Global technology equities faced a brutal selloff that originated on Wall Street, with the Philadelphia Semiconductor Index (SOX) plunging 4.98% overnight as all 30 constituent stocks closed lower, marking the index's steepest single-day decline since late July. The rout cascaded across Asia, with South Korea's KOSPI composite index tumbling over 6% and triggering the exchange's SIDECAR mechanism, which halts programmatic selling to curb downward momentum. Japan's Nikkei 225 also slid more than 2% after opening sharply lower, while mainland Chinese markets saw hundreds of stocks hit their daily downside limits. Hong Kong's benchmark index managed a marginal 0.09% gain, though many individual stocks suffered significant losses.
This broad-based weakness stems from a confluence of headwinds. Geopolitical tensions in the Middle East remain intractable, with former President Trump reportedly instructing negotiation teams to suspend contact with Iran as both sides maintain uncompromising stances. Trump further stoked tensions by posting an image depicting the Strait of Hormuz as new American territory, despite the strait being effectively controlled by Iran and remaining under sustained blockade. With the US seemingly unable to reopen the waterway, shipping capacity constraints appear intractable, pushing daily earnings for Very Large Crude Carriers (VLCCs) on Middle East routes toward two-month highs. According to charter reports and shipbroker data, the VLCC "Mongolia Prosperity" will load crude from an unnamed Persian Gulf port for East Asia at a single-voyage freight cost of $31 million. COSCO Shipping Energy Transportation Co Ltd (01138) rose 3.68% on the news. Shipping earnings have been robust across the sector, with Haitong International Holdings Ltd (01308) reporting interim net profit attributable to shareholders of $677 million, up 7.39% year-on-year with basic earnings per share of $0.25, and declaring an interim dividend of HK$1.50 per share. COSCO Shipping Holdings Co Ltd (01919), Pacific Basin Shipping Ltd (02343), and Orient Overseas (International) Ltd (00316) all continue to trend higher.
Adding to the pressure is the escalating crisis in US Treasuries, which serve as the world's benchmark "risk-free" asset and underpin pricing for mortgages, corporate loans, emerging market debt, private credit, and equity valuations globally. On Tuesday, the 30-year Treasury yield spiked to 5.32%, its highest level since June 2007, while the 10-year yield reached 4.75%, the loftiest since January 2025. When this foundational anchor wobbles, markets grow anxious, as rising corporate borrowing costs spell trouble for businesses. Technology stocks are especially sensitive to these dynamics, and sector-specific concerns compound the issue. Anthropic's annualized revenue run rate surpassed $6.5 billion but fell short of the $7-8 billion expected, fueling worries about a "second derivative slowdown." Additionally, looming large-scale IPOs from Anthropic and OpenAI cast a shadow over the sector.
Domestic IPO pressures also weigh on sentiment. The China Securities Regulatory Commission website shows that Yangtze Memory Technologies Co has submitted its guidance completion report to the Hubei securities regulator, with its IPO status now moving to guidance acceptance. The company was valued at RMB 160 billion during its pre-IPO restructuring phase, with the IPO expected to raise RMB 30-40 billion. While bull markets can absorb new listings and even benefit from the incremental supply, weak markets perceive them as additional strain. Today, technology stocks bore the brunt of the selling, with Hua Hong Semiconductor Ltd (01347), Zhongji Innolight Co Ltd (03308), and Cambridge Industries Group Ltd (06166) all plunging more than 10%. Notably, Unitree Robotics (688836.SH) made its Shanghai STAR Market debut with spectacular initial trading, opening as high as RMB 1,100 against an issue price of RMB 150.80. However, the stock retreated substantially from those highs, closing up 460% in a classic high-open, pullback pattern that dampened sentiment for the broader robotics sector. Yesterday's speculative darling Star Plus Legend Holdings Ltd (06683) nearly gave back all its recent gains, crashing over 19%, while Estun Automation Co Ltd (02715) and Yuejiang Technology (02432) both dropped more than 11%.
