Hong Kong's three major stock indexes ended Tuesday's session with mixed results, as the Hang Seng Tech Index briefly rallied over 1% in the afternoon. The benchmark Hang Seng Index closed 0.17% lower, or down 43.66 points, at 25,396.51, with total turnover reaching HKD 263.71 billion. The Hang Seng China Enterprises Index slipped 0.23% to 8,426.49, while the Hang Seng Tech Index edged up 0.33% to 4,792.39. CICC analysts noted that the "odds" for the Hang Seng Index as a broad-based benchmark are significantly lower than those for the Hang Seng Tech Index. The tech-heavy index has experienced a deeper decline in recent periods, and its current valuation remains at historically low levels, meaning its odds advantage is not yet exhausted. As US bond yields fall, internet leaders trigger catalysts, and capital rebalancing occurs, the tech index is expected to show stronger elasticity in the future.
Among blue-chip stocks, LENOVO GROUP (00992) hit a historic high. It closed up 20.18% at HKD 34.9, with turnover of HKD 11.848 billion, contributing 61.09 points to the index. Lenovo's first fiscal quarter reported adjusted net profit surged 176% year-on-year to USD 1.075 billion, breaking the USD 1 billion mark for the first time. The adjusted net profit margin reached 4%, nearly doubling year-on-year. The company's AI server order backlog stood at USD 54 billion, up 157% quarter-on-quarter. Lenovo stated that AI-related business revenue grew 60% year-on-year. Other blue-chip performers included Tingyi (Cayman Islands) Holding Corp (00322), which rose 6.75% to HKD 13.12, contributing 2.58 points to the Hang Seng Index, and CK Asset Holdings Limited (01113), which gained 3.62% to HKD 48.1, adding 4.97 points. On the downside, Xinyi Solar Holdings Limited (00968) fell 5.95% to HKD 2.26, dragging the index by 1.06 points, while TENCENT (00700) dropped 4.46% to HKD 441, pulling the index down by 89.11 points.
Hot sectors overview Major tech stocks faced broad pressure, with TENCENT sliding over 4% after its earnings release and Alibaba falling 0.57%. AI server stocks saw explosive growth, with LENOVO GROUP surging over 20% post-earnings and Huaqin Technology Co., Ltd. (03296) jumping over 10%. Innovative drug stocks continued their upward trend, with Genscript Biotech Corporation (01548) rising over 4%. AI large model stocks also moved higher, as Zhipu AI (02513) was added to the MSCI China Index, gaining over 9%. Conversely, non-ferrous metals led the declines, while real estate and heavy machinery stocks broadly weakened.
Innovative drugs show renewed activity By the close, ZAI LAB (09688) rose 4.73% to HKD 20.6, Biocytogen Pharmaceuticals (Beijing) Co., Ltd. (02315) gained 4.69% to HKD 70.25, and Genscript Biotech Corporation (01548) advanced 4.51% to HKD 25.98. The licensing of innovative drugs for overseas markets is entering a high-frequency phase. On August 10 alone, three major deals were completed: BeiGene partnered with Revolution Medicines to explore innovative combination cancer therapies, securing exclusive development and commercialization rights for four clinical-stage candidates in select Asian markets. Innovent Biologics teamed up with Daiichi Sankyo to obtain the commercialization rights for Vifor Pharma in Mainland China. Gan & Lee Pharmaceuticals leveraged Menarini to advance its self-developed GLP-1 innovative drug in the European market. Zhongtai Securities noted that recent earnings reports from leading overseas pharmaceutical companies continue to validate the value of Chinese innovative assets, and multinational corporations are strategically enhancing their positioning of Chinese innovative drugs.
AI server sector shines At the close, LENOVO GROUP (00992) surged 20.18% to HKD 34.9, and Huaqin Technology Co., Ltd. (03296) rose 10.4% to HKD 77.5. Lenovo's ISG division reported first fiscal quarter revenue of USD 8.5 billion, up 98% year-on-year, with an operating profit margin of 9.1%, up 5.5 percentage points from the previous quarter. The AI server order backlog reached USD 54 billion, up 157% sequentially. Additionally, TENCENT recently released its second-quarter 2026 results, which showed a sharp increase in capital expenditure driven by computing power procurement. Q2 capital expenditure surged to RMB 52.784 billion, up 176.3% year-on-year and 65.3% quarter-on-quarter. Kaiyuan Securities previously pointed out that demand continues to validate the essential need for AI computing power, while supply-side domestic computing power is accelerating its penetration. The positive feedback loop for major tech firms is already in place, and the substitution of domestic computing power is entering an accelerated phase, with the large-scale deployment of domestic supercomputing nodes advancing rapidly.
