The three major Hong Kong stock indices fell in a one-way decline throughout the day, with the Hang Seng Index dropping over 3% and losing the 23,000 mark, while the Hang Seng Tech Index plunged over 5%, hitting a new low since the "924" policy announcement.
As of the close, the Hang Seng Index fell 3.03% or 717.19 points to 22,934.68 points, with total daily turnover of HK$256.051 billion; the Hang Seng China Enterprises Index fell 3.20% to 7,689.19 points; and the Hang Seng Tech Index fell 5.03% to 3,793.93 points.
Guoyuan International believes that the Hong Kong stock market will remain in a "range-bound index with internal differentiation and rotation" as the baseline scenario in the short term. As the marginal momentum of southbound capital weakens, the sustainability of further gains in Hong Kong stocks will depend more on upward earnings revisions and improvements in domestic fundamentals. CMBI pointed out that it maintains a barbell structure in allocation, with the stable end anchored by high-dividend assets such as banks, telecommunications, and utilities, while the flexible end focuses on AI hardware companies, though the pace of allocation should be slowed.
Blue Chip Performance
CATL (03750) fell for a second consecutive session after its earnings report. As of the close, it dropped 7.24% to HK$338.4, with turnover of HK$3.275 billion. UOB Kay Hian noted that CATL's third-quarter net profit was below expectations due to the company absorbing the impact of the export VAT rate increase and a 2% consumption tax without passing them on to customers. The firm expects some tax costs to be passed through via higher battery prices, with margins expected to recover in the fourth quarter, though the further reduction of tax incentives in 2027 will still weigh on margins.
Blue chips were nearly all in the red, with only Midea Group (00300) bucking the trend to close up 0.54%. On the downside, Hua Hong Semiconductor (01347) fell 9.46% to HK$66.55, and Innovent Biologics (01801) dropped 8.42% to HK$81.6.
Hot Sectors
On the market, internet stocks came under collective pressure, with Alibaba (09988) falling 6.12% and Tencent Holdings (00700) dropping 2.89%. AI hardware stocks also collapsed, with PCB and optical communication stocks bearing the brunt, as YOFC (06869) plunged 11.79%. Lithium battery stocks extended their decline, with CATL (03750) falling another 7.24%. Amid a sudden escalation in Middle East tensions and elevated oil prices, gold stocks retreated alongside gold prices, with Zijin Gold International (02259) dropping 7.96%. Innovative drug stocks saw significant pullbacks, with Innovent Biologics (01801) falling 8.42%.
Midea Group was the only blue chip to gain on the day.
Optical communication and PCB computing hardware stocks led the declines. As of the close, YOFC (06869) fell 11.79% to HK$110.7; CIG Shanghai (06166) fell 11.28% to HK$72.75; Juhe Technology (01729) fell 7.67% to HK$12.15; and Zhongji Innolight (03308) fell 7.30% to HK$724. The market has begun to worry about slowing growth at leading manufacturers and whether future returns can cover current massive investments. The market expects that the year-on-year growth rate of capital expenditure by the US AI "Magnificent Seven" will decline from about 90% in 2026 to 36% in 2027, and the uncertainty of investment returns has also intensified volatility in AI assets. Notably, Nvidia announced at the GTC Berlin conference yesterday that it will jointly expand production significantly with six supply chain partners. Some views suggest that the absence of mainland Chinese manufacturers among Nvidia's announced CPO expansion partners may signal a "divergence" between the existing route and the next-generation route. Meanwhile, news of public funds significantly reducing holdings in Zhongji Innolight and Eoptolink in the third quarter fermented, further amplifying selling pressure amid concerns over "the collapse of crowded trades."
Star internet stocks came under collective pressure. As of the close, Alibaba-W (09988) fell 6.12% to HK$97.35, and Tencent (00700) fell 2.89% to HK$382.4. The 90-day transition period for offshore trust individual income tax filing ended today. The Ministry of Finance and the State Taxation Administration issued Announcement No. 21 of 2026 on July 24, imposing a 20% tax rate on offshore trust income of resident individuals, requiring filing regardless of whether the income is actually distributed. The State Taxation Administration issued another notice on October 19, urging relevant taxpayers to complete filing and tax payment within the transition period. In addition, recent continuous net outflows of southbound capital amplified pressure. From October 14 to 21, southbound capital recorded a cumulative net outflow of HK$14.94 billion over six trading days, with a single-day net outflow of HK$4.43 billion on October 21 alone.
