HSI Down 3.21%
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Amid the intertwining of external liquidity pressures and supportive domestic policies, the Hong Kong stock market continued its volatile adjustment this week. The Hang Seng Index(HSI) fell 3.21% for the week, while the Hang Seng TECH Index(HSTECH) showed relative resilience, declining by 2.14%. Early in the week, disruptions in the Middle East significantly heightened risk-aversion sentiment, placing broad pressure on tech and growth sectors. By mid-week, as the Trump administration canceled its planned military strikes against Iran, geopolitical risks marginally eased. Market risk appetite recovered, driving major indices to rebound from their lows. However, looking at the weekly performance, expectations of tightening external liquidity remained the dominant factor suppressing HK stock valuations, and the indices overall failed to break free from their weak, volatile pattern.
From a macro perspective, the core pressure on HK stocks continues to stem from the renewed tightening of expectations regarding Federal Reserve policy. The US May retail sales m/m came in at 0.9%, significantly above the market expectation of 0.5%. This highlights the continued resilience of US consumption and further reinforces market concerns that the Fed’s new chair, Kevin Warsh, might adopt a more aggressive monetary policy. Meanwhile, the Fed’s dot plot indicated rising expectations for rate hikes later this year, pushing up US Treasury yields and continuously suppressing the valuations of the offshore HK market. In contrast, domestic policy continued to send positive signals. The State Council issued the “15th Five-Year Plan for Implementing the Employment Priority Strategy,” emphasizing the enhancement of technological innovation capabilities. The National Data Administration released the “Implementation Plan for Promoting the Construction of High-Quality Industry Datasets,” systematically deploying “Data Empowering AI” for the first time, which helped boost expectations for tech and data element-related sectors. Additionally, the Securities and Futures Commission (SFC) of Hong Kong clarified that licensed firms can provide services to existing mainland clients, effectively alleviating market concerns over regulatory tightening.
At the sector level, HK stocks continued to exhibit significant structural divergence this week, with capital heavily concentrated in AI applications, the electronic hardware supply chain, and high-end equipment. According to the latest industry data, the top three O’Neil sectors by weekly gains were Computer Sftwr-Enterprse(G3583IG.HK) with a staggering 62.28% gain, reflecting a significant warming in market expectations for enterprise software, AI application commercialization, and digital transformation. Electronic-Parts(G3680IG.HK) rose 26.36%, indicating sustained confidence in consumer electronics components, hardware upgrades, and the recovery of the tech supply chain. Machinery-Tools & Rel(G3541IG.HK) gained 19.56%, showing that amid expectations of improved capital expenditure in manufacturing upgrades, equipment renewals, and the industrial sector, high-end equipment-related directions are beginning to be repriced by capital.
In the US market, the three major indices showed divergent performance this week, but overall saw significant recovery in the latter half of the week. The Dow Jones Indus Actual(0DJIA) rose 0.57% for the week; the Nasdaq Composite(0NDQC) gained 0.51%; and the S & P 500 Index(0S&P5) dipped 0.15%. Early in the week, the resonance of strong economic data and high-interest-rate expectations rapidly escalated market concerns about further Fed tightening, putting pressure on tech stocks. However, as Middle East tensions eased, market risk appetite warmed up, and major indices rebounded significantly from their phase lows, exhibiting a “dip-then-recover” trend.
From the US macro environment, the market remains highly sensitive to the interest rate path. Stronger-than-expected retail sales data prompted investors to further revise their previously optimistic expectations of rate cuts this year, beginning to price in a longer-duration high-interest-rate scenario. This shift directly pushed up US Treasury yields, forming medium-term pressure on high-valuation tech sectors. However, by the end of the week, market focus clearly shifted toward geopolitics. Trump announced the cancellation of the planned military action against Iran, stating that a related agreement was nearing finalization. This drove international oil prices lower and cooled risk-aversion sentiment, providing tech growth assets with room for a phased recovery. Meanwhile, SpaceX confirmed its listing on June 12 with a fundraising scale of approximately $75 billion, poised to be one of the largest IPOs in history, further intensifying global market focus on the reshaping of the tech asset valuation system.
