At midday, the three major Hong Kong stock indices showed mixed performance. The Hang Seng Index rose by 0.39% to close at 25,774.47, while the Hang Seng Tech Index fell by 0.11%. The Hang Seng China Enterprises Index gained 0.39%.
In terms of sector performance, technology and internet stocks generally advanced. Bilibili saw an increase of over 3%, while Tencent and NetEase both rose by more than 2%. Alibaba, Baidu, and Kuaishou each gained over 1%. On the other hand, domestic banking stocks were active, with Industrial and Commercial Bank of China rising by more than 1%.
In contrast, gold stocks broadly declined, with China Gold International falling by over 4%. Semiconductor stocks also weakened, with TianShu Zhixin dropping by more than 5%.
The recent strength in domestic banking stocks is supported by multiple positive factors, including expectations for stabilizing and expanding net interest margins, sustained inflows from southbound capital, widespread institutional optimism, and their high-dividend defensive characteristics. Recently, banks such as China Construction Bank, Industrial and Commercial Bank of China, and Bank of China have continued to see significant net purchases from northbound capital. A Goldman Sachs derivatives report also noted that domestic banking stocks are attracting strong interest from northbound funds, with notable inflows into related call warrants. Several institutional research reports indicate that the banking sector's operating conditions have shown marginal improvement. In the first quarter of 2026, revenue and net profit growth rates improved significantly, and net interest margins have ended their long-term downward trend, showing signs of stabilization and recovery.
Regarding gold stocks, JPMorgan believes the upward trend in gold is "paused rather than reversed." If the Strait of Hormuz reopens in June, gold prices could potentially surge to $4,900–$5,100, with a year-end target of $6,000. For silver, the logic of outperforming gold has largely dissipated due to the end of a five-year deficit cycle and a potential 30% drop in solar energy-related silver demand. The gold-to-silver ratio is expected to rebound to 75:1.
In the semiconductor sector, former Samsung Electronics semiconductor division president Kyung Kye-hyun publicly warned that driven by significant capacity expansion by Chinese companies, global memory chip supply is expected to increase sharply in the second half of next year, which could lead to price declines. If the return on capital expenditure for large technology companies decreases, memory demand itself may also face contraction risks after 2028.
