The long-beleaguered technology sector staged a broad rally today, though it failed to lift the benchmark index because the Hang Seng's tech weighting is too low. Instead, it siphoned liquidity away from other sectors, dragging the Hang Seng Index down 0.98%.
According to data released by the U.S. Bureau of Labor Statistics on Tuesday, October CPI rose 0.4% month-on-month, below September's 0.6% gain but above the 0.3% economists expected. Core CPI rose 0.3% month-on-month, matching September's pace but exceeding the 0.2% consensus. This marked the third consecutive month that headline CPI overshot Wall Street forecasts, and core CPI also posted back-to-back-to-back 0.3% monthly gains. A December rate hike by the Federal Reserve is now all but certain, with the only question being the magnitude. Some voices are already calling for a 50-basis-point increase. Ordinarily, rate hikes are bearish for tech stocks, but the dominant issue right now is that tech shares have fallen so hard that any spark can set them alight.
Foreign media reported that Microsoft has been pressuring the Trump administration to abandon plans to ban imports of optical transceivers from China used in AI data centers. The rationale: U.S. cloud providers have already purchased massive quantities of AI chips, but without optical modules those chips cannot connect and will simply sit idle. A ban could bring data center construction to a near standstill. Microsoft declined to comment, and both the White House and the FCC did not immediately respond to requests for comment. When news of the proposed restrictions on optical modules from certain countries first surfaced in August, it triggered a sustained selloff across global computing hardware stocks. Now the market is buying first and asking questions later, regardless of whether the ban will actually be approved.
Objectively speaking, both U.S. and A-share tech stocks have compelling reasons to rebound. Take Nvidia as an example. Jensen Huang is under investigation, and the stock has fallen for several consecutive days. The sector leader simply cannot keep sliding without consequences, and investment banks have started to speak up: Nvidia shares are ridiculously cheap, with the chipmaker's forward price-to-earnings ratio having dropped below 10x, signaling a prime buying opportunity. The stock is up more than 5% in pre-market trading. Meanwhile, Anthropic is preparing to go public. If tech stocks remain in the doldrums, how would it raise capital? The company disclosed in its IPO roadshow that revenue grew more than 45-fold over the past six quarters while computing costs rose only 10-fold, pushing gross margins above 85%. Yet the company has no intention of slowing down, continuing to bet heavily on computing power and data centers targeting the 40-trillion-dollar knowledge work market. Anthropic even set a long-term target of adjusted operating margins exceeding 35%. This has fueled intense investor demand, and Anthropic's underwriters are already considering raising the IPO price above the 70 to 78 dollar range disclosed in Tuesday's filing, with a target valuation potentially reaching 1.5 trillion dollars or even higher.
A higher valuation is naturally welcome, lifting everyone in the sector. Z.AI (02513), mentioned yesterday, plans to repurchase up to 4 billion Hong Kong dollars of H-shares and rose another 3% today. MINIMAX-W (00100) officially released MiniMax H3-Image with open weights, capable of generating a 4096 x 4096 pixel, approximately 16 MP 4K high-resolution image in 10 seconds, with rich realistic detail, strong instruction-following and multi-reference image understanding capabilities, gaining over 4%.
These factors combined to drive a full-scale rebound in AI technology hardware, with the most direct catalyst naturally being optical modules, the sector that had fallen the hardest. Leading optical module stocks had generally corrected more than 60%, leaving chips well cleared out. Bernstein projects the Nvidia ecosystem's optical communications market will reach 46.8 billion dollars by 2028, up 91% from 2027. China Mobile's 2027 procurement is expected to exceed 500 billion yuan. CIG (06166) disclosed an investor relations activity record Thursday evening, stating it had reached monthly capacity of approximately 1 million high-speed optical modules by early September and plans to expand annual capacity by at least 10 million more units before the end of 2027, while refuting rumors of order cuts from major North American customers. The stock surged more than 23% today. ZJ INNOLIGHT (03308) disclosed that major customer orders essentially cover all of 2027, with key customers already providing 2028 guidance, rising nearly 14%.
PCB stocks followed suit. According to Prismark data, 2026 output growth for 18-layer-plus multilayer boards, HDI, and packaging substrates is projected at 79%, 23%, and 28.8% respectively, far outpacing the sector's overall single-digit growth. Goldman Sachs estimates AI server CCL demand will reach 42 million sheets in 2026 and 131 million sheets by 2028, a compound annual growth rate of 77%. Based on Unimicron data, the PCB substrate material gap will be approximately 20% by 2027, making supply chain expansion capacity a key industry bottleneck. KINWONG (03228), DTECH (01377), Victory Giant Technology (02476), and Robotechnik (03757) all gained more than 10%. Hypersilicon (01191), focused on AI silicon photonics interconnection, rose over 14%. Fiber optic cable player YOFC (06869) gained more than 13%. These are all core names.
The current view on tech stocks is that this is an oversold rebound. Whether it can be sustained depends on: first, official statements on U.S. export control policy; second, the latest capital expenditure guidance from North American cloud providers; third, progress on 1.6T product certification with overseas customers. Of course, the trajectory of U.S. tech stocks is also critical. The strength in AI hardware naturally pressures software names, as the two sectors see-saw against each other.
