Key market developments are in focus as the first half of 2026 concludes, with investors closely watching the Hang Seng Index review and the adjustments to the Southbound Stock Connect program. Recent market data indicates structural shifts within the Hong Kong market, where southbound capital plays a pivotal role, significantly influencing individual stock liquidity and valuations.
The threshold for inclusion in the Southbound Stock Connect may have risen to approximately HKD 10.267 billion, with the removal threshold set around HKD 6.689 billion. Currently, 55 companies meet the criteria for potential inclusion, while 14 face removal risks.
Research from Huatai Securities suggests that Hang Seng Indexes Company may announce the semi-annual index review results on August 25, 2026. All changes are expected to be implemented after the market close on September 4 and take effect from September 7. The Shanghai and Shenzhen stock exchanges will correspondingly adjust the list of investable stocks under the Southbound Connect.
Pre-emptive trading activity targeting potential inclusions continues, and significant price volatility for these stocks is anticipated upon their official addition to the program.
Market Outlook
The Nasdaq Golden Dragon China Index closed up 2.93%. In overnight US trading, the Dow Jones Industrial Average fell 13.96 points, or 0.03%, to close at 52,305.24. The S&P 500 index dropped 16.13 points, or 0.22%, to 7,483.23. The Nasdaq Composite declined 173.69 points, or 0.66%, to 26,040.03.
Major technology stocks were mixed, with Meta gaining over 8%, Microsoft rising over 3%, Nvidia falling over 1%, and SpaceX dropping over 7%. Storage, semiconductor, and computer hardware sectors saw significant declines. The Philadelphia Semiconductor Index plunged over 6%, with Corning down over 13%, KLA down over 11%, Micron Technology and SanDisk down over 10%, Intel down over 9%, ASML down over 7%, AMD and TSMC down nearly 7%, Western Digital down over 6%, and Super Micro Computer and Seagate Technology down over 5%.
Most popular Chinese concept stocks advanced. The Hang Seng Index ADRs rose, calculating to 23,356.67 points, up 475.65 points or 2.08% from the Hong Kong close.
NYMEX WTI crude oil for the front-month contract fell $1.41, or 2.03%, to settle at $68.09 per barrel. COMEX gold for the front-month contract rose $6.10, or 0.15%, to $4,044.6 per ounce.
Key Developments to Watch
Federal Reserve Chair Kevin Warsh stated on July 1 at the European Central Bank's Central Banking Forum in Portugal that current US inflation levels remain too high, reiterating that the Fed's top priority is ensuring price stability.
Warsh mentioned the Fed would "chart a new policy path" but did not elaborate further, avoiding questions about a potential rate hike at the July policy meeting and emphasizing that the Fed would not provide forward guidance on future rate policy.
He added that the Fed is establishing independent working groups to study topics including monetary policy communication, economic data systems, productivity, the inflation framework, and balance sheet policy. He believes reforms should be implemented if the existing policy framework hinders decision-making efficiency.
CDB Leasing Co., Ltd. (01606) announced plans to purchase information technology computer equipment for operating lease business purposes. The company, as the buyer, entered into a product procurement agreement with seller Dachuang Precision Intelligent Manufacturing (Kunshan) Co., Ltd. on July 1, 2026, for a total consideration not exceeding RMB 2.5 billion.
Separately, CDB Leasing Co., Ltd. (01606) entered into another product procurement agreement with seller Changkuaisuan Information Industry (Beijing) Co., Ltd. on the same date for a total consideration not exceeding RMB 4 billion. The procurement target in both agreements is information technology computer equipment.
Anton Oilfield Services (03337) announced its intention to spin off its inspection business for an independent listing on the Main Board of the Stock Exchange. T-ALL Inspection is described as a leading independent provider of testing, inspection, and certification services and technology-driven inspection solutions in China.
Its proprietary inspection technologies are not limited by industry and can be applied across a wide range of sectors. The company has successfully applied these capabilities primarily within China's oil and gas energy industry. It is one of the few Chinese TIC companies with large-scale overseas operations and full-industry-chain service capabilities in the oil and gas energy market and is actively extending these capabilities into new energy and other technology-driven application fields.
