Hang Seng Index Gains 3.53%
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Hong Kong equities extended their rebound this week. The Hang Seng Index(HSI) rose 3.53% for the week, while the Hang Seng TECH Index(HSTECH) gained 4.95%, continuing to outperform the broader market. On the final trading day, trading volume in the two indexes was 9.73% and 27.29% above their respective 50-day average volumes, indicating that this rebound is no longer just a sentiment-driven recovery, and that volume support in the technology sector has strengthened significantly. This week’s gains in Hong Kong stocks were mainly driven by a sharp return of Southbound capital, a rebound in internet and AI-related stocks, and improving expectations for mainland policy support.
On the external front, U.S. initial jobless claims for the week ended July 4 came in at 215,000, below both the expected 218,000 and the prior 217,000, suggesting that the U.S. labor market remains resilient. This has also kept market expectations in check for a rapid dovish pivot by the Federal Reserve in the near term. Meanwhile, U.S. EIA crude oil inventories unexpectedly increased by 2.998 million barrels in the week ended July 3, far above expectations for a 2.371 million barrel decline, partly offsetting supply concerns caused by renewed instability in the Middle East. Although reports during the week—including mutual strikes between the U.S. and Iran and a sharp decline in traffic through the Strait of Hormuz—briefly pushed up oil prices and safe-haven sentiment, the market later shifted back to pricing in ongoing technical negotiations, OPEC+ production increases, and expectations for lower average oil prices later this year. As a result, crude oil traded in a high-level range rather than moving in a one-way rally. For Hong Kong equities, this means that while inflation and rate-related disturbances have not disappeared, they are still not strong enough to derail the rebound in technology stocks.
Mainland China’s macro and policy environment continued to provide support. In June, China’s CPI rose 1.0% year over year, while PPI increased 4.1% year over year, indicating that domestic demand and the industrial pricing environment are still recovering. Official references to summer grain production and economic resilience also helped stabilize market expectations for fundamentals. On the policy side, the People’s Bank of China proposed strengthening financial support for key areas such as expanding domestic demand, technological innovation, and small and micro enterprises. The State Council also issued the 15th Five-Year carbon peaking action plan, clearly stating that the share of non-fossil energy consumption should reach 25% by 2030. These measures further reinforce the medium-term logic for technological innovation, advanced manufacturing, and green transformation. At the same time, nine government departments introduced 20 measures to accelerate retail sector development, while offshore RMB market development continued to advance, both of which offered additional support to expectations for consumption and Hong Kong’s domestic financial market.
From a sector perspective, this week’s rebound in Hong Kong stocks expanded beyond heavyweight technology names into higher-beta areas such as software, internet retail, and advertising services. According to the latest industry data, the top three O’Neil industry groups by weekly performance were Computer Sftwr-Medical(G3069IG.HK), Comml Svcs-Advertising(G7310IG.HK), and Retail-Internet(G3559IG.HK), which rose 16.83%, 16.32%, and 14.17%, respectively. Among them, Computer Sftwr-Medical still ranked first for the full week despite dipping 1.20% on the final trading day, suggesting that investor interest in medical software and digital healthcare-related themes was concentrated earlier in the week and that the sector as a whole showed strong elasticity. Comml Svcs-Advertising gained 1.02% on the final day, reflecting continued investor interest in advertising services amid recovering expectations for platform traffic, marketing spend, and internet monetization. Retail-Internet rose 14.17% for the week, and its final-day trading volume reached HK$17.474 billion, making it one of the strongest areas in terms of capital absorption among leading industries. This suggests that e-commerce platforms, online retail, and related internet consumption scenarios have become one of the key themes in this week’s Hong Kong market rebound.
In the U.S. market, the three major indexes were mixed this week. The Dow Jones Indus Actual(0DJIA) fell 0.78%, the Nasdaq Composite(0NDQC) rose 1.45%, and the S & P 500 Index(0S&P5) gained 0.81%. From a medium-term trend perspective, the Dow, Nasdaq, and S&P 500 all remain above their 200-day moving averages, indicating that index levels are still elevated, although structural divergence remains pronounced. This week, the Nasdaq continued to benefit from strength in chip and AI-related names, while the Dow was dragged lower by geopolitical developments and rate volatility.
The key drivers affecting U.S. stocks remain the interaction of AI trading volatility, geopolitical risks, and interest rate expectations. At the start of the week, higher output from OPEC+ pushed oil prices lower, which supported a rebound in risk assets. Later, however, renewed tensions involving Iran and news that the U.S. had revoked waivers for Iranian oil sales pushed oil prices higher again and lifted U.S. Treasury yields. The 10-year Treasury yield briefly rose to around 4.57%, while the 30-year yield climbed above 5%, putting pressure on high-valuation growth stocks. In the latter part of the week, however, chip stocks regained strength, with the Philadelphia Semiconductor Index rebounding sharply. Names such as Micron, SanDisk, Arm, and AMD all staged recoveries, allowing the Nasdaq to retake leadership. At the same time, Chinese ADRs performed strongly, with Alibaba, Kingsoft Cloud, and Baidu posting notable gains, which also helped boost sentiment toward Hong Kong internet stocks. Overall, U.S. equities continue to trade at elevated levels, but the main trading theme is more about rotation within AI-related assets rather than a broad-based rally.
