Hong Kong's three major stock indexes ended mixed on Monday as surging long-dated bond yields across multiple countries weighed on risk appetite, with investors awaiting the Federal Reserve's July monetary policy meeting minutes. The Hang Seng Index closed up 0.09% or 23.92 points at 25,495.07, with total turnover reaching HK$253.175 billion. The Hang Seng China Enterprises Index rose 0.21% to 8,471.21 points, while the Hang Seng Tech Index fell 1.21% to 4,682.05 points.
Huatai Securities noted that Hong Kong stock valuations have now recovered to neutral levels. With no fundamental change in long-term earnings expectations, the current ERP gap from the 2025 low stands at less than 1%. From a global perspective, the Hang Seng Index valuation is close to levels supported by global liquidity indicators. Looking ahead, further valuation gains will require either progress in AI initiatives by Hong Kong-listed companies and rising earnings delivery expectations, or stronger domestic demand policies and recovery expectations.
Where to focus
Xiaomi Corp (01810) defied the broader market weakness, climbing 4.81% to HK$27.44 by the close, with turnover of HK$9.342 billion and contributing 34.93 points to the index. The company reported second-quarter total revenue of RMB 108.9 billion, up 9.9% quarter-on-quarter, with adjusted net profit of RMB 6.2 billion, up 2.4% quarter-on-quarter. Smartphone ASP hit a record high, with gross margin of 8.5% beating market expectations. Xiaomi President Lu Weibing stated that the company will launch flagship smartphones in the second half of the year, along with the official release of the Xiaomi Automobile Pengcheng series, expressing confidence in second-half performance.
Other blue-chip movers included HK & China Gas (00003), which rose 7.37% to HK$7.285, contributing 8.63 points to the Hang Seng Index; New Oriental-S (09901), which gained 4.17% to HK$42.98, adding 2.02 points; China Unicom (00762), which dropped 12.36% to HK$5.495, dragging the index down 7.24 points; and China Resources Beer (00291), which fell 4.96% to HK$21.06, subtracting 2.78 points.
Sector highlights
Large technology names were mixed, with Xiaomi surging nearly 5% after earnings and Tencent rising over 1%, while Alibaba fell nearly 2%. AI hardware stocks including optical communications and semiconductors suffered heavy losses amid the long-bond selloff. Commercial spaceflight stocks initially surged following Zhuque-3's successful land recovery of its rocket booster but later reversed lower. Robotics concept stocks pulled back significantly as UBTech's listing created a siphoning effect. Biopharmaceuticals, non-ferrous metals, and aviation stocks also declined, while mainland banks, shipping, and coal stocks bucked the trend.
AI hardware stocks were sold off across the board. By the close, Hua Hong Semiconductor (01347) plunged 11.79% to HK$113.7; CIG (06166) fell 11.73% to HK$89.15; YOFC (06869) dropped 10.19% to HK$131.3; and ZJ Innolight (03308) declined 10.06% to HK$1,100. Driven by inflation, fiscal deficits, and the AI financing boom, long-term sovereign bonds in the US, Germany, France, the UK, and Japan faced heavy selling, with 30-year US Treasury yields surging to their highest level since 2007, putting pressure on long-duration, high-valuation growth and technology stocks. Additionally, OpenAI revealed that its revenue grew to only $6.7 billion in the three months through June, compared to $5.7 billion in the first quarter, while Q2 losses widened further. Markets are concerned that slowing downstream large-model revenue growth and expanding losses may lead customers to scale back procurement expectations for servers, optical communications, and memory chips.
Robotics concept stocks saw broad declines. By the close, Estun (02715) fell 14.2% to HK$17.76; Dobot (02432) dropped 11.21% to HK$24.72; and Sanhua Intelligent Controls (02050) declined 5.78% to HK$26.74. UBTech officially listed on the STAR Market today, opening at RMB 1,100 per share, a 629% surge from its IPO price of RMB 150.80, with intraday gains exceeding 700% at one point. Market analysts believe that mega tech IPOs attract significant institutional capital away from existing robotics concept stocks as funds reposition into new listings, intensifying divergence within the sector. However, over the medium to long term, UBTech's A-share listing marks a shift in the technology weighting of China's capital markets from mobile internet to embodied intelligence, which will attract more systematic long-term capital allocation into the humanoid robotics track.
