Hong Kong Stocks Close Lower: Hang Seng Drops 1.22%, Lenovo Leads Blue Chips, Optical Communication Stocks Surge

Hong Kong's three major indices experienced a volatile downturn throughout the trading session, with the Hang Seng Tech Index falling over 2% intraday, as risk appetite waned due to persistent geopolitical tensions and hawkish signals from a Federal Reserve nominee. By the close, the Hang Seng Index had declined 1.22%, or 324.24 points, to 26,123.24, with a total turnover of HK$228.303 billion. The Hang Seng China Enterprises Index dropped 1.59% to 8,801.78, and the Hang Seng Tech Index decreased 1.93% to 4,963.94. Industrial Securities commented that while the situation in the Middle East may continue to fluctuate, the probability of escalation into a broader conflict has significantly diminished compared to before. The pace may resemble the cycle of "threat-détente-renewed tension" seen after the tariff shocks of April 2025. Despite potential geopolitical twists, April is expected to present a favorable window for long positions in Hong Kong stocks.

Among blue-chip stocks, LENOVO GROUP (00992) led the gainers. It closed up 5.73% at HK$11.63, with a turnover of HK$1.905 billion, contributing 6.83 points to the Hang Seng Index. On April 1st, Yang Yuanqing, Chairman and CEO of LENOVO GROUP, announced a new target at the company's fiscal year kickoff meeting: to achieve over US$100 billion in revenue within two years and transform Lenovo into an AI-native company. For the full fiscal year performance, Yang projected revenue could reach 560 billion yuan. Other blue chips included Geely Automobile (00175), which rose 2.13% to HK$24.9, contributing 5.42 points; PetroChina (00857), up 2.01% to HK$10.65, contributing 7.03 points; Contemporary Amperex Technology (03750), which fell 5.03% to HK$699, dragging the index down by 7.72 points; and Lao Feng Xiang Gold (06181), down 4.75% to HK$601.5, subtracting 3.02 points.

Sector-wise, major technology stocks generally faced pressure, with Alibaba down 3.52% and Tencent down 2.89%. The optical communication sector saw expanded gains in the afternoon. YOFC (06869) and CIG (06166) posted significant increases, benefiting from improved sentiment in the optical module industry and a simultaneous rise in volume and prices in the fiber optic market. AI sector newcomers also performed strongly, with stocks like Extreme Vision, Axera, Montage Technology, and Zhipu AI showing notable gains. Conversely, internet technology stocks, lithium battery shares, pork concept stocks, container shipping stocks, and gold equities were mostly under pressure. CATL fell over 5% following a product launch.

1. Optical fiber and module stocks extended their gains. By the close, CIG (06166) was up 21.08% at HK$152.2, and YOFC (06869) rose 17.16% to HK$247.2. TrendForce recently forecasted that the global market size for AI-specific optical (transceiver) modules would reach US$26 billion this year, a year-on-year increase of 57.6%. Separate data showed that five listed companies in the optical module sector have released their first-quarter reports. Among them, Zhongji Innolight led in performance growth, with Q1 revenue up 192.12% year-on-year and net profit attributable to shareholders surging 262.28%. Companies like Tianfu Communication and Shijia Photons also reported growth in both revenue and net profit. Furthermore, according to a CCTV Finance report, the fiber optic industry has shown a prosperous trend of "rising volume and prices" this year. A manager at a fiber optic manufacturer in Jiangsu reported that production and sales volume in Q1 increased nearly fivefold year-on-year, with prices experiencing explosive growth. The price for G.657.A2 fiber rose from 32 yuan per core kilometer last year to 240 yuan this year, a 650% increase.

