Hang Seng Index Falls 1.13%
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The Hang Seng Index(HSI) declined by 1.13% this week, while the Hang Seng TECH Index(HSTECH) edged up modestly by 0.62%. The Hong Kong equity market overall exhibited a volatile and range-bound pattern, with clear divergence in performance across sectors. Weekly volatility was primarily driven by external macro factors, including recurring geopolitical tensions in the Middle East, sharp swings in global oil prices, and a significant cooling of Fed rate-cut expectations. Although HSI trading volume on the final day contracted by 7.92% compared to its 50-day average—indicating growing investor caution—the substantial inflow of southbound capital provided critical market support.
Hong Kong equities this week were highly correlated with the global macro backdrop. While U.S. February CPI data met expectations (2.4% year-over-year), it failed to reflect the recent surge in oil prices. As U.S.-Iran tensions escalated further, Brent crude breached USD 100 per barrel, sharply heightening market fears of resurgent inflation. Traders have now priced in fewer than one 25-basis-point rate cut by the Fed in 2026, pushing the 10-year U.S. Treasury yield up by over 20 basis points this week. As an offshore market, Hong Kong equities are acutely sensitive to shifts in global rate expectations and risk appetite, thus coming under downward pressure. Additionally, redemption pressures emerged in U.S. private credit markets, causing sharp declines in shares of financial institutions like Morgan Stanley, which further amplified global risk-off sentiment. Although China’s “Two Sessions” concluded smoothly and delivered positive policy signals, their supportive impact on Hong Kong stocks remained limited amid strong external headwinds.
Sector-wise, market leadership rotated toward defensive and energy-security themes. Traditional cyclical sectors stood out, benefiting from high oil prices and steady-growth expectations. CHINA COAL(01898)rose 5.85% for the week, supported by an O’Neil Score of 75 and an industry rank of 24, reflecting robust fundamentals and sector momentum. Utilities also attracted capital flows, with CHINA SUNTIEN(00956)gaining 5.56%. Notably, bank stocks surged unexpectedly: HUISHANG BANK(03698) led gains with a remarkable weekly increase of 15.47%, drawing safety-seeking investors with its extremely low price-to-book ratio of 0.39. In contrast, high-valuation growth sectors—particularly biotech and select consumer tech names—continued to face selling pressure.
U.S. equity markets experienced broad-based pullbacks this week, underscoring the profound impact of geopolitical risk on global asset pricing. The Dow Jones Indus Actual(0DJIA) plunged 1.73%, the S & P 500 Index(0S&P5) fell 1.00%, and even the Nasdaq Composite(0NDQC) was not spared, declining by 0.34%.
Market attention was entirely dominated by Middle Eastern developments. Iran’s vow to blockade the Strait of Hormuz posed a severe threat to global oil supply. Despite the International Energy Agency (IEA) announcing the largest-ever coordinated release of strategic petroleum reserves, market reaction was muted—highlighting deep-seated concerns about potential supply disruptions. This shock transmitted directly to financial markets: soaring oil prices fueled higher inflation expectations, dimming the Fed’s rate-cut outlook; simultaneously, fears of “stagflation” triggered widespread risk-asset sell-offs. Technology stocks bore the brunt—Philadelphia Semiconductor Index dropped nearly 3.5% on Friday, and Adobe tumbled 7% in after-hours trading following weak guidance. Financials also slid due to liquidity stress in private credit funds, with both Morgan Stanley and Goldman Sachs down more than 4%.
The A-share market demonstrated relative resilience. The CSI 300(000300) gained a modest 0.19% this week, with trading volume on the final day surging 17.25% above its 50-day average—indicating sustained domestic investor activity despite external turbulence. This resilience stems largely from strong domestic policy support.
The formal adoption of the “Fifteenth Five-Year Plan” outline has clarified long-term strategic priorities centered on high-quality development, technological innovation, and security-focused growth. The government work report’s GDP growth target of 4.5%–5% and its stance of “moderately accommodative” monetary policy have established a solid policy floor. Against this backdrop, market focus shifted to “security” and “self-reliance.” Energy-security-related sectors such as chemicals and coal rallied counter-cyclically, while hard-tech segments like computing infrastructure also showed strength mid-week. However, AI application-themed “lobster” concept stocks—after a speculative frenzy—faced regulatory warnings and underwent sharp corrections, signaling heightened market skepticism toward pure narrative-driven trades.
This week, the TOP33 portfolio declined by 2.50% (9 gainers, 24 decliners), slightly outperforming the HSI. The top performer was HUISHANG BANK(03698), surging 15.47%. In contrast, the Model Portfolio underperformed significantly, falling an average of 7.22% with all constituents in the red—led by CMOC(03993), which dropped 12.09%. Since inception, TOP33 has consistently demonstrated relative strength in volatile conditions by focusing on high industry strength and quality fundamentals, exemplified by CHINA COAL(01898), which carries an EPS Rating of 88.
From a technical perspective, the HSI has broken below both its 50-day moving average (-3.9897%) and 200-day moving average (-0.6649%), indicating a weakening medium-term trend and entry into a consolidation phase. Near-term key support lies at the psychological 25,000 level—if held, a rebound could materialize; resistance sits around 26,000. Although HSTECH posted a slight weekly gain, its technical posture remains weak: current price is 8.816% below its 50-day moving average and significantly lower (-11.324%) than its 200-day average, suggesting insufficient momentum for a sustained recovery and confirming its position within a downtrend channel.
Southbound capital flows were notably active this week, with net inflows reaching approximately HKD 52.44 billion. This massive inflow occurred precisely during a period of market weakness driven by external shocks, reflecting mainland investors’ view of Hong Kong equities as a valuation trough and their strategic positioning amid volatility. Funds primarily flowed into defensive, high-dividend sectors such as energy and finance, providing crucial bottom-up support and effectively offsetting foreign outflow pressures.
Overall, global markets operated under the shadow of Middle Eastern geopolitical conflict this week, with risk assets broadly pressured. Hong Kong equities oscillated amid the tug-of-war between external shocks and southbound support. Looking ahead, market direction will hinge critically on the evolution of geopolitical dynamics. If navigation through the Strait of Hormuz stabilizes, risk appetite could recover, offering growth stocks a rebound opportunity; conversely, prolonged conflict may sustain global market stress. Additionally, the Fed’s assessment of current conditions at its March FOMC meeting will serve as another pivotal variable. Investing involves risk—caution is advised.
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published on March 13, 2026