Despite the tech wreck, the Hang Seng Index held its ground, thanks largely to banking and insurance stocks acting as stabilizers. August marks the peak season for interim earnings reports from mainland-listed banks. As of August 18, five banks including Ping An Bank, Shanghai Pudong Development Bank, Bank of Jiangsu, Bank of Chongqing, and Chongqing Rural Commercial Bank had already published their 2026 interim results or earnings preannouncements. On August 18, Bank of Nanjing followed suit, reporting revenue of RMB 31.596 billion, up 10.94% year-on-year, with net profit attributable to shareholders of RMB 13.65 billion, an increase of 8.17%. The common thread across these five banks: both revenue and net profit achieved positive growth in the first half, with revenue growth rates accelerating compared to the same period last year. This marks the first time since 2022 that the banking sector has collectively delivered a half-year report with both top and bottom line growth. Net interest margins are currently the primary driver supporting earnings, with commercial banks' NIM at 1.41% in Q2, up 0.01 percentage point from 1.40% in Q1, the first quarterly sequential increase since 2022. Large state-owned banks saw NIMs rise from 1.29% to 1.31%, city commercial banks from 1.38% to 1.40%, and rural commercial banks from 1.58% to 1.59%. Banks will only truly escape their reliance on interest spreads when non-interest income becomes the engine of profit growth. August 29 marks the peak day for interim reports, with nearly 20 banks scheduled to release results. Among the big four state-owned lenders, Agricultural Bank of China Ltd (01288) showed the strongest momentum, rising over 2%. Other gainers included China CITIC Bank Corp Ltd (00998), China Merchants Bank Co Ltd (03968), and Postal Savings Bank of China Co Ltd (01658), all up more than 1.5%. In the insurance sector, China PICC Property & Casualty Co Ltd (02328) advanced over 3%.
Xiaomi Corp (01810) emerged as one of the few bright spots today after releasing its interim results, with total revenue surpassing RMB 200 billion. In Q2, Xiaomi's total revenue reached RMB 108.922 billion, up 9.9% quarter-on-quarter, with adjusted net profit of RMB 6.219 billion. While much of this performance was already priced in, the market focused on the improving IoT and lifestyle products segment, which generated RMB 31.3 billion in revenue, up 14.2% year-on-year. The internet services division, serving as the group's high-margin ballast, contributed RMB 9 billion in revenue with gross margins around 76% and record monthly active users. The smart electric vehicle business also delivered solid results, with Q2 automotive revenue of RMB 23.9 billion and 104,199 vehicles delivered, up 28.2% year-on-year, as delivery volumes continue to scale higher. Key catalysts going forward include sales performance of the new Pengcheng model and whether smartphone gross margins can bottom out and recover as memory chip prices decline. Xiaomi shares rose 4.81% today.
The pharmaceutical sector remains resilient, with reports indicating that major Western pharma companies continue aggressively licensing innovative pipelines from Chinese biotech firms. In the first half of 2026, eight of the top ten largest licensing deals globally had Chinese biotech companies as sellers, with Pfizer, Bristol-Myers Squibb, Eli Lilly, AstraZeneca, and GSK all making substantial commitments, including multiple framework agreements exceeding $10 billion. Zai Lab Ltd (09688) and GenScript Biotech Corp (01548) both continued their upward momentum, rising more than 4%.
Looking ahead, the Federal Reserve will release minutes from its July monetary policy meeting at 2:00 AM Beijing time Thursday. Given the intensifying Treasury selloff, these minutes carry heightened significance. At the July meeting, Fed officials voted to hold rates steady in the 3.5%-3.75% range, though three of twelve voting members dissented in favor of a hike. Market reaction to the minutes will be closely watched. Additionally, South Korea's SK Hynix has announced a KRW 40 trillion share buyback program, with investors watching whether this can stimulate a rebound in its stock price.
