Hong Kong Market Opens Higher with Tech and Semiconductor Stocks Leading Gains

The Hang Seng Index opened 1.11% higher on July 20th, while the Hang Seng Tech Index advanced 2.2%. The semiconductor sector showed notable strength.

Montage Tech (HKG: 06809) surged over 6%, Huahong Grace Semiconductor Manufacturing Corporation rose more than 4%, GigaDevice Semiconductor (Beijing) Inc. gained over 3%, and SMIC (HKG: 00981) climbed more than 2%.

Market Outlook and Analysis

Shenwan Hongyuan Group believes the current adjustment phase is nearing its conclusion. The institution notes that non-tech sectors adjusted first in May-June, followed by the tech sector in June-July, leading to a sufficient contraction in momentum and profit effects. This suggests the adjustment wave is poised to end. From a medium-term perspective, the AI industry trend remains the primary driver for major market moves, with the tech sector expected to continue leading gains.

Huatai Securities suggests the current rebound in Hong Kong stocks is primarily driven by a global rebalancing of funds, leading to short covering. The rally represents a swift technical recovery from oversold sentiment. For allocation, the firm recommends focusing on oversold stocks that previously faced significant short-selling pressure, offer diversification benefits against AI hardware overperformance, and high-dividend defensive plays. Regarding the AI hardware supply chain, attention should be on leading domestic foundry players, where pullbacks may present accumulation opportunities.

Soochow Securities indicates the Hong Kong market is currently in a catch-up window. Short-term risk appetite recovery is driving the index rebound, but its sustainability faces potential headwinds. Catalysts for the Hong Kong market's rise include external factors (such as easing expectations for interest rate hikes and the spread of the US AI rally) and internal support (Hong Kong's lower valuations compared to A-shares). While short-term catch-up momentum is strong, driven by fund rebalancing, the rebound's extent and durability will depend on the pace of the US AI rally's diffusion, the earnings season performance, and economic data. The institution suggests actively seizing short-term catch-up opportunities, with a focus on mid-to-downstream AI sectors, innovative pharmaceuticals, and companies with significant overseas business.