Major Asian markets experienced a significant downturn on Friday, with Hong Kong's key indices trending lower throughout the session. The Hang Seng Index once again fell below the 25,000-point threshold, while the Hang Seng Tech Index dropped over 5% at one point in the afternoon.
By the close, the Hang Seng Index had declined 1.78%, or 446.36 points, to 24,562.24, with a total turnover of HK$347.35 billion. The Hang Seng China Enterprises Index fell 2.18% to 8,136.73, and the Hang Seng Tech Index dropped 4.37% to 4,623.17. For the week, the Hang Seng Index gained 1.6%, the HSCEI rose 1.21%, and the Tech Index fell 2.09%.
Analysts note that after last year's substantial gains, Hong Kong's market has shown lackluster index performance this year. The market is currently considered to be in a "triple bottom" zone. Furthermore, the market structure includes significant accumulated short positions, which could provide upward momentum if the market reverses. Potential catalysts for a recovery include changes in both top-down macroeconomic factors and bottom-up industry narratives.
Blue-Chip Performance
Power Assets Holdings Ltd (HSI: 00006) led the gainers among blue-chips. Its shares closed up 3.01% at HK$59.8, with a turnover of HK$295 million, contributing 3.69 points to the Hang Seng Index. A recent research report upgraded its investment rating from "Hold" to "Buy," raising the target price from HK$56 to HK$70, citing a favorable macro environment for regulated utility assets and potential value-enhancing corporate actions.
Among other blue-chips, Orient Overseas (International) Ltd (HSI: 00316) rose 2.91% to HK$145, contributing 0.8 index points. BYD Electronic (International) Company Ltd (HSI: 00285) gained 2.22% to HK$23.98, adding 0.61 points. Conversely, Semiconductor Manufacturing International Corporation (HSI: 00981) plunged 9.97% to HK$67.70, dragging the index down by 48.14 points. Lao Feng Xiang Co Ltd (HSI: 06181) fell 6.27% to HK$350, subtracting 2.35 points.
Sector Movements
Major technology stocks were broadly lower, with Tencent down over 4% and Alibaba falling more than 3%. The global tech stock sell-off intensified, hitting AI hardware-related sectors like memory, semiconductors, and optical communications particularly hard. Biopharmaceutical stocks adjusted following a risk warning from a leading company. Gold stocks declined across the board as inflation expectations pressured prices, with spot gold falling below $4,000. Automobile stocks, robotics concepts, and airline shares also moved lower. In contrast, power stocks bucked the downtrend, supported by growth in electricity consumption data.
1. AI Hardware Stocks Suffer Heavy Losses
By the close, Kingboard Laminates Holdings Ltd (HSI: 01888) plummeted 14.26% to HK$41.98. Hua Hong Semiconductor Ltd (HSI: 01347) dropped 11.88% to HK$138.70. Yangtze Optical Fibre and Cable Joint Stock Ltd (HSI: 06869) fell 11.17% to HK$130.40. GigaDevice (HSI: 03986) declined 11.08% to HK$533.50.
The global tech sell-off accelerated, with major Asian markets experiencing their worst single-day decline this year. Japan's Nikkei 225 fell over 4%, and Taiwan's Weighted Index dropped more than 6%, with chip stocks being the hardest hit. This followed a 4.29% drop in the U.S. Philadelphia Semiconductor Index overnight, which has lost over 16% so far in July. Analysts suggest the speed and magnitude of declines in key Asian indices indicate panic selling, as investors rush to lock in gains for the remainder of the year. With July half over, traders' accumulating paper losses are further worsening market sentiment.
The sell-off in overseas markets is attributed to easing congestion in AI hardware trades, with concerns over excessive speculative fervor leading to collective risk-off positioning and profit-taking. Core sectors like semiconductors, AI computing power, and optical modules had strong performances in the first half, with many popular stocks posting significant year-to-date gains, accumulating substantial unrealized profits. Short-term correction risks have been building, with the adjustment starting from the year's top performers, clearly reflecting profit-taking behavior.
2. Gold Stocks Decline Across the Board
At the close, Chifeng Gold (HSI: 06693) was down 7.81% at HK$25.50. Zijin Mining Group Co Ltd (HSI: 02259) fell 6.76% to HK$96.50. Shandong Gold Mining Co Ltd (HSI: 01787) dropped 6.13% to HK$17.15. Zijin Mining Group Co Ltd (HSI: 02899) declined 4.80% to HK$29.38.
Geopolitical tensions, including U.S. airstrikes on targets in southern Iran and Iran's directive to Yemen's Houthis to potentially block the Strait of Hormuz, caused a rapid reaction in international oil prices. Analysts note that rising oil prices could push bond yields higher and might even prompt the Federal Reserve to consider raising rates as soon as September, thereby applying sustained pressure on gold. Additionally, recent comments from Federal Reserve officials warned that a single month of improved inflation data is insufficient to declare victory, and further policy tightening remains an option if price pressures do not continue to ease.
3. Power Stocks Defy Market Weakness
By the close, Datang International Power Generation Co Ltd (HSI: 01798) gained 3.23% to HK$1.28. Huaneng Power (HSI: 00902) rose 3.21% to HK$5.79. China Resources Power Holdings Co Ltd (HSI: 00836) advanced 1.79% to HK$18.17.
Data released showed China's total electricity consumption in June reached 898.1 billion kilowatt-hours, a year-on-year increase of 3.7%. Furthermore, electricity demand has maintained growth into July. On July 10th, the national power load hit a record high for the year, reaching 1.518 billion kilowatts, an increase of over 150 million kilowatts from early July—equivalent to adding Japan's entire electricity load. Looking ahead, analysts believe July and August remain critical periods for meeting peak summer demand. If high temperatures persist, residential cooling and commercial loads are expected to rise, while strong demand from industrial production, electric vehicle charging, and data centers will provide underlying support.
Notable Stock Movers
Stella Holdings (HSI: 01836) moved against the market trend, closing up 6.65% at HK$13.64. The company announced its unaudited consolidated revenue for the second quarter increased approximately 1.2% year-on-year to $449.3 million. For the first half, unaudited consolidated revenue rose about 1.5% to $786.7 million. The company reaffirmed its commitment to maintaining a dividend payout ratio of around 70% for regular dividends and stated that by 2026, it plans to distribute up to an additional $60 million in cash to shareholders through a combination of share buybacks and special dividends.
TCL Electronics Holdings Ltd (HSI: 01070) performed strongly, closing up 5.71% at HK$14.25. The company recently announced plans to acquire TCL Air Conditioner for HK$5.61 billion. Analysts view this move as transforming the company from a global TV leader into a comprehensive smart terminal platform, with clear logic for boosting both revenue scale and profit margins, high certainty for EPS accretion, and clear medium-to-long term value.
Dobot (HSI: 02432) shares plunged, closing down 12.84% at HK$23.22. At a critical juncture for its A-share listing, an individual claiming to be a co-founder and former executive publicly alleged via social media that the company's A-share prospectus contains significant ownership flaws and concealment, with all materials formally submitted to the Shenzhen Stock Exchange. The post accused the prospectus of containing false statements and deliberately concealing ownership disputes involving hundreds of millions.
Joinn (HSI: 06127) saw a notable correction, closing down 7.98% at HK$23.76. The company issued an announcement stating its stock price had deviated by over 20% in three consecutive trading days. It warned that the recent sharp increase reflects overheated market sentiment and irrational speculation, posing significant trading risks with the potential for a price decline at any time. Additionally, the company noted that the fair value of its biological assets is subject to various uncertainties and carries substantial valuation volatility risk.
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