Hong Kong's stock market trended lower today, with the Hang Seng Tech Index posting the worst performance.
South Korean ETFs collectively turned to losses as regulators moved up their "deleveraging" timeline, coinciding with fund outflows from the ongoing deleveraging process. Meanwhile, gold stock ETFs were among the top decliners, driven by rising oil prices due to US-Iran tensions, which in turn fueled rate hike fears. At the close, the Hang Seng Index fell 0.98% to 24,963.23 points, with total turnover for the day reaching 209.877 billion Hong Kong dollars; the Hang Seng Tech Index dropped 1.47% to 4,629.51 points.
Among the top Hong Kong ETFs by scale, Tracker Fund of Hong Kong (02800) closed down 1.01% at 25.42 Hong Kong dollars; CSOP Double Long SK Hynix (07709) fell 12.83% to 52.74 Hong Kong dollars; and Hang Seng China Enterprises Index ETF (02828) dropped 0.88% to 85.12 Hong Kong dollars.
Sector Performance
1. South Korean ETFs collectively turned to losses as early regulatory "leverage reduction" combined with fund outflows during the "deleveraging" process. At the close, CSOP Double Long Samsung Electronics (07747) fell 13.2% to 82.46 Hong Kong dollars; CSOP Double Long SK Hynix (07709) dropped 12.83% to 52.74 Hong Kong dollars; and CSOP Hong Kong-Korea Tech Index ETF (03431) declined 3.8% to 9.995 Hong Kong dollars. On July 24, local time, South Korea's Financial Services Commission (FSC) stated that to quickly stabilize market demand, the basic margin requirement enhancement, originally scheduled for August, would be moved up to the 31st. The FSC announced that the minimum deposit requirement for individual investors trading leveraged ETFs on single stocks would be advanced to July 31, significantly raised from 10 million Korean won to 30 million Korean won. Following this news, the KOSPI index fell over 6% during intraday trading, with heavyweight stocks like Samsung Electronics and SK hynix dropping more than 7%, dragging related leveraged ETFs significantly lower. Separately, according to data from the Korea Financial Investment Association, as of July 16, Korean investors had reduced their leveraged stock holdings to their lowest level in three months. Outstanding margin loan balances fell to 33.4 trillion Korean won, down 13% from the peak at the end of June. Regarding the "deleveraging" issue in the South Korean stock market, JPMorgan noted in a report that for the leveraged ETFs which recently caused the KOSPI's sharp decline and amplified market volatility, about 75% of the liquidation work has been completed. Analysts at GF Securities pointed out that the current adjustment in the KOSPI exhibits characteristics of "low valuation, high panic." While the index has retreated significantly from its June high, valuations remain at historical lows, suggesting the decline is not primarily driven by a valuation bubble. The risk stems more from the excessive concentration of heavyweight stocks like Samsung Electronics and SK hynix, as well as market concerns regarding AI capital expenditure, memory chip cycle sustainability, and earnings continuity. The VKOSPI at historically high levels relative to the VIX also reflects a notable increase in tail-risk pricing within the Korean market.
2. The US-Iran conflict pushed oil prices higher, igniting rate hike fears, and gold stock ETFs were among the top decliners. At the close, Gold Stock ETF YY (517520.SH) fell 5.36% to 1.785 yuan; Gold Stock ETF China Asset Mgmt (159562.SZ) dropped 5.31% to 1.942 yuan; and Gold Stock ETF Guotai (517400.SH) declined 5.3% to 1.411 yuan. Driven by rising oil prices from the escalating US-Iran conflict, Brent crude broke through $100 per barrel. Market concerns about a resurgence in inflation intensified, leading to a sharp strengthening in expectations for a Federal Reserve rate hike, pushing the US dollar index to a three-week high. GF Futures believes that precious metals still face bearish pressure. The recent escalation of geopolitical tensions in the Middle East and the expansion of the conflict have pushed energy prices higher again. Inflation risks cannot be completely ignored. Given Fed Governor Waller's statement of "zero tolerance" for inflation, market expectations for a rate hike in September are high, so the US dollar index and US Treasury yields are maintaining a relatively strong trend. Guoxin Futures stated that while gold and silver had rebounded in previous days on expectations of geopolitical easing, after Trump's tough stance and the deployment of US military forces escalated, the geopolitical situation has become tense again. The market is re-pricing the transmission chain of "geopolitics → oil prices → inflation → rate hikes," causing precious metals' rebound to stall and reverse.
Institutional Views
The Chen Guo team from East Money Securities Strategy noted that the total shares of active equity funds in Q2 2026 fell significantly again. On one hand, net redemptions from existing funds surged, while on the other, new fund issuances saw a slight decline. The overall phenomenon highlights a pronounced Matthew effect, with subscriptions highly concentrated in top-performing funds and redemptions spreading broadly. This liability-side characteristic further exacerbated the market's K-shaped divergence in the second quarter. Regarding the judgment of Fed monetary policy, the mainstream view is that rate hike expectations have eased or subsided, but international geopolitical situations change rapidly, and Fed monetary policy still carries significant uncertainty, requiring close monitoring.
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