Hang Seng Index Drops 0.88%
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The Hong Kong stock market generally exhibited a volatile and downward trend this week. The Hang Seng Index(HSI) declined by 0.88% for the week, while the Hang Seng TECH Index(HSTECH) showed relative resilience, edging up by 0.09%. Market divergence remained pronounced this week: on one hand, A-shares and certain tech growth sectors maintained their vitality; on the other hand, influenced by expectations of tightening external liquidity and local regulatory disruptions, overall risk appetite in Hong Kong stocks retreated, causing the HSI to fail to sustain its previous rebound momentum.
From a macroeconomic and policy perspective, Hong Kong stocks are currently still in a game theory phase where “external liquidity constraints” and “internal policy support” coexist. Externally, the US May ISM Manufacturing PMI came in at 54, exceeding market expectations. Coupled with the April Core PCE Price Index rising 3.3% year-on-year, indicating persistent inflation stickiness, market expectations for the Federal Reserve to maintain a tighter policy stance have heated up again. For Hong Kong stocks as an offshore market, high-running US Treasury yields and tight dollar liquidity continue to exert some valuation pressure. Domestically, policymakers continue to send signals of stabilizing growth and promoting transformation. The State Council issued the 15th Five-Year Plan for Urban Renewal and the 15th Five-Year Plan for Accelerating Agricultural and Rural Modernization, clarifying key directions such as the renovation of dilapidated housing and agricultural modernization, providing mid-term policy support for related industrial chains. Additionally, the State Administration for Market Regulation released the Guidelines for AI Metrology System and Capacity Building, which will help promote the standardization of the AI industry and further strengthen institutional support for the tech sector.
For the Hong Kong stock market itself, the current environment can be summarized as a combination of “marginal easing of external relations, internal growth policy support, and increased tech industry policies.” Periodic positive signals in China-US economic and trade fields, along with expected easing of Middle East tensions, have helped repair market sentiment temporarily. Meanwhile, as a crucial hub connecting mainland China and international capital markets, Hong Kong’s institutional and platform value continues to manifest. Against the backdrop of ongoing synergies in the “A+H” financing platform and the Cross-boundary Wealth Management Connect, the appeal of Hong Kong stocks to medium- and long-term allocation funds remains supported. Particularly in the inaugural year of the “15th Five-Year Plan,” coordinated fiscal and industrial policies are providing a more sustainable fundamental and policy foundation for structural opportunities in Hong Kong stocks.
Consequently, sector performances showed extreme structural divergence, with certain sub-sectors bucking the trend and surging amid capital pursuit. The most outstanding performer this week was the Comml Svcs-Staffing(G1011IG.HK) sector, which soared by 8.54%, acting as the strongest market leader. Close behind was the Leisure-Movies & Related(G7810IG.HK) sector, up 7.23% for the week, showing that recovery expectations for offline consumption and the cultural entertainment industry are continuously attracting capital favor. Furthermore, the Security/Sfty(G3999IG.HK)sector also performed well, gaining 7.18%. Amid the volatile market pattern, this sector demonstrated strong defensive attributes and downside resistance, drawing concentrated allocations from risk-averse funds.
The US stock market performed strongly this week, with all three major indices hitting record highs. The Dow Jones Indus Actual(0DJIA)rose 1.04% for the week; the Nasdaq Composite(0NDQC) dipped 0.53%; and the S & P 500 Index(0S&P5) edged up 0.06%. The market was entirely dominated by AI giants; despite pressures from high inflation, robust earnings and capital expenditure plans from tech stocks kept pushing the indices higher.
US macroeconomic data indicated that inflationary pressures remain stubborn. The April Core PCE Price Index rose 3.3% year-on-year, above expectations, leading to cooling expectations for Fed rate cuts. However, market focus is primarily centered on the robust growth of the AI industry. NVIDIA announced it would increase its spending on TSMC to $150 billion and launch a massive share buyback program; Meta announced testing paid subscription services, ushering in a new stage of commercial monetization. Furthermore, expectations of mega IPOs like SpaceX and OpenAI have further reinforced the tech-centric nature of US stocks. Although repeated news regarding US-Iran negotiations caused crude oil price fluctuations, it did not pose substantial obstacles to the overall upward trend of US equities.
