Hang Seng Index rose 3.69%
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Hong Kong equities overall showed a pattern of range-bound recovery and sector divergence this week. The Hang Seng Index(HSI) rose 3.69% for the week, while the Hang Seng TECH Index(HSTECH) rose 4.31%. At the start of the week, the market came under pressure from a global AI sector pullback, escalating U.S.-Iran tensions, and volatility in U.S. technology stocks. Later, sentiment stabilized as policy expectations improved, leading tech names recovered, and low-valuation sectors provided support. Overall, this week’s gains were mainly a technical rebound under policy support.
On the macro and policy front, Hong Kong equities were mainly affected by external interest rates, geopolitical conflict, and trade policy. U.S. June core PCE rose 3.3% year over year, with inflation continuing to ease, but the support for valuation recovery in growth stocks remained limited. Initial jobless claims for the week of July 25 came in at 197,000, below expectations, indicating that the U.S. labor market remained resilient. The Fed kept rates unchanged in July, but three FOMC voters advocated a rate hike, showing that policy divergence remains and concerns over how long rates will stay at elevated levels have not faded. Meanwhile, the U.S. imposed tariffs of 10%-12.5% on 60 economies. Combined with the escalation of the U.S.-Iran conflict and Brent crude briefly returning to $90, this further increased uncertainty around global trade and inflation, weighing on Hong Kong’s externally oriented growth sectors.
Mainland policy continues to provide medium-term support for Hong Kong equities. The Politburo meeting emphasized implementing a more proactive fiscal policy and a moderately loose monetary policy, stepping up countercyclical adjustments, and further advancing the “AI+” initiative and comprehensive reforms in capital market financing and investment. These statements help stabilize expectations for domestic demand, technological innovation, and capital market reform, supporting Hong Kong-listed consumer, financial, and high-dividend assets. At the industry level, semiconductors, computing power hardware, and AI large-model concepts were more affected by volatility in overseas technology stocks, while banks, household appliances, autos, and parts of the consumer sector remained relatively resilient. Hong Kong equities continued to exhibit a pattern of technology divergence and domestic-demand support.
Sector rotation in Hong Kong accelerated noticeably this week, with the top gainers concentrated in theme-driven and high-beta areas. Security/Sfty(G3999IG.HK) led the market with a weekly gain of 19.54%, making it the strongest performer amid improving risk appetite, which shows that capital allocation to event-driven sectors increased significantly. Computer Sftwr-Gaming(G3584IG.HK) rose 10.45% for the week, benefiting from AI applications, content consumption, and summer-season themes. Trading activity in the sector was strong, reflecting the market’s continued search for subsectors with a growth narrative and earnings upside. Consumer Svcs-Education(G8240IG.HK) gained 9.72%, indicating that policy expectations and low-base recovery themes continued to attract capital attention. Despite relatively large intraday volatility, the sector delivered a solid weekly performance, reflecting both valuation-repair and sentiment-repair trades.
U.S. equities also experienced significant volatility this week. The Dow Jones Indus Actual(0DJIA) rose 0.5%, the Nasdaq Composite(0NDQC) rose 0.59%, and the S & P 500 Index(0S&P5) rose 0.35%. Although all three major indices finished the week higher, technology and semiconductor sectors diverged sharply during the week, and the market repeatedly repriced assets based on earnings and macro data.
The core driver of U.S. market volatility remains the reassessment of expected returns on AI investment. At the start of the week, investors questioned whether massive AI capex would translate into returns, triggering a pullback in technology and semiconductor stocks. Midweek, Microsoft’s stronger-than-expected earnings and robust cloud performance briefly boosted the AI theme. But by the end of the week, Apple’s guidance fell short of expectations and Meta’s capex outlook appeared aggressive, reigniting concerns about the return on AI investment and the ability to convert it into profits. U.S. June core PCE at 3.3% year over year, initial jobless claims at 197,000, and second-quarter preliminary GDP annualized growth of 1.5% together pointed to a combination of “easing inflation, resilient employment, and slowing growth.” The Fed held rates steady in July, but internal hawkish dissent increased, extending expectations for rates to remain high. Geopolitical conflict and tariff disruptions further amplified U.S. market volatility.
