The Hong Kong market showed signs of recovery today, with the Hang Seng Index leading the gains among the three major benchmarks. The grid equipment sector surged, driven by a confluence of supportive policies and strong fundamentals, while the chip sector faced a correction due to multiple valuation pressures. At the close, the Hang Seng Index rose 1.28% to 25,210.81 points, with a total daily turnover of HK$233.4 billion. The Hang Seng Tech Index gained 0.65% to 4,698.48 points.
Among the largest Hong Kong-listed ETFs by size, the Tracker Fund (02800) closed up 1.34% at HK$25.68. The CSOP Hang Seng Tech Index ETF (03033) rose 0.66% to HK$4.61. The CSOP 2x Long SK Hynix ETF (07709) surged 8.5% to HK$60.5.
Sector Performance Highlights
Grid Equipment Sector Rises on Policy and Fundamentals
The grid equipment sector led the market higher, with related ETFs posting strong gains. This was driven by a combination of policy support and positive fundamental developments. At the close, the ChinaAMC Grid Equipment ETF (159326.SZ) rose 5.2% to 1.659 yuan. The Guotai Grid Equipment ETF (561380.SH) gained 5.14% to 0.736 yuan. The GF Fund Grid Equipment ETF (159320.SZ) increased 5.09% to 0.619 yuan.
On the policy front, the National Development and Reform Commission and the National Energy Administration jointly issued the "15th Five-Year Plan for Renewable Energy Development," explicitly calling for "appropriately advancing power grid infrastructure construction ahead of schedule," enhancing cross-provincial and cross-regional power transmission capacity, and promoting the integrated development of distribution grids and smart microgrids.
Fundamentally, the results of the State Grid's third tender for ultra-high voltage and power transmission and transformation equipment for 2026 have been announced, with listed companies like China XD Electric and Pinggao Electric securing contracts totaling over 63 billion yuan. Additionally, electricity loads in many regions across the country have reached record highs, directly creating demand for the expansion and upgrading of power transmission and distribution equipment to ensure supply.
GF Securities noted that the distribution grid, as the "last mile" of power supply, is accelerating its transformation into an active, bidirectional, and intelligent system. Policy guidance for the "15th Five-Year Plan" period emphasizes coordinated development between main grids, distribution grids, and microgrids by both State Grid and China Southern Power Grid. This is coupled with Document No. 187, which sets a target to basically complete the flexible and intelligent transformation of distribution networks by 2030. Furthermore, the adjustment of transmission and distribution tariffs in the fourth regulatory cycle shows significant increases for voltage levels of 35kV and below, seen as a leading indicator for expanded distribution grid investment. This is expected to provide funding support for distribution grid construction exceeding 1.9 trillion yuan during the "15th Five-Year Plan" period.
Chip Sector Faces Correction Amid Valuation Pressures
The chip sector experienced a pullback, with related ETFs declining collectively. This was attributed to multiple factors weighing on valuations. At the close, the Fullgoal Chip ETF (516640.SH) fell 4.38% to 1.571 yuan. The E Fund Chip ETF (516350.SH) dropped 4.3% to 1.781 yuan. The Eastmoney Chip ETF (159599.SZ) declined 4.26% to 3.035 yuan.
After the U.S. market closed on Wednesday, Alphabet, Google's parent company, reported its Q2 earnings. While revenue and profit exceeded expectations, the company significantly raised its full-year capital expenditure guidance to $195-205 billion and reported negative free cash flow for the first time in its history. Notably, during the earnings call, CEO Sundar Pichai stated that market demand for AI infrastructure and solutions remains very strong, with the company's cloud backlog growing to $514 billion.
Meanwhile, geopolitical tensions in the Middle East have pushed oil prices higher, fueling inflation concerns and strengthening expectations for Federal Reserve interest rate hikes. This has also dampened risk appetite for high-valuation technology and growth sectors.
Li Yue from Penghua Fund added that recent performance within the technology sector has shown significant divergence. As global cloud providers maintain high levels of AI capital expenditure, upstream computing hardware supply chains continue to see order and profit figures exceeding expectations. Areas like memory chips, high-speed optical communication, and AI servers have demonstrated strong earnings realization capabilities, becoming the core leading themes in the U.S. stock market. In contrast, some leading internet software companies continue to increase capital expenditure and R&D investment, which is suppressing short-term profits and leading to relatively weaker stock performance.
Key Institutional Perspectives
Analysis suggests that in the short term, positive developments in the following areas could provide support for the Hong Kong market. First, the realization or alleviation of the Federal Reserve's tightening expectations. Current market concerns about rate hikes are already largely priced into assets; even if subsequent hikes materialize and expectations are met, their marginal impact may be limited. If tightening concerns ease further, it would be more favorable from a discount rate perspective for interest-rate-sensitive assets like the Hang Seng Tech Index constituents and innovative drug stocks.
Second, against the backdrop of increased volatility in the tech sector, the potential for capital rebalancing due to extremely low allocations to Hong Kong stocks by both domestic and foreign investors. Third, marginal changes in domestic policy. While a major policy ramp-up or a significant shift is unlikely, fiscal support in the third quarter may see a slight improvement compared to the second quarter.
Notable ETF Activity
The newly listed CSOP CSI All Share Consumer Staples Index ETF (515840.SH) closed its first trading day up 0.1% at 0.997 yuan, with a turnover of 75.531 million yuan. The fund tracks the CSI All Share Consumer Staples Index, whose constituents cover leading A-share companies in essential consumption sectors such as food processing, condiments, dairy products, meat products, and grains and oils.
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