Gold stocks fell collectively. As of the close, Zijin Gold International (02259) fell 7.96% to HK$122.6; Shandong Gold (01787) fell 6.57% to HK$17.21; and Chifeng Gold (06693) fell 6.12% to HK$30.7. On October 22, spot gold lost the $4,100 mark, falling over 1% intraday. Amid a sudden escalation in the Middle East situation, Brent crude oil rose above $110. Reports indicate that the US military has formulated a new round of strike plans against Iran, while Israel has signaled an attitude of war escalation. CITIC Futures believes that gold will remain range-bound in the short term, with a slight pullback in the US dollar and US Treasury yields marginally easing downward pressure on gold, but energy inflation risks and market bets on further rate hikes by the US, Europe, and Japan have not yet significantly receded, limiting the room for a gold price rebound. In the long term, US fiscal credit risks, central bank gold purchases, and gold allocation demand continue to provide support for gold.
Gaming stocks showed weak performance. As of the close, Galaxy Entertainment (00027) fell 4.55% to HK$31.5; Sands China (01928) fell 4.49% to HK$10.86; Melco International Development (00200) fell 3.95% to HK$2.43; and SJM Holdings (00880) fell 2.89% to HK$1.175. Sands China announced that its total net revenue for the third quarter of 2026 was US$1.93 billion, up 1.4% year-on-year; net income was US$191 million, down 29.8% year-on-year; adjusted property EBITDA was US$529 million, down 12% from the same period last year. Citi expects Macau gaming revenue for the first 19 days of October to be approximately MOP14.1 billion, with average daily gaming revenue from October 12 to 19 at approximately MOP613 million, 16% lower than the approximately MOP729 million daily average in the week of October 5. The firm maintains its October gaming revenue forecast of MOP23 billion, implying a 5% year-on-year decline.
Notable Stock Movers
Zhaowei Machinery & Electronics (02692) surged against the trend. As of the close, it rose 21.29% to HK$34.18. Tesla stated in its latest earnings report that Optimus has begun production on the high-volume production line at the Fremont factory. The robots rolling off this line are the first mass-production-quality robots manufactured. While we will continue to iterate on hardware and manufacturing processes, we have demonstrated that Optimus's current manufacturing process is suitable for commercial products.
Duiba (01753) continued to climb. As of the close, it rose 5.71% to HK$1.11. Duiba entered the AI short drama sector earlier this year and has demonstrated outstanding hit-making capability. The company recently disclosed that its AI short drama business recorded net profit for three consecutive months in July, August, and September, with total new viewership across all platforms exceeding 45.8 billion in the third quarter, more than nine times the cumulative 5 billion in the first half. The company's current positioning has shifted to an AI-Native content platform, transforming production from individual talent into systematic replication.
Bloks (00325) saw its share price plummet. As of the close, it fell 21.38% to HK$54.6. Bloks announced that SmartBloks Limited, a member of the controlling shareholder group, sold 3.849 million shares on October 22 through a block trade at HK$65.28 per share, representing approximately 1.56% of issued shares, cashing out approximately HK$251 million, with its stake decreasing from approximately 3.57% to approximately 2.01%. SmartBloks is wholly owned by Zhu Weisong.
Jingwei Tiandi (02477) extended its decline. As of the close, it fell 17.19% to HK$0.106. Jingwei Tiandi announced that its major shareholder Hengfeng sold 716 million shares in the open market on October 21, representing approximately 14.93% of issued share capital, at a total consideration of approximately HK$107 million, with an average selling price of approximately HK$0.1494 per share. After the sale, Hengfeng's shareholding decreased from 24.94% to approximately 10.01%, remaining a major shareholder of the company.
China State Construction International (03311) declined after its earnings report. As of the close, it fell 4.69% to HK$8.12. China State Construction International announced that for the nine months ended September 30, the group's turnover and share of turnover of joint ventures were approximately RMB59.114 billion and RMB1.674 billion respectively, down 23.92% and 37.75% year-on-year; during the period, the group's operating profit and share of profits of joint ventures totaled approximately RMB9.863 billion, down 17.26% year-on-year.
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