In the A-share market, the CSI 300(000300) rose 3.44% for the week. The market experienced a brief pullback early in the week due to external risk disruptions, but quickly recovered mid-week supported by policy expectations and industry catalysts, demonstrating strong resilience. In terms of sectors, data elements, chip exports, and the proposed mandatory national standards for the photovoltaic industry became key market focal points, reflecting that capital continues to actively position itself around policy support and industry outperformance.
Domestic policies and fundamentals continued to provide support for A-shares. National Bureau of Statistics data showed that the PPI rose 3.9% y/y in May, hitting a 46-month high and reflecting the continued improvement in industrial sector prosperity. On the policy front, the National Data Administration’s first systematic deployment of “Data Empowering AI” directly boosted the data element theme. Ministry of Commerce data indicated that chips became a major driver of export growth in May, further strengthening expectations for improved prosperity in the semiconductor supply chain. The proposed mandatory national standards for the photovoltaic industry are expected to accelerate the clearance of backward capacity and optimize the industry’s competitive landscape. Additionally, the State Administration for Market Regulation (SAMR) summoned e-commerce platforms and automakers for talks, sending a clear signal to curb inefficient competition and guide resources back to technological R&D, which helps enhance the medium-to-long-term valuation support for enterprises with core competitiveness.
Regarding portfolio performance, the HK33 portfolio underperformed the broader market this week, with an average weekly decline of 1.81%. Among the 33 constituent stocks, 8 recorded gains while 25 declined, indicating an overall weak performance. DONGYUE GROUP(00189) led the gains with a 24% increase. However, the portfolio’s cumulative return since inception has continued to outperform the Hang Seng Index, reflecting that the strategy of selecting high-quality assets still possesses a certain degree of alpha-generating capability during the HK stock valuation recovery process. The Model Portfolio performed relatively steadily this week, with an average weekly gain of 5.35%, led by CATL(03750) which also rose 5.35%, demonstrating the model portfolio’s solid allocation resilience in a volatile market.
From a technical perspective, the Hang Seng Index remains in a consolidation range with a weak short-term pattern. The index has currently broken below its 5-day, 10-day, and 20-day moving averages, trading 2.18%, 2.40%, and 4.22% below them respectively, indicating that the short-term trend still awaits repair. However, from a medium-term perspective, the index continues to trade near its 50-day moving average. The one-year low area around 23,690.94 points below constitutes important support, while upward resistance remains near the one-year high area of 28,056.1 points. The technical pattern of the Hang Seng TECH Index is similarly weak, currently trading below short-term moving averages such as the 5-day and 10-day. The sustainability of the short-term rebound remains to be further observed, with the key medium-term support level still around 4,567.28 points.
On the liquidity front, Southbound capital recorded a net outflow this week, with cumulative net selling of approximately HK$4.441 billion. This reflects that against the backdrop of rising external uncertainties, mainland funds are becoming more cautious in their HK stock allocations. Structurally, however, capital has not completely withdrawn but continues to adjust positions around core tech assets. The semiconductor sector saw capital inflows, indicating that funds are still executing high-low switches and concentrated positioning within the main tech theme.
Overall, the global market’s main theme this week continued to revolve around “high-interest-rate constraints” and “easing geopolitical risks.” HK stocks saw a tug-of-war between external liquidity pressures and internal policy support. While the index level continued its adjustment, structural opportunities have not completely disappeared. Looking ahead, market focus will remain on the policy path of the Fed’s new chair Kevin Warsh, the trend of US Treasury yields, and the potential impact of mega IPOs like SpaceX on the global tech stock valuation system. If the external interest rate center continues to remain elevated, global high-valuation assets may still face phased pressure. Investors need to be vigilant about the risk of intensified short-term volatility while keeping an eye on structural opportunities supported by policy backing and industry recovery logic.
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published on June 18, 2026