Hong Kong stocks opened higher but drifted lower today, with heavyweight technology names broadly weakening and the Hang Seng Tech Index falling below the 4,000-point mark.
On the board, the lithium battery sector led declines, while Korean stock and memory-related ETPs rebounded.
Among Hong Kong ETF products ranked by size, the Tracker Fund of Hong Kong (02800) closed down 0.81% at HK$24.34; the CSOP Hang Seng TECH Index ETF (03033) fell 1.41% to HK$3.922; and the Hang Seng China Enterprises ETF (02828) dropped 1.11% to HK$81.62.
Sector Performance
Disappointing results from an industry leader dragged down the entire sector, with lithium battery ETFs posting the steepest declines.
By the close, the GF Battery ETF (159755.SZ) fell 4.26% to 0.742 yuan; the China Universal Battery ETF (159796.SZ) dropped 4.19% to 0.663 yuan; and the ICBC Credit Suisse Lithium Battery ETF (159840.SZ) declined 4.00% to 0.6 yuan.
Lithium battery leader Contemporary Amperex Technology Co., Limited (CATL) disclosed its third-quarter results on October 20, reporting revenue of 165.221 billion yuan, up 58.58% year-on-year.
However, net profit attributable to shareholders rose only 14.54% year-on-year to 21.246 billion yuan, down 5.77% quarter-on-quarter, while the single-quarter gross margin fell to 20.69%, down 5.1 percentage points year-on-year, significantly missing market expectations.
Citi promptly cut its target price for CATL's A-shares from 500 yuan to 479 yuan and its H-shares from HK$765 to HK$732, while lowering its earnings forecasts for 2026 to 2028 by 9%, 14%, and 15%, respectively.
JPMorgan downgraded CATL's H-shares to "neutral," arguing that battery consumption tax, reduced export tax rebates, and trade barriers are redistributing profits across the supply chain.
In addition, the trend of automakers "de-CATL-izing" — with OEMs such as Li Auto advancing in-house battery development — is also disrupting the leader's long-term pricing power.
Memory Contract Price Hikes Expected, Overseas Leaders' Earnings Upgraded, Korean Stocks and Memory-Related ETPs Rebound
By the close, the CSOP 2x Long Samsung Electronics (07747) surged 12.76% to HK$51.60; the CSOP SK hynix Daily Leveraged 2x Product (07709) jumped 13.87% to HK$19.62; and the CSOP KOSPI (03121) gained 3.81% to HK$5.59.
On the news front, TrendForce estimates that DRAM contract prices will rise about 20% quarter-on-quarter in the fourth quarter of 2026, marking the fourth consecutive quarterly increase.
South Korea's October chip exports surged 222.5% year-on-year to US$27.5 billion, and the KOSPI closed up 3.29% at 5,735.67 points, as overseas memory leaders' profit expectations continue to be revised upward.
Citi expects SK hynix to report third-quarter operating profit of 81.3 trillion won, up 614% year-on-year and 8% above market expectations.
Nomura Securities reiterated its "buy" rating on SK hynix, judging that physical memory supply constraints will persist at least through 2028.
The two daily 2x leveraged products posted gains significantly larger than the underlying indices themselves due to their leverage mechanism.
Institutional Views
Guoyuan Securities Brokerage (Hong Kong) believes that the Hong Kong market's baseline scenario in the short term remains "index consolidation with internal divergence and rotation."
In the technology space, the focus should be on companies that are already profitable, have improving free cash flow, low leverage, and capital expenditure that can effectively convert into revenue and profit.
Meanwhile, allocating to financials, utilities, and select consumer sectors with stable cash flows can help reduce portfolio volatility, adopting a barbell strategy.
As southbound capital momentum weakens at the margin, further gains in Hong Kong stocks will depend more on earnings upgrades and improvements in domestic fundamentals.
Risks include economic downturn, the Federal Reserve's monetary policy turning more hawkish than expected, and geopolitical changes.
ETF Developments
The Yinhua Hong Kong Stock Connect Information Technology ETF (159047.SZ) debuted, closing down 1.12% at 0.97 yuan with a turnover of 87.0841 million yuan.
The fund tracks the CSI Hong Kong Stock Connect Information Technology Composite Index, with deep coverage of semiconductors, electronic components, and computer software, explicitly excluding internet platform companies such as Alibaba-W (09988) and Tencent (00700).
Its top ten holdings include hard-tech leaders such as Lenovo Group (00992), SMIC (00981), and Hua Hong Semiconductor (01347).
The Guolian Hong Kong Stock Connect Internet ETF (159089.SZ) also debuted, closing down 2.39% at 0.98 yuan with a turnover of 124 million yuan.
The fund tracks the Guozheng Hong Kong Stock Connect Internet Index, covering platform economy sectors such as internet retail, entertainment, software, and local life services.
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