Hang Seng Index Falls 5.24%
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Hong Kong stocks faced significant pressure this week. The Hang Seng Index(HSI) fell 5.24% for the week, while the Hang Seng TECH Index(HSTECH) dropped 7.57%, notably underperforming the broader market. The HSI remains 19.19% below its one-year high and is only about 0.68% away from its one-year low. Similarly, the HSTECH is 36.63% below its one-year high and merely 0.61% above its one-year low, indicating that tech and growth sectors remain the core of this week’s market correction.
External macro factors continue to be a major backdrop for the pressure on Hong Kong stocks. U.S. initial jobless claims for the week ending June 20 fell to 215,000, below the expected 225,000 and the previous 227,000, showing that the labor market remains resilient. Meanwhile, U.S. core PCE year-on-year rose to 3.4% in May, higher than the previous 3.3%, indicating that the path of cooling inflation is not smooth. For Hong Kong stocks, this implies a high probability that U.S. short-term interest rates will remain elevated, continuing to exert valuation discounting pressure on high-valuation internet, software, and tech growth stocks. Although some Federal Reserve officials have signaled a dovish stance, market concerns over “higher for longer” interest rates have not faded. Meanwhile, U.S. EIA crude oil inventories dropped by 6.088 million barrels for the week ending June 19, significantly exceeding the expected 4.461 million barrels. Combined with the back-and-forth U.S.-Iran negotiations and geopolitical disruptions in the Middle East, prices of crude oil, gold, and copper, along with the U.S. dollar and U.S. Treasuries, experienced synchronized volatility. Global capital continues to oscillate between “inflation fears” and “growth fears,” which is unfavorable for the valuation recovery of high-beta sectors in Hong Kong stocks.
Mainland policies and liquidity conditions provided some hedging for Hong Kong stocks. The central bank conducted 500 billion yuan in MLF operations this week and provided support for cross-quarter liquidity. Statements regarding stabilizing foreign investment, enhancing the openness of the financial sector, and promoting synergistic efforts between existing and incremental policies also helped stabilize risk appetite for Chinese assets. On the industrial front, the release of the “15th Five-Year Plan for Building a New Energy System” and the Ministry of Industry and Information Technology’s proposal to strengthen the planning and construction of next-generation communication and computing power networks, along with the launch of industrial 5G independent private network pilots by five departments, continue to support new energy, communication infrastructure, computing power chains, and high-end manufacturing. However, short-term market trading themes were largely dominated by the adjustment in overseas tech stocks and fluctuations in inflation expectations. Policy tailwinds currently manifest more as structural opportunities rather than a comprehensive recovery at the index level.
In terms of industry performance, although Hong Kong stocks faced overall pressure this week, internal structural divergence was evident. Capital did not completely withdraw but continued to concentrate in sectors supported by strong business cycles, policy catalysts, or defensive attributes. By weekly gains, the top three O’Neil industries were Bldg-Maintenance & Svc(G7340IG.HK), Elec-Semiconductor Mfg(G3677IG.HK), and Medical-Services(G1044IG.HK), with weekly gains of 5.73%, 5.55%, and 2.60%, respectively. Among them, Bldg-Maintenance & Svc performed the best during the period of heightened market volatility, reflecting increased capital preference for stable-demand and defensive service sectors. Elec-Semiconductor Mfg bucked the trend to gain strength amid global tech stock turbulence, with trading volume reaching as high as 19.158 billion on the last trading day. This shows that semiconductors remain one of the most capital-attractive and clear industrial trend themes in Hong Kong stocks, although short-term divergence is also increasing. Medical-Services saw leading gains and relatively stable trends, demonstrating the defensive resilience and allocation value of the healthcare sector in a weak market.
In the U.S. stock market, the three major indices showed divergent performance. The Dow Jones Indus Actual(0DJIA) rose 0.69% for the week; the Nasdaq Composite(0NDQC) fell 4.37%; and the S & P 500 Index(0S&P5) dropped 1.91%. The Dow was relatively resilient while the Nasdaq saw a significant pullback, indicating that capital continues to shift from high-valuation tech growth sectors toward defensive sectors or those with higher earnings certainty.
The core variables driving U.S. stock volatility this week remain inflation, interest rates, and the repricing of AI trades. The decline in initial jobless claims to 215,000 reflects that the labor market has not significantly weakened, while the 3.4% year-on-year core PCE indicates that price pressures on the service and core demand sides persist. Under this combination, the market finds it difficult to form strong expectations for rapid Fed rate cuts. In the bond market, the yield on 2-year U.S. Treasuries fell to around 4.13%, while the 10-year yield remained near 4.39%, indicating that the market continues to weigh “slowing growth” against “sticky inflation,” keeping the interest rate center of gravity relatively high. Performance and valuation divergence within tech stocks has further intensified. Micron’s strong earnings report drove a rebound in memory and some chip stocks; however, large-cap tech stocks like Apple and Microsoft faced sell-offs due to price hikes and cost pass-through issues, showing that the market is increasingly focusing on earnings realization, pricing power, and demand affordability. The significant intraweek volatility in oil prices and WTI’s return above $72 also imply that inflation expectations may continue to fluctuate, which is unfriendly to high-valuation tech stocks.
