Hong Kong stocks opened higher but reversed course to trade in a narrow range throughout the session, with the Hang Seng Tech Index emerging as the worst performer.
On the sector front, technology-focused ETFs spanning artificial intelligence, telecommunications, and semiconductors all suffered sharp declines, while Korean equity leveraged products showed divergent performance, and banking emerged as one of the few sectors posting gains.
By the close, the Hang Seng Index fell 0.59% to 22,958.65 points, with total daily turnover reaching HK$189.453 billion; the Hang Seng Tech Index dropped 2.84% to 3,744.14 points.
Among Hong Kong ETF products ranked by size, Tracker Fund of Hong Kong (02800) declined 0.59% to HK$23.64; CSOP SK Hynix Daily Leveraged 2x Product (07709) gained 0.79% to HK$25.62; and Hang Seng China Enterprises (02828) slipped 0.38% to HK$79.68.
Sector Performance
Google's earnings disappointment reignited concerns over AI returns, sending technology ETFs across artificial intelligence, telecommunications, and semiconductors into steep declines.
By the close, ChiNext AI ETF Nanfang (159382.SZ) plunged 9.53% to 1.927 yuan; Communications ETF Fullgoal (159583.SZ) tumbled 7.75% to 1.154 yuan; and STAR Chip ETF Harvest (588200.SH) dropped 6.08% to 0.819 yuan.
After the U.S. market close on October 28, Google parent Alphabet reported third-quarter revenue excluding partner payouts of $111.2 billion, slightly below the analyst average estimate of $111.3 billion, with net earnings per share of $2.12, far short of Wall Street's $2.99 projection. Free cash flow turned negative for a second consecutive quarter with a deficit of $9.1 billion, while the company projected capital expenditure will exceed $300 billion by 2027.
Citing Dolphin Research, Securities Times noted that "AI has made Google look more like a shovel seller, yet it has caused the search cash machine to start decelerating," as the mismatch between investment and returns reignited market anxiety over AI capital expenditure efficiency, with long-duration assets bearing the brunt.
CITIC Securities recently pointed out that the communications sector faces numerous disruptions, recommending focus on internal structural opportunities: CPO progress benefits ultra-high-power laser companies, NPO progress benefits pluggable optical module makers and mature-node silicon photonics foundries, while both CPO and NPO benefit optical connection component companies; looking toward 2027, the market will pay more attention to the massive incremental opportunity from optical connections moving into cabinets. In the near term, although capital expenditure continues to rise, order fulfillment has been slower than expected, making the optical module chain—which had seen enormous gains earlier—the primary target for profit-taking.
Memory giants' earnings outlooks diverged sharply, leading to dramatic divergence in Korean equity leveraged products.
By the close, CSOP SK Hynix Daily Leveraged 2x Product (07709) rose 0.79% to HK$25.62, having surged more than 8% at one point during the session; CSOP Daily 2x Long Samsung Electronics (07747) fell 10.96% to HK$52.98.
On the news front, Korean memory giants showed divergent earnings prospects. SK Hynix reported third-quarter revenue of 104.62 trillion won, up 327.9% year-on-year; operating profit of 83.33 trillion won, up 632.1% year-on-year, beating market expectations by approximately 5.7% and 7.5% respectively. Meanwhile, Samsung Electronics reported third-quarter revenue of 195.3 trillion won, up 127% year-on-year; memory revenue of 140.7 trillion won, up 427% year-on-year. However, since preliminary results were disclosed on October 8, the official figures largely fell within expectations, and the stock price came under pressure instead.
Everbright Securities noted that HBM4's revenue share is expected to surpass HBM3E in the fourth quarter, and with more than half of 2027 and 2028 capacity already locked in through long-term agreements, the stability of original manufacturers' profitability and their ability to capture price increase benefits are strengthening simultaneously.
Banks' high-dividend safe-haven attributes came to the fore, with related ETFs becoming one of the few gainers.
By the close, Bank ETF E Fund (516310.SH) rose 1.94% to 1.472 yuan; Bank ETF Nanfang (512700.SH) gained 1.73% to 1.589 yuan; and Bank ETF Huabao (512800.SH) advanced 1.72% to 0.887 yuan.
Listed banks' third-quarter earnings disclosures have begun, with some regional banks maintaining double-digit revenue and net profit growth in the first three quarters; foreign public fund third-quarter position adjustments showed that defensive assets such as banks received notable increases in allocation.
Guosheng Securities research noted it maintains an "overweight" rating on the banking sector, believing the sector possesses strong certainty of earnings recovery and high-dividend attributes, with its balanced offensive-defensive allocation value proposition continuing to stand out. Galaxy Securities noted that the banking sector's dividend yield remains attractive relative to fixed-income assets, appealing to long-term capital represented by insurance funds. Zhongtai Securities data showed that passive funds, active funds, and northbound capital collectively recorded net inflows of 64.93 billion yuan into the banking sector in the third quarter, with northbound capital alone increasing holdings by 43.39 billion yuan in the quarter, while active fund allocation ratios rose 1.06 percentage points quarter-on-quarter.
Institutional Views
CITIC Construction Investment Securities chief macro analyst Zhou Junzhi analyzed that Hong Kong stock valuation pressures have been partially released in stages, with the Hang Seng Tech Index falling to a more than two-year low and growth stock valuations having undergone relatively thorough adjustments, while high-dividend assets such as Chinese banks and utilities still hold allocation value in a high interest rate environment. A trend reversal still requires confirmation, and the index level is expected to mainly see volatile bottoming, with a barbell structure of dividend defense as the foundation while awaiting clear stabilization signals from growth sectors being relatively advantageous. A trend reversal requires confirmation of two conditions: first, substantial easing of overseas discount rate pressures, and second, southbound capital returning alongside incremental capital entering to re-form a concerted force.
ETF Developments
ChiNext Battery ETF Yinhua (158082.SZ) debuted, falling 2.8% to 0.971 yuan with turnover of 63.1363 million yuan; the fund tracks the ChiNext Battery Index, covering the entire chain of power batteries, energy storage, and consumer lithium batteries.
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