Commercial spaceflight stocks opened higher but reversed lower. By the close, Junda (02865) fell 8.73% to HK$17.45, and Goldwind (02208) dropped 8.33% to HK$10.02. The Zhuque-3 Y2 carrier rocket launched from the Dongfeng Commercial Space Innovation Pilot Zone, with the first stage successfully landing at the Zhuque-3 landing pad in Minqin County, Gansu Province. Notably, this mission marked China's first successful land-based controlled recovery of a reusable carrier rocket first stage using landing legs, following the sea-based net recovery of the Long March 10B rocket first stage on July 10, representing a significant breakthrough in China's reusable rocket technology.
Mainland bank stocks rose against the market trend. By the close, Chongqing Rural Commercial Bank (03618) gained 2.86% to HK$6.48; China CITIC Bank (00998) rose 2.2% to HK$7.675; and Agricultural Bank of China (01288) advanced 2.13% to HK$6.22. Latest data from the National Financial Regulatory Administration showed that commercial banks' net interest margin stood at 1.41% at the end of the second quarter, up 1 basis point from the low at the end of the first quarter. Over a longer time frame, this marks the first quarter-on-quarter positive growth in commercial banks' NIM since the first quarter of 2022, breaking a four-year trend. Additionally, Huachuang Securities pointed out that high dividends and low valuations remain the core characteristics of bank stocks, particularly against a backdrop of declining risk-free rates, where the bond-like attributes of bank stocks will continue to attract steady capital.
Stocks in focus
Xunfei Healthcare (02506) remained strong throughout the session, closing up 12.47% at HK$71.25. The company reported first-half revenue of RMB 446 million, up 49.4% year-on-year, significantly exceeding market expectations. Gross profit reached RMB 236 million, up 53.5% year-on-year, with gross margin of 52.9%, up 1.4 percentage points. In terms of business segments, the AI diagnosis and treatment assistant contributed revenue of RMB 202 million, up 47.5% year-on-year, accounting for 45.2% of total revenue, continuing to solidify its position as the core business.
HK & China Gas (00003) advanced after announcing its interim results, closing up 7.37% at HK$7.285. The company reported 2026 interim revenue of HK$29.526 billion, up 7.31% year-on-year. Growth businesses achieved breakthrough progress, with operating profit surging threefold during the period. Profit attributable to shareholders rose 23% year-on-year to HK$3.64 billion, with basic earnings per share of 19.5 HK cents and an interim dividend of 12 HK cents per share.
China Unicom (00762) shares plunged 12.36% to HK$5.495. The company reported first-half operating revenue of RMB 201.364 billion, up 0.6% year-on-year, while net profit attributable to shareholders fell 34.8% to RMB 4.139 billion, a decrease of approximately RMB 2.2 billion compared to the same period last year. The company attributed the quarterly earnings volatility to multiple factors, including VAT and changes in the pace of labor cost investment.
Huaneng Power International (00902) remained under pressure throughout the day, closing down 5.36% at HK$5.385. The company reported first-half revenue of RMB 106.909 billion, down 4.57% year-on-year, with net profit attributable to shareholders of RMB 6.586 billion, down 28.89% year-on-year. Based on calculations, second-quarter net profit was RMB 2.102 billion, a 53% decline from RMB 4.484 billion in the first quarter.
China Resources Beer (00291) reversed lower in the afternoon, closing down 4.96% at HK$21.06. The company reported first-half revenue of RMB 24.24 billion, up 1.24% year-on-year, with profit attributable to shareholders of RMB 5.169 billion, down 10.71% year-on-year. Basic earnings per share stood at RMB 1.59, with an interim dividend of RMB 0.446 per share, compared to RMB 0.464 in the same period last year.
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