Optical communication concept continues to rally By market close, HiSilicon Technologies (01191) rose 7.91% to HKD 100.9, Cambridge Technologies (06166) gained 6.61% to HKD 91.9, and Zhongji Innolight (03308) added 2.89% to HKD 1,141. Optical communication giant Coherent Corp reported its fiscal fourth-quarter 2026 earnings for the period ending June 30. The company's quarterly revenue hit a record USD 2.05 billion, driven by explosive demand for optical interconnections in AI data centers. Coherent expects first-quarter fiscal 2027 revenue of USD 2.2 billion to USD 2.4 billion and adjusted earnings per share of USD 1.85 to USD 2.05, both above market consensus. Wanlian Securities noted that the global AI computing infrastructure buildout continues to accelerate, sustaining high demand for optical interconnections both domestically and internationally.
Gold stocks fell broadly At the close, LINGBAO GOLD (03330) dropped 9.43% to HKD 20.56, China Gold International Resources Corp. Ltd. (02099) fell 7.69% to HKD 187.2, and Shandong Gold Mining Co., Ltd. (01787) declined 6.25% to HKD 21.6. The US July CPI fell from 3.5% to 3.4%, with core CPI dropping from 2.6% to 2.5%, both in line with expectations. The moderate inflation data did not produce any major surprises, easing pressure on the Federal Reserve to accelerate rate hikes. However, the lack of clear directional data led to a tug-of-war in the gold market, with spot gold losing the USD 4,400 per ounce mark today. Notably, gold prices had been rising for several consecutive days, recording their best weekly performance since January. Xingye Securities' chief economist Liu Yu commented that the recent gold price rally was primarily driven by cooling rate hike expectations after the unexpectedly negative non-farm payroll data, with speculative capital amplifying the gains.
Hot stock movers BLOKS (00325) showed strong momentum. It closed up 19.73% at HKD 71. The company reported its first-half 2026 results, with revenue of RMB 1.776 billion, up 32.7% year-on-year, and net profit of RMB 387 million, up 30.5%. Earnings per share were RMB 1.56, with an interim dividend of HKD 32.47 cents per share, marking the first dividend payout since its listing. Nexteer Automotive Group Limited (01316) surged after its earnings release. It closed up 9.71% at HKD 4.915. The company reported first-half 2026 revenue of USD 2.329 billion, up 3.86% year-on-year, with profit attributable to equity holders of USD 85.806 million, up 35.17%. UOB Kay Hian raised its target price from HKD 8.3 to HKD 11.4, with a "Buy" rating. Sanhuan Group (06951) hit a record high. It closed up 9% at HKD 130.8. MLCC (Multi-Layer Ceramic Capacitor) components are seeing a scramble for supplies, with some customers willing to pay two to three times the normal price to secure inventory from major passive component manufacturers like Yageo and Murata. This creates a bidding war environment, highlighting the increasingly tight supply-demand balance for MLCCs. Zhipu AI (02513) performed well. It closed up 9.02% at HKD 1,317. MSCI Inc. announced the results of its August 2026 index review for the MSCI China Index. The adjustment includes the addition of 33 stocks, including Zhipu AI. The changes will take effect after the close on August 31. Inclusion in the MSCI China Index means the stock enters the MSCI Global Standard Index series, attracting significant passive fund tracking. TENCENT (00700) faced pressure throughout the day. It closed down 4.46% at HKD 441. Heavy upfront investment in AI infrastructure turned cash flow negative. Tencent's second-quarter capital expenditure reached RMB 52.8 billion, up 65% from RMB 31.9 billion in the first quarter. Free cash flow turned negative to -RMB 13.8 billion, marking the first negative free cash flow since 2005.
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