Where to Focus
On August 18, major independent coking plants in Hebei and Shanxi issued collective price adjustment letters, raising wet-quenched coke prices by RMB 50 per ton and dry-quenched coke by RMB 55 per ton, effective from 00:00 on August 20. The price hikes are driven by rising coking coal costs and prolonged losses at coking plants. However, steel mills have yet to collectively confirm acceptance of the increases. Key Hong Kong-listed names in this space include China XD Plastics Co Ltd (01907), the largest independent coking leader with the biggest coke production capacity and a Hebei-based company squarely in the primary price-hike region; Shougang Resources Ltd (00639), primarily producing metallurgical coking coal with interim results already guiding toward improvement; and Mongolian Mining Corp (00975), which supplies imported Mongolian coking coal to domestic steel mills and coking plants, offering high leverage to rising coking coal prices.
Stock Spotlight
Midea Group Co Ltd (00300): Subsidiary partners with Black Sesame Technologies to strengthen robotics operations with multiple business lines advancing globally.
Black Sesame Technologies (02533) has officially signed a chip supplier cooperation framework agreement with Guangdong Meichuangxi Technology Co Ltd, focusing on deepened collaboration in the robotics sector while also covering chip demand in home appliances, jointly promoting large-scale application of domestic chips and technological iteration.
Commentary: Guangdong Meichuangxi is a subsidiary of Midea, making this cooperation mutually beneficial and directly strengthening the company's robotics capabilities. The near-term highlight is surging air conditioner orders in Europe, with overseas AC orders growing continuously. Year-to-date, PortaSplit sales have already doubled compared to all of last year, with shipments exceeding 200,000 units. In Q1 2026, Midea had over 500 million connected home appliances globally, with more than 140 million smart appliances connected and over 150 million smart users onboard, completing AI deployment across more than 150 product categories. The company's technology transformation has succeeded, evolving from home appliances to a technology conglomerate spanning AI, robotics, and new energy. The ToB segment represents a billion-dollar second growth curve, growing significantly faster than ToC with higher margins. The dual-engine model: ToC (67%) holds 35% AC market share, with premium brands COLMO and Toshiba generating over RMB 20 billion in premium revenue in 2025, exceeding 15% of total. ToB (33%, high growth) delivered RMB 122.8 billion revenue in 2025, up 17.5%, with Q1 2026 building technology at RMB 10.8 billion (up 10.1%) and robotics at RMB 8.2 billion (up 11.8%). The company has 29 overseas R&D centers and 43 manufacturing bases across 50 countries, with 2025 overseas revenue of RMB 195.9 billion (up 16%), representing 43% of total. Vertically integrated across compressors, motors, and controllers, Midea's self-developed core components give it a 10-15% cost advantage over peers with shorter delivery cycles. The company operates six lighthouse factories, the most in the home appliance industry, with its Chongqing building technology facility being the world's first full-process AI lighthouse factory in central air conditioning. In robotics, KUKA plus self-developed humanoid robots have over RMB 2 billion in orders, with concentrated delivery in H2 2026. New energy vehicle components have over RMB 5 billion in orders, supplying leading automakers. AI integration targets 40% AI-enabled appliance penetration by 2026, with 2,000+ COLMO stores and premium revenue accounting for over 20%. The company continues deepening globalization through OBM brand expansion, with strong growth in Southeast Asia, North America, and the Middle East. Following the acquisition of a European HVAC leader and the formation of the MBT Climate European HVAC alliance, Midea has opened incremental European ToB markets in energy storage, heating, and cooling equipment, providing a medium-to-long-term second growth curve. Midea's business now covers more than 200 countries and regions. With overseas and ToB businesses growing strongly, ToB growth is expected to outpace ToC. Recently, Midea and Alibaba Group announced their first collaboration focused on building core whole-home intelligence capabilities, with deep cooperation across three areas: home AI brains, IoT ecosystem and lifestyle service interoperability, and hit smart hardware products. The company maintains high dividends and substantial buybacks, returning 100% of net profit through dividends and repurchases, with expected dividend yield of approximately 5% in 2026. Continued large-scale share buybacks, robust earnings growth, and proactive shareholder returns have significantly boosted investor confidence.
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