset from domestic stimulus measures.
However, some material-related stocks bucked the trend and moved higher. For instance, GON TECHNOLOGY (ASX: 02768), highlighted in recent picks, surged over 10%. The company is investing over 3.8 billion in five new material projects, including polyimide (PI), photoresist, and PVT, directly targeting AI, semiconductor, and advanced packaging materials, and is also involved in PEEK robot materials.
The silicon wafer concept stock GCL Technology (03800), mentioned previously, rose over 5% following a substantial share buyback. Capital flowed towards safe-haven sectors, with major financials showing overall stability. The annual dividend season is underway, with listed banks announcing their 2025 profit distribution plans. With domestic deposit rates trending lower, the value of bank dividends has become more prominent, offering an average yield of around 4.5%. Smaller banks demonstrated greater elasticity, with Huishang Bank (03698) up over 6% and Qingdao Bank (03866) gaining over 4%. Insurance stocks also rose on dividend expectations.
At Apple's 2026 Worldwide Developers Conference, the company announced major AI updates for Siri and introduced Apple Intelligence. Concurrently, Tencent's WeChat revealed its own AI ecosystem plans, including allowing its AI Agent to analyze mini-program code and developing custom AI Agents. Meituan, Ctrip, Tongcheng, and JD.com have announced integration with WeChat's AI ecosystem, highlighting the intensifying competition for AI ecosystem dominance and traffic entry points. Related stocks like Tencent (00700) and Meituan (03690) advanced.
The market is focusing on AI applications with clear monetization paths. HyperG AI (02706), specializing in graph-model fusion technology for industrial scenarios, saw its shares jump nearly 10% as it enters a commercialization phase. Fubo Group (03738) rose over 6%, supported by its core copyright business and growth from its AI creation platform, DreamMaker, with plans for overseas computing power cooperation.
In the auto sector, GEELY AUTO (00175) stood out as one of the strongest performers, gaining over 4%. Its Xingyuan model topped May sales, and the company announced the upcoming launch of its 5th-generation Emgrand i-HEV hybrid. Overseas sales have also been strong.
Following news of China's planned massive investment in data centers, communication-related stocks benefited. China Communications Services (00552) rose over 5%, while telecom operators like China Unicom (00762) and China Telecom (00728) gained over 3%, driven by their computing power and AI infrastructure plans.
Ahead of the 2026 FIFA World Cup, A-share beer stocks rallied, though the Hong Kong market focused on baijiu producer Zhenjiu Li Du (06979), which rose over 3%. POP MART (09992) gained nearly 3% after its COO indicated diversified revenue sources beyond its Labubu IP.
The market is now closely watching the upcoming release of US May Consumer Price Index (CPI) and Producer Price Index (PPI) data. Expectations are for core CPI to accelerate, and this data will be a key reference for the Federal Reserve's upcoming meeting. According to the CME FedWatch Tool, traders have significantly increased bets on at least one rate hike by the end of 2026. A positive data surprise could potentially shift market sentiment.
Sector Spotlight
According to industry research, a new round of price hikes for packaging paper has been initiated in June by major producers, marking the seventh increase since April. Prices for containerboard and corrugated paper rose in May, and the uptrend is expected to continue into the peak season in the second half of the year, supported by improving supply-demand dynamics and cost controls. Key Hong Kong-listed players include ND PAPER (02689) and LEE & MAN PAPER (02314).
Stock in Focus
HAIER SMARTHOME (06690): The company conducted a significant A-share buyback, with the repurchased shares intended for future equity incentive plans. Its dividend payout ratio is targeted to increase. As a leader in high-end home appliances, its Casarte brand maintains a dominant market share in premium segments. The company is benefiting from strong domestic and overseas orders, with its smart home ecosystem and AI-powered appliances driving growth. Overseas expansion in emerging markets like Southeast Asia and India is progressing, with new factories coming online to boost local production and circumvent trade barriers, positioning international markets as a key growth engine.
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