COSCO SHIP DEV (02866) plans to invest a total of approximately RMB 8.656 billion to acquire 24 vessels. The ships are scheduled for delivery in batches between 2029 and 2030.
This includes a shipbuilding contract signed with Dalian Shipbuilding Industry Co., Ltd. in 2026 for the construction of 15 87,000-deadweight-ton multi-purpose grain carriers, with a total contract price of approximately RMB 4.785 billion (excluding taxes and fees). Another contract was signed with China State Shipbuilding Corporation Limited in 2026 for the construction of a total of nine vessels.
MGM CHINA (02282) plans to acquire all shares of MGM Asia Pacific Limited for USD 20 million. Following the completion of the acquisition, the company will obtain strategic and operational control over the target group through management rights, aligning its business with the group's long-term development strategy.
The target company was established in 2006 and is wholly owned by the seller as of the announcement date. The target group operates a hotel business through MGM Hospitality. After nearly 19 years of development, MGM Hospitality has become an independent hotel platform operating MGM-branded projects in mainland China.
Latest data from the Hong Kong Stock Exchange shows that on June 26, three directors of Kingboard Laminates Holdings Ltd (01888) simultaneously reduced their holdings in the company, selling a combined 896,000 shares involving approximately HKD 89.8451 million.
On the same day, two shareholders of Kingboard Holdings Ltd (00148) also reduced their holdings, selling a combined approximately 2.188 million shares involving about HKD 282 million.
China Resources Transportation Group Ltd (00269) released its annual results for the year ended March 31, 2026. The group reported revenue of HKD 609 million, a year-on-year increase of 5.47%. Profit attributable to owners of the company was HKD 661 million, turning around from a loss of HKD 338 million in the same period last year. Earnings per share were HKD 0.06.
The shift from a net loss for the year ended March 31, 2025, to a net profit for the year ended March 31, 2026, was primarily due to the recognition of a debt restructuring gain of HKD 653 million during the year.
PAX GLOBAL (00327) issued a positive profit alert, expecting its interim net profit to increase by not less than 30% year-on-year. The board attributed the expected profit growth primarily to revenue growth recorded in the first half, particularly driven by increased market demand in the US and Canada region, and operational savings resulting from the group's enhanced cost control measures.
VGT (02476) stated in an investor relations activity record announcement that the company is fully committed to advancing its capacity expansion, steadily progressing towards its goal of achieving a CNY 100 billion output value by 2030.
From a product specification perspective, the company will focus on high-value products such as AI and data center switches, continuously optimizing its product structure and enhancing value. Domestically, the Huizhou Plant 4 project is now in phased production, currently in the ramp-up and mass production stage. Construction of Plant 10 and Plant 11 is accelerating, with interior fitting, equipment installation, and trial production scheduled to continue in the second half of this year.
For overseas capacity, the Phase I upgrade of the Thailand Factory A1 building was completed in March 2025, and Phase II high-end capacity has begun production verification board production. The construction of the Thailand A2 building and the Vietnam factory is also progressing as planned.
Anker Innovations Technology Co., Ltd. (00668) is scheduled to list in Hong Kong on July 2 (Thursday). At the close of the grey market, the stock was quoted at HKD 95.5, down 3.85% from the offer price of HKD 99.32. Based on a board lot of 100 shares and excluding handling fees, this represents a loss of HKD 382 per lot.
Stock in Focus
BEIGENE (06160) announced positive results from the phase 3 clinical study of BRUKINSA® as a first-line treatment for mantle cell lymphoma. The MANGROVE phase 3 clinical study evaluated the efficacy of the company's self-developed foundational BTK inhibitor, BRUKINSA® (zanubrutinib), combined with rituximab, versus bendamustine combined with rituximab, for the first-line treatment of adult patients with MCL.
MANGROVE is the first global, randomized phase 3 study to evaluate a chemotherapy-free regimen based on a BTK inhibitor against a standard immunochemotherapy regimen in this treatment setting. The positive results from this pivotal phase 3 clinical study are expected to strengthen the clinical evidence base for zanubrutinib in the MCL disease area.
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