To The Moon

The Hang Seng Index opened 0.27% lower, while the Hang Seng Tech Index declined by 0.31%. The semiconductor sector saw notable declines, with Montage Technology Co.,Ltd. (06809) and GigaDevice Semiconductor Inc. falling over 4%, Hua Hong Semiconductor Ltd. dropping more than 3%, and Semiconductor Manufacturing International Corporation edging down nearly 1%.

Market Outlook and Analyst Views

A recent research report from China Securities indicates that the Hong Kong market has gradually completed a phase of bottoming out and established a medium-term base following April's TACO trading activity. The market's momentum is now shifting from the initial recovery driven by valuation and sentiment repair to a new phase propelled by earnings verification and improving risk appetite. Over the past month, Hong Kong's performance has lagged, primarily because global capital has favored markets with greater exposure to AI computing power. The Hong Kong market's weightings are more concentrated in internet platforms, finance, consumer sectors, dividend stocks, and the application side of AI, offering relatively limited direct exposure to the computing power supply chain. The market previously viewed the computing power segment as having the most certain fundamentals, leading to less focus on Hong Kong due to its limited computing power components. If the AI trade expands from pure computing power to areas like computing leasing, cloud services, AI applications, cybersecurity, data platforms, and enterprise software, the structural disadvantages of Hong Kong's tech assets could gradually transform into structural advantages.

China Galaxy Securities notes that the Hang Seng Tech Index's current position at a historically low valuation trough suggests limited room for further significant declines, offering a relatively high margin of safety. From a short-term currency perspective, it may be prudent to wait for the US dollar to retreat to a reasonable range. In the medium term, positioning ahead of "certainty" and awaiting a rebound from the index's bottom is advised, with key revenue realization phases expected in 2026–2027. Long-term, as the proportion of AI-related business revenue continues to grow, the index's valuation framework is anticipated to shift from an "internet valuation" model to a "tech growth valuation" model.

Guotai Junan Securities highlights that the Hong Kong market faces periodic liquidity headwinds in the second half of the year. July and September represent two peaks for share lock-up expiries, though the pressure is concentrated in specific sectors. Concurrently, IPOs are effectively optimizing the market structure of Hong Kong stocks. Once these headwinds subside, the market's perception of value-for-money is expected to return. Valuation percentiles for most industries in Hong Kong are relatively low; after international risks and liquidity concerns ease, the market may revert to a fundamental assessment of simple value and attractiveness.