Hang Seng Index rose 2.39%
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The Hong Kong stock market showed a significant rebound this week, with technology stocks leading the rally to repair valuations. As of Friday’s close, the Hang Seng Index(HSI) rose 2.39% for the week; the Hang Seng TECH Index(HSTECH) performed even stronger, with a weekly gain of 4.75%.
The main driver of the market’s rise was the dramatic de-escalation of US-Iran tensions during the week, which caused risk premiums to fall and prompted capital to flow back into Hong Kong-listed tech leaders. Early in the week, market risk aversion intensified due to news of an attack on UAE oil facilities and a standoff between the US and Iran in the Strait of Hormuz; however, the US Defense Secretary later reaffirmed the validity of the ceasefire agreement, and US media reported that the US and Iran were close to reaching a temporary deal. This cooling of geopolitical risk became the core catalyst for the rebound in Hong Kong stocks.
On the macroeconomic front, domestic fundamentals showed signs of moderate recovery, providing a bottom-line support for the market. Foreign exchange reserve data showed that China’s foreign exchange reserves returned to the $3.4 trillion mark at the end of April, reaching $341.0547 billion, indicating stable cross-border capital flows and enhanced resilience in the foreign exchange market. The central bank has increased gold reserves for 18 consecutive months, further enhancing the stability of the financial system. On the policy front, the General Office of the CPC Central Committee and the General Office of the State Council issued the “Assessment Measures for the Effectiveness of Beautiful China Construction,” clarifying the long-term policy direction in environmental protection and green energy, which is beneficial for related utilities sectors. In addition, the Ministry of Industry and Information Technology approved commercial trials for satellite IoT, providing substantial policy support for the low-orbit satellite communication industry.
From a sector perspective, technology and manufacturing-related sectors stood out. Driven by the acceleration of global AI commercialization and the surge in A-share computing hardware, Hong Kong-listed semiconductor and electronic components sectors led the gains. KB Laminates(01888) saw a weekly gain as high as 24.73%, and KINGBOARD HLDG(00148) also rose by 17.52%. Both belong to Electronic-Parts(G3680IG.HK), showing the market’s optimistic expectations for demand for upstream copper-clad laminates and PCBs. In contrast, affected by the fall in oil prices, the energy and oil & gas sectors saw a pullback, showing the market’s direct reaction to the de-escalation of geopolitical tensions.
The US stock market turned volatile and retreated this week after hitting historic highs. The Dow Jones Indus Actual(0DJIA) rose slightly by 0.2% for the week; the Nasdaq Composite(0NDQC) rose 2.75% for the week; and the S & P 500 Index(0S&P5) rose 1.48% for the week. Although the Nasdaq and S&P 500 once hit record highs driven by a strong earnings season early in the week, they gave back some of their gains towards the end of the week due to doubts about the prospects of a US-Iran deal and tariff threats from Trump. Chip stocks led the decline, showing market jitters at high levels.
In terms of economic data, the US ISM Manufacturing PMI for April was released at 52.7, flat with the previous value, indicating that the manufacturing sector maintained its expansion. April ADP employment figures showed an increase of 109,000 jobs, higher than the forecast of 99,000, indicating that the labor market remains robust. However, weekly initial jobless claims were 200,000, slightly lower than expected, showing the resilience of the job market. These data reinforced market expectations that the Federal Reserve will maintain its interest rate policy in the short term, while also exacerbating concerns about sticky inflation. Geopolitically, Iran’s attack on UAE oil facilities early in the week caused crude oil prices to plunge and then rebound on news of a ceasefire. The sharp volatility in oil prices was transmitted to the stock market, causing a seesaw effect between the energy sector and tech stocks. In addition, the Trump administration threatened to impose tariffs on EU automobiles and would take action if no agreement was reached by July 4. The reignition of this trade friction risk put a damper on market sentiment.
The A-share market performed strongly this week, charting an independent course with major indices closing higher consecutively. The CSI 300(000300) index had a weekly gain of 1.34%. In terms of sectors, AI applications and computing hardware became the absolute main theme, with market hotspots highly concentrated in the technology growth sector.
Macro policy and industry dynamics were the core drivers of the A-share rally. Data from the “May Day” holiday showed that domestic tourist trips reached 325 million, with spending of 185.49 billion yuan, a year-on-year increase of 2.9%. This moderate data on consumption recovery provided expectations for stable growth for the market. On the policy front, the introduction of the “Assessment Measures for the Effectiveness of Beautiful China Construction” and the approval of commercial satellite IoT use directly stimulated valuation repairs in the environmental protection and aerospace communication sectors. At the industry capital level, the AI industry reached an important turning point. ByteDance’s “Doubao” launched a paid subscription model, reaching up to 500 yuan/month, marking that the AI industry has officially entered the “commercial monetization” stage from “burning money to grab market share.” This logic greatly boosted investment confidence in computing hardware and application ends.
The Top 33 portfolio outperformed the broader market this week, with an average weekly gain of 1.48%. Of the 23 constituent stocks, 19 recorded gains, with KB Laminates(01888) posting a weekly gain as high as 24.73%. Since its inception, the cumulative gain of this portfolio has consistently outperformed the Hang Seng Index (HSI), demonstrating the ability of selected high-quality assets to generate excess returns in the Hong Kong stock market’s valuation repair rally. The Model Portfolio, however, performed weakly this week, with an average weekly loss of 0.87%. Only 1 stock rose, while 4 fell. Among them, CATL(03750) rose 7.07% for the week, showing that the model portfolio is facing some adjustment pressure under the current rapid market style rotation.
From a technical analysis perspective, the Hang Seng Index(HSI) showed a restorative rebound. The current price has recovered to above the 5-day average price (+0.56%), 10-day average price (+1.24%), and 20-day average price (+1.21%), and has successfully broken above the 50-day average price (+2.36%), with short-term technical patterns turning significantly stronger. The index’s lower support level has moved up to the 26,000 point psychological barrier, and the upper resistance level points to the one-year high area of 28,056.1 points. The Hang Seng TECH Index(HSTECH) has an even stronger technical pattern. The current price is significantly higher than the 5-day average price (+1.65%), 10-day average price (+2.98%), and 20-day average price (+3.0%), and has broken through the 50-day average price (+3.26%). However, it is still trading below the 200-day average price (-8.06%), indicating sufficient momentum for a short-term oversold rebound, but the medium-to-long-term trend repair will still take time.
Southbound capital showed a net outflow this week, with a cumulative net outflow of approximately HK$194 million. Despite the significant rebound in the indices, southbound capital did not add positions on a large scale, indicating that mainland investors have some divergence at current levels, or are inclined to participate in the market through channels other than the Stock Connect, or are taking profits on some positions.
The main logic of the global market this week lies in the game between “geopolitical de-escalation” and “tech monetization.” Hong Kong stocks achieved valuation repair driven by the cooling of US-Iran tensions and the A-share tech bull market, with technology and electronics sectors leading the gains. Looking ahead, the market focus will be on the final outcome of US-Iran negotiations and the commercial progress of the global AI industry. If geopolitical risks are further alleviated, the valuation repair rally in Hong Kong stocks is expected to continue; if trade frictions escalate, it may put pressure on assets related to the global supply chain. Investors should pay close attention to capital flows and the sustainability of industrial policies.
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published on May 8, 2026