Hong Kong's three major stock indices all moved lower on Wednesday. By the close, the Hang Seng Index fell 1.1%, or 279.66 points, to 25,116.85, with total turnover for the day at approximately HKD 254.179 billion. The Hang Seng China Enterprises Index dropped 1.02% to 8,340.83, while the Hang Seng Tech Index lost 1.77% to 4,707.62. On a weekly basis, the Hang Seng Index is down 2.15%, the HSCEI is down 2.24%, and the Hang Seng Tech Index is down 3.1%. Huatai Securities believes that as the momentum of short-covering recedes and the 30-year US Treasury yield remains at multi-year highs, pressuring valuations, earnings certainty from the mid-year reporting season will become the dominant variable. China Securities Co. notes that for Hong Kong stocks to achieve a "sustained bull market reversal," they must overcome two major hurdles: corporate earnings flexibility and liquidity constraints.
Among blue-chip stocks, SMIC (00981) led the gainers, closing up 4.81% at HKD 70.80, with a turnover of HKD 12.061 billion, contributing 20.89 points to the index. SMIC's second-quarter revenue hit USD 3.006 billion, a sequential increase of 20% and a year-on-year rise of 36.1%. Profit attributable to the company's owners was USD 479 million, surging 261.7% year-on-year and 142.7% sequentially. The company expects third-quarter revenue to grow by 2% to 4% sequentially, with gross margins further improving to between 26% and 28%. Other blue-chip performers included China Telecom Corporation Ltd (00728), which rose 4.07% to HKD 4.725, contributing 3.72 points to the Hang Seng Index, and MTR Corporation (00066), which gained 2.85% to HKD 33.24, contributing 2.6 points. On the downside, CK Asset Holdings Limited (01113) fell 6.44% to HKD 45, dragging the index down by 9.16 points, while Laopu Gold Co Ltd (06181) dropped 3.7% to HKD 333.6, weighing on the index by 1.22 points.
Analysis of key sectors
In market sectors, large-cap tech stocks faced a pervasive sense of pressure today. The semiconductor sector showed clear divergence: SMIC surged nearly 5% post-earnings to lead blue chips, while HUA HONG GRACE (01347) slumped over 11% due to weaker-than-expected Q3 revenue guidance. Container shipping stocks broadly rose after Maersk's strong Q2 results and an upward revision of its full-year guidance. Some optical communication concepts rallied against the trend, with Cambridge Industries Group surging over 9%. Gold stocks saw some gains, with China Gold International Resources Corp Ltd (02099) jumping over 14% after its earnings report. Conversely, the previously strong pharmaceutical stocks mostly retreated.
The memory concept bucked the overall downtrend. By the close, the CSOP SK Hynix Daily (2x) Leveraged Product (07709) rose 10.01% to HKD 36.94, while the CSOP Samsung Electronics Daily (2x) Leveraged Product (07747) gained 7.39% to HKD 85.46. GigaDevice Semiconductor (HK) Co Ltd (03986) advanced 2% to HKD 511. Overnight, memory chip giant SanDisk surged over 13%, driving US memory stocks higher. The long-term financial targets SanDisk provided at its Investor Day far exceeded expectations, prompting the market to reassess the cyclical pricing logic for NAND. SanDisk forecasts revenue to grow at a mid-to-high teens percentage rate during fiscal years 2028 to 2030, with non-GAAP gross margins expected to remain around 80% and operating margins around 75%. Additionally, SK Hynix Chairman Chey Tae-won indicated that next year could be the most severe memory shortage year in recent times.
Container shipping stocks broadly rose. By the close, COSCO SHIPPING Holdings Co Ltd (01919) increased 1.71% to HKD 15.49, Orient Overseas (International) Limited (00316) rose 1.09% to HKD 148.1, and SITC International Holdings Company Limited (01308) edged up 0.44% to HKD 40.78. Maersk reported strong Q2 results for 2026, driven by robust market demand, rising spot freight rates, and broad-based growth across all business segments. Based on its actual performance and higher "visibility" into the remainder of the year, the company raised its full-year guidance and expects global container transport volumes to grow by approximately 4% in 2026. The report noted that spot freight rates increased significantly during the period due to strong demand, worsening trade flow imbalances, tight capacity, and increased port congestion in Europe, the Middle East, the East Coast of South America, and West Africa. Maersk's ocean shipping revenue grew by 23%.
