Hong Kong markets maintained a volatile trajectory today, with the three major indices showing divergent performances, while the Hang Seng Tech Index demonstrated relative strength. The concentrated release of momentum from an oversold rebound propelled technology-related ETFs, particularly in semiconductors and chips, to strong gains throughout the session. The STAR 50 Index staged a notable deep V-shaped intraday recovery, leading to a collective surge in its associated ETFs.
At the close, the Hang Seng Index edged down 0.04% to 25,132.29 points, with a total turnover of HK$289.943 billion. The Hang Seng Tech Index climbed 1.32% to 4,814.83 points. Among major Hong Kong-listed ETFs by size, the Tracker Fund (02800) closed up 0.08% at HK$25.6. The CSOP 2x Long SK Hynix ETF (07709) surged 9.93% to HK$57.8. The Hang Seng China Enterprises Index ETF (02828) closed virtually flat, down 0.02% at HK$86.
Market Sector Performance Overview
The oversold rebound momentum was concentrated, driving strong performance for technology-related ETFs focused on semiconductors and chips all day. By the close, the ChinaAMC STAR Semiconductor ETF (588170.SH) soared 19.02% to 1.070 yuan. The Huatai-PineBridge STAR Semiconductor Equipment ETF (588710.SH) jumped 18.97% to 3.33 yuan. The China Universal STAR Chip ETF (588750.SH) gained 14.07% to 2.692 yuan.
UBS Securities China equity strategist Meng Lei noted recent intense volatility in global capital markets, with a broad rise in implied volatility. However, after some alleviation of crowded trading in the tech sector, technology and AI remain the key market themes for the second half. Historically, it takes mutual funds about three years to raise their overweight allocation in a specific sector from a previous low to a peak level, which aligns with the typical three-year window for overall market style formation and rotation.
JPMorgan believes factors supporting chip stocks include strong corporate earnings and the market's ongoing validation of the alignment between current valuations and stock prices. The supply-demand environment for the semiconductor industry remains positive, as a "massive" increase in chip supply is not expected before 2028. Despite recent weakness among memory chip makers, DRAM prices remain elevated. JPMorgan also indicated that the Relative Strength Index (RSI), a measure of overbought or oversold conditions, is approaching "oversold territory," and the momentum trading that previously drove sustained fund inflows into chip stocks has notably subsided.
STAR 50 Index and Associated Funds
The STAR 50 Index performed a deep V-shaped intraday rebound, leading to a collective rally in related ETFs. At the close, the Bosera STAR 50 ETF (02832) surged 10.47% to HK$13.72. The CSOP STAR Market 50 ETF (03109) rose 10.1% to HK$18.31. The ChinaAMC STAR 50 ETF (588000.SH) climbed 11.07% to 2.016 yuan.
Zhao Yang of Sealand Securities stated that this round of adjustment in tech stocks faces multiple exogenous disturbances, including hawkish signals from the Fed, renewed geopolitical risks, concerns over a slowdown in AI capital expenditure, worries about tech companies' earnings falling short, increased volatility in the Korean stock market, fears of capital siphoning due to CXMT's IPO, and emotional impact from Kimi K3's release. However, the core issue may be the concentrated release of trading congestion risk in the tech sector during an earnings vacuum period. In the short term, capital flow disturbances and the digestion of crowded positions can easily amplify market volatility, but the long-term fundamental logic of the sector may not have significantly weakened. Positive factors are accumulating in the market.
Wang Yiwei of Hua Fu Fund views AI as a relatively certain industrial main theme. For semiconductor-related investments, the focus in Q3 2026 will continue to be on advanced logic and the expansion of DRAM and NAND production, with related equipment and materials companies expected to benefit. Meanwhile, against the backdrop of tense geopolitical relations, the process of import substitution in areas like photoresist is likely to accelerate. Additionally, opportunities arising from price increases driven by domestic economic recovery will be actively pursued, with a focus on cyclical assets including analog chips and display panels.
CICC's view is that the industrial trend of the AI main theme persists, while other sectors are experiencing more of a low-level recovery. It is likely the market will return to the AI theme after adjustments. Recent increased volatility in the tech sector has lowered the opportunity cost of holding the Hang Seng Tech Index. Coupled with some fundamental positives and narrative catalysts, conditions for a low-level recovery have improved. However, the Hang Seng Tech and biotech sectors also fell sharply last Friday, indicating that high-risk assets relying solely on low valuations cannot remain unscathed during a period of contracting risk appetite. Given Hong Kong stocks' high exposure to the consumer sector and the significant weighting of large internet companies, stronger catalysts are still needed for a sustained rebound from the bottom: one type is fiscal stimulus similar to the "September 24 moment," and the other is a technological breakthrough akin to the "DeepSeek moment."
ETF Market Activity
The Huatai-PineBridge ChiNext New Energy ETF (159069.SZ) debuted today, closing up 3.89% at 0.988 yuan with a turnover of 553.934 million yuan. The fund tracks the ChiNext New Energy Index, covering multiple new energy sub-sectors such as batteries, photovoltaic equipment, automation equipment, wind power, and grid equipment.
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