The Hong Kong market commenced trading on Tuesday with the Hang Seng Index rising 0.58% and the Hang Seng Tech Index gaining 0.15%.
The semiconductor sector experienced notable weakness, with shares of GIGADEVICE (HKEX: 03986) and Montage Technology each falling nearly 6%. Huahong Grace Semiconductor Manufacturing declined over 3%, while SMIC (HKEX: 00981) dropped more than 2%.
Market Outlook and Broker Views
Regarding the market's near-term prospects, Guoyuan International highlighted that continued inflows from southbound capital and China's moderately accommodative monetary policy continue to provide support for Hong Kong equities. However, they noted increasing uncertainty surrounding U.S. inflation, employment data, and monetary policy expectations. Upcoming events, including the U.S. June CPI release, congressional testimony by Federal Reserve Governor Michelle Bowman, and developments in the Middle East, could potentially trigger a repricing of global interest rates and risk appetite.
China Merchants Securities Co.,Ltd. (SSE: 600999) observed that the recent strong rebound in Hong Kong's market was primarily catalyzed by Alibaba's earnings preview. Their analysis suggests the phase of a technical rebound from oversold conditions may have concluded. They argue that further market upside will depend on upward revisions to overall corporate earnings in Hong Kong and an increase in the AI revenue contribution from leading tech giants, factors that will require validation during the upcoming interim earnings season.
China Galaxy Securities stated that the recent rally reflects a confluence of aggressive southbound buying and a reduction in foreign selling pressure. Notably, southbound capital has been heavily concentrated in AI and internet leaders, indicating a contrarian "buy-the-dip" strategy betting on the long-term thesis for China's AI industry. This trend also signals a rotation within domestic capital from hardware to software sectors and from high-valuation to lower-valuation segments.
According to CITIC Securities, the current ratio of outstanding short positions to market capitalization in Hong Kong has surged to a historically high level. With both internal and external disruptive factors gradually easing, they anticipate significant room for this ratio to decline, which could sustain the market's rebound. For the short term, they recommend focusing on sectors with high fundamental certainty and positive catalysts, including innovative drugs, aviation, robotics (core stocks), and industrial metals.
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