BAIGE DIGITAL (02672), which had been the hottest momentum play recently, unexpectedly plunged near 3 p.m., closing down 72%. Such moves are fairly common in Hong Kong markets, typically in stocks that have been pushed up in a straight line with almost no correction. Once they hit a certain peak, profit-taking ensues, and without buyers to absorb the selling, a chain reaction of liquidations can follow, especially from leveraged funds facing automatic margin calls. So far, no negative news about the company has emerged. Its crash dragged down related AI agent stocks.
Anthropic engineer Felix used Fable5.2 to produce a game in 8 hours at a cost of 550 dollars. XD Inc. (02400) has an AI game creation tool called TapMaker that supports API calls to external models and can directly publish on its TapTap platform with ad monetization forming a closed loop. Domestic AAA game Shadow Blade Zero officially announced sales exceeding 4 million copies within 72 hours of launch, with TapTap PC and others handling PC distribution. From November 21 to December 27, XD Town and My Little Pony's second collaboration event will launch. According to prior Sensor Tower data, the My Little Pony IP collaboration and Valentine's Day event drove overseas single-day revenue above 2.5 million dollars. The stock rose more than 4% today.
A new giant is entering AI short dramas. JD.com is internally testing a standalone short drama product called JD Drama Welfare Club, using a free model with the core gameplay of watching dramas to earn rewards and buying products featured in shows directly with JD delivery. This creative concept is excellent, embedding products directly into short dramas for a win-win scenario. It provides a positive stimulus to the short drama industry overall. China Literature (00772), highlighted in yesterday's sector focus, continued to rise, while copyright leader Vobile Group (03738) gained more than 4%.
Sector Focus
China's National Press and Publication Administration released October 2026 domestic online game approval information, showing 195 games approved in October, including 183 domestic online games and 12 imported games. As of October, cumulative approvals for 2026 totaled 1,766, comprising 1,708 domestic games and 58 imported games. Additionally, data from the China Audio-video and Digital Publishing Association's Game Publishing Committee showed that in the third quarter of 2026, China's domestic game market actual sales revenue reached 92.522 billion yuan, up 1.36% quarter-on-quarter and 5.11% year-on-year. AI-enabled gaming democratization is a major driving force, and combined with the AI short drama boom, gaming stocks are expected to benefit. Key Hong Kong names: Tencent (00700), NetEase (09999), XD Inc. (02400), Kingsoft (03888), Bilibili-W (09626), and Tanwan (09890).
Stock Spotlight
China Merchants Port (00144): Overseas container volume growth continues to accelerate, driving profitability improvement. Recently, China Merchants Port signed a related-party structural leasing agreement worth over 635 million Hong Kong dollars, covering 22 Hambantota container equipment units. The company achieved operating revenue of 13.541 billion yuan in the first three quarters of 2026, up 6.11% year-on-year. Third-quarter revenue alone reached 4.593 billion yuan, up 6.98% year-on-year. First three quarters net profit attributable to shareholders was 4.169 billion yuan, up 9.51% year-on-year, with third-quarter net profit of 1.388 billion yuan, up 17.60% year-on-year. Commentary: The company's port main business profit exceeded expectations, with equity throughput ranking among the global leaders. Many overseas terminals are regional transshipment hubs occupying scarce shipping lane nodes. Overseas business gross margin is significantly higher than domestic at 57.4%, making it the core profit driver. Cash flow is ample and growing healthily, with operating cash flow growing 15% in sync with operating profit in the first half of 2026. The port segment revenue growth outpaced controlled terminal container volume growth at 13.2% versus 3.5%, mainly due to higher terminal rates and improved container mix, with revenue per TEU increasing year-on-year. Its independently controllable terminal operating system has been exported to 38 terminals in 7 overseas countries, paired with AI operations and maintenance and automated terminal retrofits to reduce costs and improve efficiency, making it one of the few Chinese operators capable of exporting port technology overseas. Overseas is the high-growth main line, with overseas container volume growth consistently outpacing domestic: Turkey's Kumport, Togo's LCT, and Brazil's TCP all show high growth. Turkey's Kumport has locked in long-term volume contracts. Togo's LCT is one of the few West African terminals capable of berthing 24,000 TEU vessels, with a solid transshipment position. The newly added Brazil Vast project completes the Latin American footprint. The Greater Bay Area home port base remains solid, with Shenzhen's western port area long leading the Greater Bay Area in foreign trade share, with throughput continuously hitting new highs as the domestic profit anchor, capturing Belt and Road and RCEP trade flows. The company's cargo volume is expected to maintain solid growth, and further profitability improvement through lean operations is viewed favorably. Benefiting from increased AI-related product cargo volumes, accelerated exports of Chinese high-end manufacturing, and emerging market economic growth, the company's terminal cargo volume is expected to keep growing. On the pricing side, overseas terminal fees are expected to continue rising, and revenue per TEU should maintain growth from container mix optimization. Additionally, the company is expected to continuously reduce costs and expenses through optimizing port operation processes, increasing automation ratios, and expense management, driving further profitability improvement.
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