Hong Kong's major indices extended their declines, with the Hang Seng Index falling for a sixth consecutive session. The drop came as renewed tensions between the US and Iran dampened risk appetite, while investors awaited the release of key US inflation data later in the day.
At the close, the Hang Seng Index was down 0.64% or 157.94 points at 24,407.96, with a total turnover of HK$320.55 billion. The Hang Seng China Enterprises Index dipped 0.07% to 8,318.73, and the Hang Seng Tech Index fell 0.94% to 4,724.79.
CMB International Securities suggests the negative factors for the Hong Kong market are nearly exhausted, leaving it in a structural bottom with a floor below and awaiting catalysts for an upward move. The broker believes short-term gains depend on two catalysts: a revaluation driven by AI and a marginal recovery in corporate earnings, with the August interim results season being a key validation point.
The brokerage recommends following three main themes for portfolio positioning. Tech stocks, particularly leading internet names, have already priced in pessimistic expectations with their current valuations. The high-dividend strategy offers prominent value as a defensive core holding. Base metals, benefiting from geopolitical tensions and resource security strategies, still possess price elasticity.
Performance of Blue-Chip Stocks
TENCENT (00700) continued its advance. By the close, it was up 2.74% at HK$465.6, with a turnover of HK$16.62 billion, contributing 53.64 points to the Hang Seng Index. Bank of America Securities noted that the launch of the WeChat AI Agent has made more substantive progress. Yesterday's share price increase was mainly attributed to connection testing between the WeChat AI Agent and mini-program developers, along with more service providers recently joining the WeChat Agent pilot program. The broker reiterated its "Buy" rating, with Tencent remaining its top pick in the China internet sector.
Among other blue chips, Geely Automobile Holdings Ltd (00175) rose 4.04% to HK$19.32, contributing 7.44 points. NetEase, Inc. (09999) gained 3.79% to HK$194.4, contributing 17.22 points. Contemporary Amperex Technology Co., Limited (03750) fell 5.43% to HK$653.5, dragging the index down by 11.86 points. HSBC Holdings plc (00005) dropped 4.79% to HK$135.3, weighing on the index by 96.27 points.
Key Sector Movements
On the market, most major technology stocks traded in positive territory, with Kuaishou and NetEase up over 3%, Tencent rising more than 2%, while Alibaba continued its decline, down 2%. The market displayed defensive characteristics, with large financial stocks like domestic banks and insurers bucking the downtrend to move higher. Telecom stocks also advanced, with China Unicom surging over 6% at one point during the morning session. Innovative drug and restaurant stocks generally performed well.
Conversely, optical communications concepts plunged following a SemiAnalysis report pointing to delays in two key technologies. Spot gold fell below $4,200, triggering a collective slump in gold stocks. Semiconductor, mobile phone supply chain, coal, and Hong Kong banking stocks all faced pressure.
1. Large Financial Stocks Rise Against Market Trend
By the close, China Merchants Securities Co., Ltd. (06099) was up 3.30% at HK$15.33. Agricultural Bank of China Limited (01288) rose 1.22% to HK$5.80. China Life Insurance Company Limited (02628) gained 3.00% to HK$28.2. China Pacific Insurance (Group) Co., Ltd. (02328) increased 2.70% to HK$15.23.
China Galaxy Securities notes that the banking sector possesses defensive beta attributes, reflected not only in operational stability and resilience to volatility but also in consistent dividend returns and the safety margin provided by low valuations. Soochow Securities points out that non-bank financials currently still have low average valuations, offering a safety margin and a balance of offensive and defensive characteristics.
Firstly, the insurance industry benefits from economic recovery and rising interest rates. The proportion of savings-type product sales has increased significantly, and the broker expects continued improvement on the liability side, remaining optimistic about the long-term development space for health and pension insurance. Secondly, the transformation of the securities industry is expected to bring new business growth points.
2. Optical Communications Concepts Plunge Across the Board
By the close, YOFC (06869) had tumbled 9.40% to HK$231.4. Cambridge Industries Group Limited (06166) fell 7.32% to HK$121.5. Foxconn Interconnect Technology Limited (06088) dropped 7.31% to HK$7.23. Wai Kee Holdings Limited (01729) declined 6.89% to HK$16.49.
The prominent AI industry analysis firm SemiAnalysis released a report directly pointing to delays in two core technological paths for AI data centers. The report suggests that Nvidia's 800VDC power architecture shipments will be postponed to 2028, while the mass production of CPO (Co-Packaged Optics) may be delayed until 2028 or even 2029.