For A-shares, the CSI 300(000300) fell 1.48% for the week. Trading volume on the last trading day was 26.84% higher than the 50-day average, indicating that trading remained active during the adjustment. At the sector level, AI hardware, semiconductors, and sci-tech innovation growth remained market focal points, but volatility significantly amplified. Large-cap financials, new energy, high-end equipment, and policy-related automotive aftermarket sectors also showed rotational performance.
At the macro and policy levels, support for A-shares remains relatively clear. The central bank’s increased MLF renewals and signals of stabilizing cross-quarter liquidity helped stabilize the funding landscape. Policies stabilizing foreign investment, statements on financial opening, support for the automotive aftermarket, and the construction of high-end equipment, new energy systems, communication networks, and computing power networks continue to reinforce the “new quality productive forces” theme. Meanwhile, the combined margin trading balance of A-shares surpassed 3 trillion yuan for the first time, indicating high risk appetite and leveraged capital activity, but also suggesting that market volatility could be further amplified. The slowdown in infrastructure investment growth to 0.6% in the first five months indicates limited recovery in traditional growth stabilization measures. Consequently, the market is more willing to trade around industrial upgrading, technological infrastructure, and sectors with higher earnings elasticity. Externally, the Fed’s interest rate path, tariff and Sino-U.S. economic and trade consultation progress, and global inflation and raw material price changes will continue to transmit to A-shares through exchange rates, export expectations, and risk appetite.
Regarding portfolio performance, the HK33 top performers had an average weekly change of -3.51%, generally weaker than a few individual stocks that bucked the trend, but with a smaller decline than the Hang Seng Index (HSI), showing that the selected stock pool retains some relative resilience during adjustments. Among them, WUXI APPTEC(02359) led the gains with a weekly rise of 12.98%. The Model Portfolio had an average weekly change of -3.95%, with its sole constituent stock, CATL(03750), falling 3.95% for the week. However, looking at fundamental indicators, CATL’s revenue grew 52.45% year-on-year, with an RS Rating of 89 and an O’Neil Score of 64. Its stock price remains 102.40% above its 52-week low, indicating that its medium-term strong foundation remains intact. The short-term pullback was merely a result of high-level volatility and the retracement of the growth style.
From a technical perspective, Hong Kong stocks remain weak in the short term. Both the Hang Seng Index(HSI) and the Hang Seng TECH Index(HSTECH) are below their 5-day, 10-day, 20-day, 50-day, and 200-day moving averages, indicating that the tech index is significantly weaker across short-, medium-, and long-term trends. On the support side, the one-year low of 22,518 for the HSI has formed the first key support level. The current price is very close to this level; if breached, the market may probe further lower. The one-year low of 4,229.94 for the HSTECH is also an important short-term level to watch. On the resistance side, the 5-day and 10-day moving averages will first act as rebound resistance, followed by the 20-day moving average zone. The increase in trading volume during the decline implies that panic selling and chip exchange are occurring simultaneously. To confirm stabilization in the future, the market typically needs to see a volume contraction leading to a halt in declines, followed by a volume expansion signaling a rebound.
Regarding Southbound capital, there was a net inflow of approximately 8.924 billion HKD this week, indicating that mainland funds did not significantly retreat during the overall pullback in Hong Kong stocks, but instead continued to provide marginal absorption. This is particularly important for Hong Kong stocks: on the one hand, it shows that allocation-oriented capital has gradually entered the low-price zone; on the other hand, it reflects that the market still maintains a certain level of recognition of the medium- to long-term valuation of Hong Kong stocks. If external interest rate expectations ease, the U.S. dollar weakens, and volatility in the tech sector converges in the future, Southbound capital is expected to continue serving as an important supporting force for the stabilization of Hong Kong stocks.
This week, global markets repeatedly priced in inflation, interest rates, geopolitical factors, and divergent AI trades, with Hong Kong stocks most notably dragged down by tech stocks. In the short term, Hong Kong stocks still need to observe the absorption strength of the Hang Seng Index (HSI) near 22,518 and whether the Hang Seng TECH Index (HSTECH) can form a technical recovery after approaching its yearly low. For strong individual stocks, the importance of the resonance between fundamentals, capital flows, and industry trends is rising. Targets that combine earnings, relative strength, and industry attribute support are more likely to attract capital attention in a volatile market. The above content is compiled solely based on the provided data and does not constitute any investment advice. The market carries risks, and investment requires caution.
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published on June 26, 2026