A-shares this week showed clear index divergence and sector rotation. The CSI 300(000300) fell 1.31% for the week, and Friday turnover reached RMB 2.36 trillion. Early in the week, technology stocks were lifted by the strong debut of ChangXin Technology; midweek, high-valuation areas such as AI hardware, semiconductors, and CPO corrected sharply, weighing on the main indices; approaching the weekend, the release of positive signals from the Politburo meeting led large financials and consumer sectors to recover, and market style began to rebalance.
Policy support for A-shares remained strong. The Politburo meeting proposed a more proactive fiscal policy and a moderately loose monetary policy, stepped up countercyclical adjustments, and called for timely planning of incremental policy measures. It also emphasized further advancing the “AI+” initiative, deepening comprehensive reforms in capital market financing and investment, and expanding domestic demand, boosting consumption, and stabilizing the property market. On the external front, although U.S. inflation is easing, rates remain elevated, while tariffs and geopolitical risks are rising. These factors may still disrupt export chains and technology-growth valuations. In the short term, funds are also more inclined to rotate away from crowded sectors toward policy beneficiaries and names with stronger earnings certainty.
The Top 33 portfolio performed steadily this week, with an average weekly gain of 1.34%. Of the 33 constituents, 23 rose and 10 fell. Among them, BCQ(01963) led with a weekly gain of 5.55%, showing that banks and high-dividend names have relatively strong defensive characteristics in a choppy market. Since inception, the portfolio has continued to outperform the Hang Seng Index (HSI) on a cumulative basis, indicating that in an environment of valuation recovery and repeated volatility in Hong Kong equities, carefully selected quality assets still have strong alpha potential. The model portfolio also performed well this week, with an average weekly gain of 4.85%. MIDEA GROUP(00300) gained 4.85% for the week, reflecting the allocation value of leading consumer-manufacturing names during market turbulence.
From a technical perspective, the Hang Seng Index(HSI) extended its rebound this week, with the overall trend shifting from earlier weakness and consolidation to a short-term recovery. The index has now moved above its 5-day, 10-day, and 20-day moving averages, indicating improvement in the short-term trend, though medium-term moving-average resistance still needs to be cleared. In terms of volume, trading activity has not expanded materially during the recovery, suggesting that capital remains cautious about the sustainability of the rebound. The Hang Seng TECH Index(HSTECH) also rebounded, but with significantly greater volatility, reflecting continued constraints on growth stocks from external rates and risk appetite. In terms of support and resistance, short-term support for the Hang Seng Index can be monitored around the one-year low area near 22,518 points, while resistance is near the one-year high area around 28,056 points. Medium-term support for the Hang Seng TECH Index is near 4,229.94 points. If it cannot successfully break above and hold key moving averages with meaningful volume, the sustainability of the rebound remains uncertain. Overall, Hong Kong equities are still in a recovery phase technically, but have not fully broken out of the pressure zone.
Southbound funds recorded cumulative net sales of about HK$18.71 billion this week, indicating that amid rising overseas volatility and repeated swings in Hong Kong’s technology sector, some funds chose to take profits temporarily. Structurally, however, southbound funds were not exiting entirely; instead, they showed clear divergence across sectors and individual names. Tencent Holdings and other leading names saw net buying, while Alibaba and SMIC were reduced, showing that capital is still rotating and concentrating into select holdings. Medium term, if southbound funds return, they could provide stronger support for Hong Kong equity valuation recovery, especially benefiting core assets with high fundamental certainty and valuations still in the historical lower-middle range.
The main themes in global markets this week remained the interplay of geopolitical conflict, easing inflation, AI divergence, and policy signaling. Hong Kong equities continued to recover under policy support and structural capital allocation. Going forward, investors still need to watch the Fed’s policy path, changes in U.S. tariffs and geopolitical conditions, capex guidance from AI giants, and the persistence of southbound fund flows. The above content is for research reference only and does not constitute investment advice.
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published on July 31, 2026