The A-share market staged a bottom-testing and rebound rally this week, with tech stocks serving as the primary leaders. The CSI 300(000300) fell 1.54% for the week. In terms of sectors, AI and semiconductor sectors were particularly prominent, with the STAR 50 index surging and newly listed stocks like Changjin Photonics performing strongly.
Domestic policy and fundamentals presented a multi-pronged flourishing landscape. Data from the National Bureau of Statistics showed that profits of industrial enterprises above designated size grew by 18.2% year-on-year from January to April, with profits in electronic specialized materials manufacturing skyrocketing by 601.7%, demonstrating strong industrial growth momentum. On the policy front, the State Council’s 15th Five-Year Plan for Urban Renewal provided clear policy guidance for relevant industrial chains. Simultaneously, DeepSeek’s announcement of a permanent API price cut ignited market imagination regarding AI applications; Huawei released the “Tao Law,” attempting to reconstruct semiconductor evolution logic. These industry dynamics significantly boosted market confidence. Moreover, the approval of CXMT Technology’s STAR Market IPO, aiming for a record-breaking fundraising amount, further stimulated market enthusiasm for domestic substitution in semiconductors.
Regarding portfolio performance, the Top 33 portfolio generally underperformed the broader market this week, with an average weekly decline of 1.77%. Among the 33 constituent stocks, 14 advanced and 19 declined, with PLOVER BAY TECH(01523) leading the gains at 11.5% for the week. Despite short-term headwinds, the portfolio’s cumulative return since inception continues to outpace the Hang Seng Index, demonstrating that a premium asset selection strategy possesses strong alpha-generation capabilities during the HK stock valuation recovery process. The Model Portfolio performed relatively steadily this week, with an average weekly drop of 4.48%, with CATL(03750) falling 4.5% for the week, reflecting a degree of allocation resilience in a volatile market.
Technically, the Hang Seng Index(HSI) is currently in a consolidation phase. The index has broken below its 5-day, 10-day, and 20-day moving averages, deviating by -1.94%, -1.73%, and -2.95% respectively, indicating a weakening short-term technical posture. However, it still trades above the 50-day moving average, meaning the medium-term trend has not been completely compromised. In the short term, the area around 24,900 points forms a crucial support zone, while upside resistance remains near the one-year high of 28,056.1 points. The Hang Seng TECH Index(HSTECH) shows a relatively steadier technical formation, currently trading near the 10-day moving average, but constrained by the 5-day moving average in the short term. Its medium-term trend requires observation on whether it can stabilize in key support areas going forward.
On the capital flow front, Southbound funds maintained net inflows this week, accumulating net purchases of approximately HKD 22.821 billion. This indicates that mainland funds still recognize the medium- and long-term allocation value of core Hong Kong assets. Structurally, tech growth directions such as semiconductors continued to see position increases. Stocks like SMIC (00981) received notable attention, showing that capital is concentrating around the highly prosperous and strongly policy-supported tech mainline.
Overall, the core logic of global markets this week remains the tug-of-war between “continuing AI prosperity” and “persistent inflationary pressures.” Hong Kong stocks maintained volatility amidst intertwined external liquidity pressures and internal policy support, closing slightly lower on a weekly basis; meanwhile, US stocks maintained high-level strength led by tech giants. Looking ahead, the market will continue to closely watch the Fed’s policy path, shifts in the global interest rate center, and actual progress in AI commercialization. If US Treasury yields remain persistently high, valuations of global risk assets may still face some suppression, especially warranting caution against exacerbated volatility in previously high-gain, high-valuation sectors. However, against the backdrop of continuous policy support, upward industry trends, and improving capital structures, structural opportunities in tech and high-end manufacturing remain worthy of sustained attention. Markets carry risks; investment requires prudence.
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published on June 5, 2026