Some gold stocks traded in positive territory. By the close, China Gold International Resources Corp Ltd (02099) surged 14.64% to HKD 214.6, Lingbao Gold Group Company Ltd (03330) rose 4.18% to HKD 21.42, and Chifeng Jilong Gold Mining Co Ltd (06693) added 1.04% to HKD 37. China Gold International reported that its sales revenue for the first half of the year reached USD 914.2 million, a 57.5% increase year-on-year. Mine operating profit reached USD 620 million, up 124%, and profit attributable to the company's owners was approximately USD 507 million, a 153.31% increase year-on-year. Company Chairman Hou Chenguang described this as the most impressive quarterly and half-year results in the company's history. Notably, the US Bureau of Labor Statistics reported that the July Producer Price Index (PPI) rose less than expected, and combined with the cooling CPI data released the previous day, inflationary pressures are further easing, leading to continued cooling market expectations for Federal Reserve rate hikes.
Notable stock movements
Marketingforce Management Ltd (02556) hit a new high for the period, closing up 15.23% at HKD 56. The company released its interim results, reporting total revenue of RMB 1.96 billion, a 111.2% increase year-on-year, and a net profit of RMB 203 million, up 466.1% year-on-year. AI applications were the core growth driver, with revenue from that segment reaching RMB 1.128 billion, up 123.7% year-on-year. Operating cash flow achieved a net inflow of RMB 500 million, further demonstrating the healthy self-sustaining cash generation mechanism of the group's AI application business.
GDS Holdings Ltd (09698) surged post-earnings, closing up 10.31% at HKD 34.24. The company reported Q2 results with net revenue increasing 6.5% year-on-year to RMB 3.088 billion. Net profit was RMB 838 million, compared to a net loss of RMB 70.584 million in the same period last year, achieving a turnaround to profitability.
Weilong Delicious Global Holdings Ltd (09985) maintained strong momentum throughout the day, closing up 10.47% at HKD 8.705. The company's first-half total revenue reached RMB 3.715 billion, a 6.7% year-on-year increase. Net profit for the period was RMB 766 million, up 4% year-on-year. Gross margin improved by 0.6 percentage points to 47.8%. The board declared an interim dividend of HKD 0.19 per share and a special dividend of HKD 0.09 per share, totaling HKD 0.28 per share, representing a payout ratio of 90%.
Guoxia Technology (02655) issued a profit alert, closing up 8.5% at HKD 17.99. The company expects to achieve revenue of approximately RMB 1.35 billion to RMB 1.45 billion for the first half of 2026, representing a 95.26% to 109.7% increase year-on-year. Profit is expected to be between RMB 55 million and RMB 65 million, compared to a profit of approximately RMB 5.6 million in the same period of 2025, an increase of 882% to 1061% year-on-year.
HUA HONG GRACE (01347) saw its share price slump, closing down 11.55% at HKD 130.2. Jefferies noted that the company's Q2 revenue was in line with expectations, but gross margin and EBIT exceeded forecasts due to higher average selling prices and cost control measures. Net profit lagged expectations due to lower other income. The Q3 revenue guidance was below expectations, while gross margin guidance was in line.
CK Asset Holdings Limited (01113) and CK Hutchison Holdings Limited (00001) faced pressure throughout the day. By the close, CK Asset fell 6.44% to HKD 45, and CK Hutchison dropped 3.11% to HKD 70.05. CK Asset reported first-half revenue of HKD 40.306 billion, a 58.77% increase year-on-year, and net profit of HKD 8.683 billion, up 37.78% year-on-year. The company declared an interim dividend of 41 HK cents, a 5.13% increase year-on-year. Bank of America Securities believes that CK Asset's decision not to declare an interim special dividend may disappoint the market. CK Hutchison reported first-half profit attributable to shareholders of HKD 26.8 billion, a massive 30.46-fold increase year-on-year. Excluding one-off items and the UK telecom business, core profit grew 7% year-on-year to HKD 12.581 billion. An interim dividend of HKD 0.7455 per share was declared, a 5% increase year-on-year.
Comments