Hong Kong's three major stock indexes all moved lower in midday trading on August 11. The Hang Seng Index fell 0.63% to 25,773.56, the Hang Seng Tech Index dropped 1.27%, and the State-owned Enterprises Index slipped 0.61%.
Tech stocks broadly declined, with Kuaishou, JD.com, Xiaomi, Baidu, and Tencent each losing over 2%. Biopharmaceutical stocks surged, with BeiGene Ltd rising more than 4%. Oil stocks led the gains, as CNOOC Ltd climbed over 3%. Gold stocks opened higher but then fell, with China Gold International Resources Corp Ltd dropping more than 2%. Aviation stocks weakened, and China Eastern Airlines Corp Ltd fell over 3%.
Biopharmaceutical stocks saw a strong rally, with BeiGene Ltd gaining over 4%. The Contract Research Organization (CRO) sector has recently been buoyed by multiple positive factors. The U.S. released July non-farm payroll data, showing a decrease of 23,000 jobs, significantly below market expectations of an 80,000 increase. Regarding WuXi AppTec's legal developments, the enforcement of the U.S. Department of Defense's 1260H designation against the company has been temporarily stayed. Leading pharmaceutical companies, including WuXi AppTec and BeiGene Ltd, have reported substantial mid-year profit growth.
Oil stocks were among the top performers, with CNOOC Ltd rising over 3%. Former President Donald Trump publicly criticized Iran's demands for war reparations in negotiations, dampening market expectations for a swift agreement to reopen strategic waterways. This has cast renewed uncertainty over the prospects of U.S.-Iran talks. West Texas Intermediate (WTI) crude oil returned to $82 per barrel, while Brent crude surpassed $87 per barrel. Tensions on the supply side continue to escalate: a recent attack by Yemen's Houthi rebels on a Saudi Arabian refinery has heightened supply concerns, and U.S. strategic petroleum reserves have fallen to their lowest levels since 1983, further amplifying market anxiety over supply gaps.
Gold stocks started the day higher before retreating, with China Gold International Resources Corp Ltd falling over 2%. Huatai Futures suggests that precious metals have shown a relatively muted response to recent changes in oil prices, with gold and oil prices often rising concurrently. They believe that unless there is a clear escalation in geopolitical tensions or a substantive breakdown in negotiations, precious metals are likely to maintain a high level of volatility while pricing in expectations of a pause in interest rate hikes. As a result, they expect gold prices to continue a trend of elevated, range-bound trading with a slight upward bias.
Aviation stocks weakened, with China Eastern Airlines Corp Ltd dropping over 3%. The turbulent situation in the Middle East continues to put pressure on airlines' fuel costs. China Merchants Securities issued a research report stating that in the short term, the U.S.-Iran situation and the status of passage through the Strait of Hormuz remain uncertain, and investors should monitor the impact of Middle East volatility on oil prices and sector sentiment. The report notes that the current market capitalization of the aviation sector is generally at post-pandemic lows, and if cost pressures ease, it could catalyze improvements in profitability and market value.
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