Hong Kong stocks opened higher but closed lower today, with internet, auto, and mainland property shares broadly weakening, while only a few sectors such as application software managed to buck the trend. By the close, the Hang Seng Index fell 0.73% to 23,041.32 points, with total daily turnover of HK$178.348 billion; the Hang Seng Tech Index dropped 1.48% to 3,800.43 points. Among Hong Kong ETF products ranked by size, the Tracker Fund of Hong Kong (02800) fell 0.75% to HK$23.70; the CSOP SK Hynix Daily Leveraged 2x Product (07709) rose 10.37% to HK$20.86; and the Hang Seng China Enterprises Index ETF (02828) declined 0.62% to HK$79.60.
In terms of sector performance, AI trading financing has cooled at the funding end, and semiconductor equipment ETFs fell once again. By the close, the STAR Semiconductor Equipment ETF Huatai-PineBridge (588710.SH) dropped 6.67% to 0.672 yuan; the Semiconductor Equipment ETF Guotai (159516.SZ) fell 6.09% to 0.478 yuan; and the Semiconductor Equipment ETF ChinaAMC (562590.SH) declined 5.85% to 0.676 yuan. The source of this round of industry adjustment has shifted from the valuation side to the financing side. Since last week, overseas tech giants have launched equity financing of up to US$95 billion to support AI infrastructure, while bond prices of new cloud service providers have fallen to record lows, raising market doubts about whether "debt-driven" capital expenditure can deliver returns. During the same period, the 10-year U.S. Treasury yield has been running at a high level near 5%, and ahead of this week's FOMC meeting, rate hike pricing for December remains near 80%, with the longest-duration growth assets bearing the brunt. Although the Philadelphia Semiconductor Index rebounded about 3% overnight, it failed to transmit to the domestic market, and semiconductor equipment, which had posted considerable gains and had highly concentrated positioning, instead became a source of profit-taking. It is also worth noting that on October 27, Musk publicly warned that "in the past few weeks, if companies do not have substantial revenue outside of AI data centers, the debt market has almost stopped financing them, and at least 200 new cloud companies face bankruptcy or consolidation." Jefferies analysts believe Musk's remarks triggered a new round of panic trading. On the industry side, CITIC Securities still judges that new equipment orders in the third quarter of 2026 will maintain strong momentum, and the industry remains optimistic about demand for more than the next three years. This round of order acceleration could extend to 2028/2029—meaning that price adjustments mainly come from valuation and positioning rather than a reversal in industry prosperity.
With the election result reversing and fiscal expectations falling through, Brazilian ETFs hit limit-down for consecutive days. By the close, the Brazil ETF E Fund (520870.SH) fell 10.02% to 1.051 yuan; the Brazil ETF ChinaAMC (159100.SZ) dropped 10.01% to 1.052 yuan. On local time October 25, the second round of Brazil's presidential election ended, with the incumbent president reversing the outcome with 51.79% of the vote to defeat the opposition candidate who received 48.21%, becoming the first elected president since the restoration of direct elections in 1989 to trail in the first round and then come back to win in the second. Previously, prediction markets had given his opponent about an 80% chance of winning, forcing concentrated unwinding of positioned bets and triggering a chain reaction. On October 26, Brazilian assets suffered a triple blow across stocks, bonds, and the currency: the benchmark stock index gapped down more than 10% and triggered a circuit breaker, closing down 13.88% at 176,606 points, the first circuit breaker since March 2020; the real depreciated by nearly 12% against the dollar at one point; 5-year sovereign CDS surged nearly 25% to 151.67 basis points; the Ministry of Finance canceled government bond auctions originally scheduled for October 27 and 29; and January 2031 interest rate futures soared 182 basis points. The market worries that expansionary spending promised during the campaign will further erode fiscal discipline—public debt has already exceeded 82% of GDP, the policy rate remains as high as 13.75%, and the rate-cut path has been forced to be pushed back. Deutsche Bank Global Head of Macro Jim Reid said: "The market had already fully priced in a Bolsonaro victory, and this election result completely disrupted the market's rhythm… Investors had originally expected a better window for fiscal consolidation."
With tighter supply-side signals combined with geopolitical disruptions, oil and gas ETFs rose against the trend. By the close, the S&P Oil & Gas ETF Fullgoal (513350.SH) gained 3.58% to 1.506 yuan; the S&P Oil & Gas ETF Harvest (159518.SZ) rose 2.83% to 1.415 yuan. Marginal tightening on the supply side outweighed sluggish demand. Since late October, attacks on pipeline pumping stations and airports in major oil-producing countries have repeatedly occurred, commercial shipping disruptions in the Strait of Hormuz and the Bab-el-Mandeb Strait have been repriced, and October became the worst month for merchant vessel attacks in and around the Strait of Hormuz. OPEC+ continued production cuts to support the market, U.S. strategic petroleum reserves fell to 282.6 million barrels, the lowest since October 1982, and the head of the International Energy Agency also reiterated supply concerns. Brent crude on October 27 still traded at a high level near US$115 per barrel, and CITIC Securities judged that "supply constraints continue," with crude oil expected to fluctuate at high levels and coal potentially rising during peak season.
Among institutional views, Zhongtai International pointed out that the market rebounded on Monday but turnover fell by nearly 30%, reflecting strong wait-and-see sentiment. The disclosed third-quarter earnings samples were mixed and generally lacked surprises. With the Federal Reserve meeting and U.S. midterm elections approaching, pre-election risk aversion may keep funds on the sidelines. It expects the Hang Seng Index to face resistance at 23,500 points. Huatai Securities believes that last week the Hang Seng Index and Hang Seng Tech fell 4.5% and 5.8% respectively, with Hang Seng Tech hitting a new low since September 2024. The sentiment index is already close to the full-position threshold but has not triggered a signal, and bottom-fishing opportunities may still require waiting for sentiment to be fully released. In terms of allocation, medium-term constraints such as high oil prices and high U.S. Treasury yields remain unresolved, so it is better to respond structurally rather than chase beta, with dividends continuing to serve as the base position (operational assets such as railways, highways, and ports); innovative drugs and CXO leaders still have upward medium-term earnings, but southbound profit-taking is still being realized, so there is no rush to buy on dips.
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