As for A-shares, the CSI 300(000300) fell 1.27% for the week, clearly underperforming both Hong Kong and U.S. equities. On the final trading day, volume was 5.58% above the 50-day average, indicating that capital remained actively engaged during the pullback. At the sector level, volatility in A-shares increased significantly this week. Previously strong segments such as computing power hardware, PCB, and CPO first came under pressure and then rebounded, while the semiconductor chain rallied strongly on Thursday, with the STAR 50 Index surging more than 8%. Meanwhile, the big four banks and some defensive sectors also played a role in stabilizing the broader index intraday.
The macro and policy backdrop behind A-shares remains relatively supportive. June CPI rose 1.0% year over year and PPI rose 4.1% year over year, reflecting continued improvement in the pricing environment. The full rollout of the project list for the “Two Major” construction initiatives, together with policy statements supporting expanded domestic demand and technological innovation, has helped stabilize the market’s medium-term expectations. In policy terms, the 15th Five-Year carbon peaking action plan, notices on flood control and drought relief, measures to support retail sector development, and the targeted campaign to rectify disorder in AI applications all reflect a continued policy focus on balancing growth stabilization, transformation, and risk control. At the same time, margin financing and securities lending balances remain elevated, implying that market risk appetite is still present, though it has also amplified volatility in popular sectors. Externally, the Fed’s rate path, Middle East tensions, and supply chain security issues will continue to affect A-shares through exchange rates, export expectations, and investor risk sentiment.
In terms of portfolio performance, the Top 33 posted an average weekly return of -0.51%, significantly underperforming the Hang Seng Index. Although the portfolio edged lower overall, 20 stocks rose while 13 declined, indicating that internal market activity remained reasonably strong, even if index recovery was mainly driven by heavyweight technology names and a few high-beta sectors. At the individual stock level, MICROWARE(01985) gained 8.16% this week, with an RS Rating of 97 and a 50-day volume ratio of 18.36, showing that capital’s preference for technology services and digital infrastructure remains intact. The Model Portfolio posted an average weekly return of -13.1%, with its only constituent, CATL(03750), falling 13.1% for the week. Fundamentally, CATL still delivered 52.45% year-over-year revenue growth, had an RS Rating of 83, and its share price remained 58.13% above its 52-week low, suggesting that its medium-term fundamentals have not been fully damaged. However, in the short term, it is facing pressure from a pullback in growth-style investing and concentrated profit-taking, and therefore the stock has been temporarily removed from the model portfolio.
From a technical perspective, recovery signals in Hong Kong equities continue to strengthen. The Hang Seng Index(HSI) is now above its 5-day, 10-day, and 20-day moving averages, though it remains below its 50-day and 200-day moving averages. The Hang Seng TECH Index(HSTECH) is also above its 5-day, 10-day, and 20-day moving averages, sitting only 1.37% below its 50-day moving average, but still 12.06% below its 200-day moving average. This suggests that the short- to medium-term rebound trend has become more firmly established, and that the pace of recovery in the technology index is faster than that of the broader market. On the support side, the Hang Seng Index may first look to the 20-day moving average and the 24,000 level, with stronger support still at the previous low of 22,518. For the Hang Seng TECH Index, attention should focus on the 4,600 level and the previous low near 4,229.94. On the resistance side, the next key question for the Hang Seng Index is whether it can effectively reclaim its 50-day moving average, while the HSTECH is approaching a critical stage in testing its own 50-day line. The simultaneous expansion in trading volume suggests that the current rebound has stronger sustainability than last week’s move.
As for Southbound capital, net inflows this week totaled approximately HK$39.054 billion, a clear improvement from the previous week, showing that mainland capital has become a key force behind this round of recovery in Hong Kong equities. The strong return of funds and the increase in technology-sector trading volume reinforce each other, also indicating that expectations for a valuation recovery in Hong Kong internet, AI, and certain Chinese financial assets are heating up. If external rate expectations remain stable and sentiment toward Chinese ADRs continues to improve, Southbound capital could maintain its net inflow trend, thereby enhancing the durability of the Hong Kong market rebound.
This week, global markets revolved around renewed Middle East tensions, oil price fluctuations, rotation within AI trades, and shifting China-U.S. policy expectations. Hong Kong equities continued to rebound under the support of Southbound capital, with technology stocks leading gains and trading volume improving, resulting in a visibly repaired short- to medium-term technical pattern. Looking ahead, the market still needs to monitor how Middle East developments may affect oil prices and inflation expectations, the path of Federal Reserve interest rates, and whether trading activity in the technology sector can further support a breakout above medium-term resistance levels. Reminder: The above content is compiled solely based on the data provided and does not constitute any investment advice. Markets involve risk, and investments should be made with caution.
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published on July 10, 2026