According to Zhi Tong Finance APP, expectations for overseas rate hikes heated up again, and all three major Hong Kong stock indices fell collectively today, with the Hang Seng Tech Index performing the worst.
On the market, tech internet stocks and gold stocks led the decline, the optical communication chain that surged the previous day gave back gains, while pharmaceutical stocks were active against the trend.
As of market close, the Hang Seng Index fell 1.26% to 24,008.55 points, with full-day turnover of HK$202.652 billion; the Hang Seng Tech Index dropped 2.36% to 3,931.93 points.
In the Hong Kong ETF space, among products ranked by size, Tracker Fund of Hong Kong (02800) closed down 1.23% at HK$24.1; CSOP SK Hynix Daily Leveraged Max (2x) Product (07709) closed down 4.61% at HK$16.76; Hang Seng China Enterprises (02828) closed down 1.19% at HK$82.74.
Sector Performance
Gold Stocks: CPI Beat Expectations Ignites Rate Hike Bets, Sector Opens Lower but Climbs
As of market close, Gold Stock ETF Yongwin (517520.SH) fell 5.39% to 1.669 yuan; Gold Stock ETF Guotai (517400.SH) dropped 5.38% to 1.32 yuan; Gold Stock ETF Huaxia (159562.SZ) declined 5.26% to 1.819 yuan.
Data released by the US Bureau of Labor Statistics on November 10 showed that October CPI rose 0.4% month-on-month and core CPI rose 0.3% month-on-month, both exceeding market expectations of 0.3% and 0.2%, with the core increase staying at 0.3% for a third consecutive month, indicating that inflation stickiness has not eased significantly.
Following the data release, traders fully priced in a Fed rate hike in December and increased bets on a 50 basis point hike, with US Treasury yields and the dollar rising in tandem, while London gold closed down 2.53% overnight at $4,034 per ounce, significantly raising the opportunity cost of holding non-interest-bearing assets.
Fed Governor Waller further suggested that if core inflation remains around 0.3% or higher, a 50 basis point hike in December should be considered.
CICC research noted that inflation stickiness remains strong, with core CPI rising 0.3% month-on-month for a third consecutive month, supporting the Fed to continue raising rates.
China Merchants Securities stated that a December rate hike is almost certain, but warned of the risk of accelerated tightening in December, noting that given the initial effectiveness of prior tightening, the probability of an accelerated hike is relatively low.
Hong Kong Internet Stocks: Rising Rate Pricing Lifts Discount Rates, Platform Stocks Under Broad Pressure
As of market close, Hong Kong Stock Connect Internet ETF E Fund (513040.SH) fell 3.35% to 0.836 yuan; Hong Kong Internet ETF Huabao (513770.SH) dropped 3.32% to 0.32 yuan; China Concept Internet ETF E Fund (513050.SH) declined 3.32% to 0.961 yuan.
Driven by rate hike expectations, the 10-year US Treasury yield once again touched the 5% mark, and Hong Kong stocks, as an offshore market, are highly sensitive to overseas interest rate and liquidity expectations, with heavyweight platform stocks falling collectively on the day, becoming the main drag on the index.
The Hang Seng Internet Technology Index retreated during the session to its lowest range since September 2024, with the latest PE-TTM at approximately 22.26 times, sitting at the 23.82% percentile over the past 10 years.
CICC maintained its baseline judgment of a 25 basis point hike in December, believing that current US inflation pressure is relatively high and supports continued rate hikes, but the necessity for accelerating hikes is not strong; Guolian Minsheng Securities warned that a single 50 basis point move is an extremely strong policy signal that could directly disrupt the asset pricing center.
It is worth noting that starting next week, Hong Kong internet giants will concentrate on disclosing their third-quarter earnings reports, and with the earnings verification window approaching, funds are actively reducing positions ahead of the financial reports.
Institutional Views
Xu Guanghong, Chief Overseas Strategy Analyst at CITIC Securities, believes that in 2027, the continued advancement of Stock Connect reforms and the opening of insurance fund investment in Hong Kong Stock Connect ETFs are expected to drive accelerated southbound capital inflows into the Hong Kong stock market. If overseas liquidity pressures ease and domestic fundamentals and earnings continue to recover, the trend of foreign capital returning is expected to continue.
Regarding the Fed, considering that the better-than-expected US September inflation data did not push US Treasury yields persistently higher, if Middle East tensions ease and drive energy prices and inflation lower, the Fed may restart rate cuts in the second half of 2027.
In terms of specific allocation, Xu Guanghong believes that before external disruptions ease, priority should be given to sectors with solid cash flow and a good foundation for southbound capital allocation, such as utilities, telecommunications, and property management, to cope with market volatility. After external disruptions ease and domestic policy support and fundamental stabilization form a resonance, investors can then opportunistically increase allocations to sectors such as machinery, textiles and apparel, and food and beverages, to capture valuation repair and dividend growth opportunities brought by earnings improvement.
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