Separate reports indicated that Nvidia's networking division executives presented a starkly opposite, optimistic stance on CPO prospects, explicitly stating "CPO is the most exciting technology right now" and claiming that volume shipments would begin in the second half of this year. Some analysts believe the volatility in the computing power sector is more related to trading factors following the previous significant rally.
3. Hong Kong Banking Stocks Extend Losses
By the close, STANCHART (02888) was down 4.83% at HK$189.3. HSBC Holdings plc (00005) fell 4.79% to HK$135.3. Bank of China (Hong Kong) Limited (02388) declined 3.38% to HK$46.28.
Regarding the recent market focus on mainland investors opening Hong Kong bank accounts, a spokesperson for the Hong Kong Monetary Authority stated on June 6 that mainland clients can still apply for Hong Kong bank accounts normally. Overall, the account opening process is operating smoothly, and Hong Kong regulators have maintained close and regular communication with mainland regulators.
Morgan Stanley noted that both HSBC and Standard Chartered have stated their operations fully comply with regulatory guidelines and expect limited impact on their wealth management businesses. JPMorgan estimates that business related to mainland visitors will contribute only about 2% to HSBC and Standard Chartered's revenue in 2025. This includes wealth management fees and net interest income from deposit spreads from both existing and new mainland visitor banking clients.
4. Gold Stocks Suffer Another Heavy Blow
By the close, CHIFENG GOLD (06693) had plunged 7.76% to HK$24.96. Lingbao Gold Group Ltd (03330) fell 5.06% to HK$13.13. Zijin Mining Group Company Limited (02259) dropped 4.79% to HK$103.3. Shandong Gold Mining Co., Ltd. (01787) declined 4.36% to HK$21.08.
On June 10, spot gold fell below $4,200 per ounce during the session, hitting a new two-and-a-half-month low. It is reported that Friday's US non-farm payroll data far exceeded market expectations, fueling expectations for a Federal Reserve rate hike. The US CPI data to be released tonight may have a further impact on future gold prices.
A Citigroup report stated that to maintain the current gold price level, physical gold purchases need to continue at a pace of about $900 billion annually. The bank is concerned that if the Strait of Hormuz remains closed throughout the summer, gold purchases could drop to $700-750 billion per year. This would mechanically push gold prices back to levels seen 9 to 10 months ago, around $3,500 per ounce.
Notable Movers
Geely Automobile Holdings Ltd (00175) delivered a standout performance. By the close, it was up 4.04% at HK$19.32. Citigroup released a research note stating that after attending Geely's Intelligent Driving G-ASD 4.0 Investor Day, it felt generally positive about the meeting content and initiated a 90-day upside catalyst watch. The broker expects June export sales to exceed 100,000 vehicles and raised its 2026 export target from 780,000 to 1 million vehicles. It believes the i-HEV technology will help Geely capture market share in overseas internal combustion engine markets with its strong performance and cost advantages.
POP MART (09992) saw its share price rise. By the close, it was up 2.73% at HK$173.1. According to reports, Si De, Chief Operating Officer of Pop Mart, disclosed that last year, non-Labubu products accounted for about 50% of total revenue in the US market. In markets like Japan, South Korea, and Southeast Asia, non-Labubu series products already constitute the majority. Si De stated that other IPs, such as the Star Man series, are growing robustly but are overshadowed by Labubu's popularity, noting that Star Man is one of the company's fastest-growing IPs in Asia.
China Dongxiang (Group) Co., Ltd. (03818) issued a profit warning. By the close, it had plummeted 10.81% to HK$0.33. China Dongxiang warned that it expects to record a net loss attributable to the company's equity holders not exceeding RMB 1.8 billion for the financial year ending March 31, 2026 (2025/2026 fiscal year), compared to a net profit attributable to the company's equity holders of approximately RMB 2.07 billion for the year ended March 31, 2025.
Cathay Pacific Airways Limited (00293) remained under pressure throughout the day. By the close, it was down 6.87% at HK$11.93. Swire Pacific announced that its wholly-owned subsidiary, Swire Pacific Finance, issued HK$4.7 billion principal amount of convertible bonds, with an initial exchange price of HK$13.18 per Cathay Pacific share. Assuming full conversion of the bonds at the exchange price, approximately 357 million Cathay Pacific shares would be issued, representing about 5.9% of the issued share capital post-exchange. Swire Pacific's shareholding would decrease to 39.2%, remaining the largest single shareholder.
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