2. AI sector newcomers performed notably well. At the close, Extreme Vision (06636) was up 25.15% at HK$122.4; Axera (00600) gained 11.08% to HK$24.06; Montage Technology (06809) rose 8.3% to HK$224.4; and Zhipu AI (02513) increased 3.79% to HK$986. From an industry trend perspective, AI is reshaping the investment landscape in Hong Kong stocks. China Merchants Securities stated that the "new vs. old" industrial structure divergence is intensifying. Sectors like AI commercialization and computing power construction, representing hard technology, boast high景气度 and have become the market's main focus. 2026 is seen as the first year for the AI industry's transition from computing infrastructure to commercial realization. Factors such as price hikes by leading cloud service providers and the listing of benchmark AI application stocks have significantly boosted market imagination regarding future profits in the tech sector. Guotai Junan Securities previously suggested gradually increasing allocations to Hong Kong's tech sector, which holds稀缺性 advantages, focusing particularly on the Hang Seng Internet Index and large models.

3. Internet technology stocks were generally under pressure. Tencent Holdings (00700) closed down 2.89% at HK$504, and Alibaba-SW (09988) fell 3.52% to HK$131.5. Federal Reserve nominee Christopher Waller, during a Senate hearing, sent signals perceived as more hawkish than market expectations, prompting markets to further scale back rate cut expectations. Waller stated he had made no promises to President Trump regarding interest rate cuts, attempting to assure senators considering his nomination that he would act independently of the White House while pushing for broad reforms. Additionally, the outlook for the Middle East situation remains unclear. Last night, Trump first threatened to bomb Iran but at the last moment extended a ceasefire agreement, awaiting Iran's final proposal. Reports today also indicated that Iran had received "some indications" that the US is prepared to lift its maritime blockade, though no further details were provided.

Notable movers included: 1. PATEO (02889) strengthened in the afternoon, closing up 7.46% at HK$9.08. PATEO announced on April 22nd that it had reached a strategic cooperation agreement with Horizon Robotics. The company became one of the first signed customers for Horizon's "Starlink" platform and signed a strategic partnership agreement. The two parties will leverage their complementary strengths in the smart vehicle sector to promote the integrated innovation of AI technology in smart cockpits, smart driving, and robotics, jointly creating platform-level solutions for automotive intelligence and localization.

2. MMG (01208) performed strongly, closing up 7.46% at HK$9.08. MMG reported that its total copper production (including cathode copper and copper contained in concentrate) for Q1 2026 was 128,700 tonnes, a 9% increase compared to Q1 2025. Copper-in-concentrate production from Las Bambas reached 101,000 tonnes, up 6% year-on-year, primarily due to improved metallurgical recovery rates, a benefit stemming from increased ore supply and higher ore grades from the Ferrobamba pit.

3. JOHNSON ELEC H (00179) issued a profit warning, closing down 17.06% at HK$21.3. JOHNSON ELEC H warned that amidst a persistently highly volatile and unpredictable global manufacturing environment, it expects revenue and gross profit margin to be broadly similar to the previous year. Profit attributable to shareholders for the year ending March 31 is forecast to decrease to between US$207 million and US$197 million, down approximately 21% to 25% from US$263 million in the prior year.

4. Yue Yuen Industrial (00551) saw its shares plunge, closing down 10.25% at HK$15.14. Yue Yuen issued a profit alert, expecting profit attributable to owners of the company for the three months ended March 31, 2026, to decrease by approximately 50% to 55% year-on-year. This was mainly due to demand volatility and the impact of retaliatory tariffs: manufacturing business revenue decreased by 5.5% compared to the same period last year, leading to operational deleveraging; rising labor costs; and capacity bottlenecks coupled with decreased production efficiency.

5. Muyuan Foods (02714) fell after earnings, closing down 6.14% at HK$40.02. On April 22nd, Muyuan released its Q1 2026 results, showing revenue of 29.894 billion yuan, down 17.10% year-on-year, and a net loss of 1.215 billion yuan, turning from a profit to a loss compared to the previous year. This was primarily attributed to declining live hog prices and reduced revenue.

6. Contemporary Amperex Technology (03750) was under pressure throughout the day, closing down 5.03% at HK$699. According to reports citing a term sheet reviewed by media, Sinopec (Hong Kong) plans to sell approximately 8.5 million H-shares of CATL for about US$768.5 million. The terms indicated an offering price range of HK$702.90 to HK$717.60 per share. If priced at the top of the range, the deal size would reach US$779 million. Sinopec currently holds 14.7 million CATL shares, making it the second-largest shareholder.