On June 29, the Hang Seng Index opened 0.69% higher, while the Hang Seng Tech Index gained 1.6%.
Technology and internet stocks showed strength, with NetEase Inc (09999.HK) rising over 4%. Baidu Group Inc (09888.HK) advanced 4%, while Meituan (03690.HK) and JD.com Inc (09618.HK) both gained more than 3%. Alibaba Group Holding Ltd (09988.HK) increased over 2%.
Market Outlook and Analysis
Regarding the outlook for the Hong Kong market, some analysts believe a sustained trend of rising prices requires monitoring several factors: a recovery in overseas risk appetite; a broadening of the U.S. stock market's AI theme—if the focus shifts from upstream hardware to infrastructure and application software, Hong Kong stocks, which have significant weight in these areas, could benefit from a synchronized rally with U.S. and Chinese markets; and a catalyst from incremental capital inflows. The current risk-reward profile of the Hang Seng Tech Index is seen as highly attractive, but a lack of significant new capital in the short term means new catalysts are still needed.
Another perspective notes that Hong Kong stocks have significantly underperformed other major Asian markets since 2026, facing a triple pressure scenario. On the fundamental side, there has been concentrated downward revisions in earnings for heavyweight stocks. Profit expectations for internet platforms, the automotive supply chain, and related sectors have been sharply lowered, and upward revisions for hard tech companies have not been sufficient to offset this. On the valuation side, the U.S. dollar and U.S. Treasury yields have imposed dual constraints on the offshore market, leading to sustained foreign capital outflows. At the micro-trading level, the third quarter faces liquidity supply disruptions from IPOs and share lock-up expiries.
Further analysis of historical data suggests there is no clear negative correlation between fundraising activities and the broader market trend in Hong Kong; the relationship appears more pro-cyclical overall. Fundraising activities themselves are not necessarily a catalyst for ending a bull market and may even support stock prices in certain macroeconomic environments, though caution is still warranted during periods of high fundraising at market peaks. Compared to IPOs, the wave of share lock-up expiries occurring six months after listing tends to have a relatively larger negative impact on the Hong Kong market. Performance varies significantly across different sectors, with market capitalization and the proportion of shares becoming unrestricted being key factors affecting the performance of these stocks. The impact of share lock-up expiries is mostly concentrated at the individual stock level and generally does not create a systemic drag on the overall market.
Looking ahead to the second half of 2026, a high number of filed and queued listings is expected to keep IPO activity robust. Simultaneously, the latter half of the year will see a peak in share lock-up expiries, with September facing the most significant pressure. These expiries are highly concentrated in sectors like software services, gold, and precious metals. It is advisable to monitor stocks with high proportions of shares becoming unrestricted and the potential short-term price volatility for industry leaders when their lock-up periods end.
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