Hang Seng Index down 1.63%
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Global markets showed divergent performance this week under the combined impact of rising U.S. Treasury yields, AI-sector catalysts, and escalating trade frictions. Hong Kong equities fell first and then stabilized: the Hang Seng Index(HSI) declined 1.63% for the week, while the Hang Seng TECH Index(HSTECH) dropped 3.38%. Monday’s sell-off, driven by higher long-end U.S. yields, marked the largest weekly decline day; afterward, sentiment gradually stabilized, and the HSI traded in a narrow range. By Friday, turnover contracted further, reflecting a wait-and-see tone. Alibaba’s HKD 80 billion share placement created short-term pressure on internet names—its stock at one point fell over 8% on placement day—but continued insider buying of over HKD 800 million by Jack Ma and management, together with oversubscription of the placement, partially eased market concerns.
On the macro front, domestic and external factors jointly influenced risk appetite. Externally, U.S. July core PCE inflation rose 3.3% YoY, in line with expectations but still well above the Fed’s 2% target. Sticky inflation pushed market expectations for rate cuts further out. U.S. initial jobless claims for the week ended Aug 22 came in at 203,000, below expectations, indicating continued labor-market resilience. Meanwhile, the U.S. is considering an additional 7.5% tariff on imports from China and has launched Section 301 investigations into 16 economies, including China, citing “overcapacity,” increasing concerns over trade-friction escalation and weighing on Hong Kong risk appetite. A synchronized rise in ultra-long yields across G7 economies also triggered repricing of global sovereign risk premia, making long-end U.S. yields the largest external pressure on Hong Kong equities this week.
Domestically, the PBOC used an MLF + reverse repo policy mix to support month-end liquidity: RMB 500 billion of MLF operations on Aug 25, plus overnight reverse repos from Aug 27 to Sep 1 with daily operations capped at RMB 600 billion, providing ample liquidity support. China’s total profits of above-scale industrial enterprises reached RMB 4,582.06 billion in Jan–Jul, up 17.6% YoY. Within that, electronics-sector profits rose 1.1x YoY, while integrated-circuit profits surged 18.5x YoY, contributing over 80% of electronics profit growth—showing sustained strength in AI supply-chain momentum.
At the sector level in Hong Kong, rotation remained rapid, but market leadership broadened from pure tech growth toward sub-sectors with clearer defensive and event-driven characteristics. The top three gainers were Bldg-Maintenance & Svc(G7340IG.HK), Comml Svcs-Advertising(G7310IG.HK), and Security/Sfty(G3999IG.HK), with weekly gains of 14.82%, 13.89%, and 12.93%, respectively. Strength in building maintenance and services suggests defensive/livelihood-oriented sectors gained favor amid higher volatility. Advertising services outperformance indicates continued expectations for consumption recovery, traffic monetization, and marketing-demand normalization. Security/safety gains appear more tied to event-driven flows and defensive allocation logic. Overall, capital is rotating toward higher-certainty areas in a high-volatility environment.
U.S. equities were broadly stronger this week, with all three major indexes posting gains: S & P 500 Index(0S&P5)up 0.74%, Nasdaq Composite(0NDQC)up 1.38%, and Dow Jones Indus Actual(0DJIA)up 0.55%. On Thursday, the Nasdaq rose 1.57% in a single day to a weekly high, driven by NVIDIA’s better-than-expected earnings. NVIDIA reported Q2 revenue of USD 96.2 billion (+106% YoY), data-center revenue of USD 89.0 billion (+117% YoY), and Q3 midpoint guidance of USD 108.0 billion (about +90% YoY). It also unusually provided an optimistic FY2028 sales outlook early, implying around 70% revenue growth, significantly boosting confidence in the durability of the AI capex cycle. At the same time, U.S. core PCE at 3.3% matched expectations but remained sticky; coupled with rising North American trade frictions, rate-cut expectations were pushed back again.
A-shares moved from weakness to recovery this week. The CSI 300(000300) edged down 0.21%, showing relatively stable overall performance. After a sharp Monday adjustment due to U.S. yield shocks, the market gradually recovered, and rallied strongly on Thursday led by semiconductors. Turnover fell from RMB 2.02 trillion on Monday to 1.82 trillion on Wednesday, then rebounded to 2.14 trillion on Thursday. The recovery in volume alongside index gains suggests improving risk-on sentiment. Sector-wise, semiconductors and computing-power chains surged, with CPO, memory, and PCB leading; financials stayed strong, with brokers and internet finance outperforming; gold-related names were active on safe-haven demand; and agriculture stocks performed well on stronger El Niño expectations.
China’s policy front continued to release positive signals. MIIT issued a “15th Five-Year” new industrialization roadmap, and Shanghai released its strategic emerging-industry plan for the same period, targeting RMB 2.1 trillion in value-added output by 2030 and adding three trillion-yuan clusters in integrated circuits, biopharma, and AI. In H1, China’s digital industry recorded revenue of RMB 20.71 trillion, up 13.6% YoY, with growth accelerating by 4.1 percentage points YoY. Total private-fund AUM reached RMB 25.73 trillion, a record high for the tenth consecutive month. Private securities investment fund AUM surpassed RMB 9 trillion for the first time, and the large private-fund positioning index hit 88.56%, a year-to-date high—reflecting continued institutional optimism.
The Top 33 basket fell 0.60% on average this week, with 9 gainers and 24 decliners. Top performers were LONKING(03339)up 9.91%, GUANGSHEN RAIL(00525)up 9.84%, and YIHAI INTL(01579)up 7.57%. LONKING’s latest quarterly revenue rose 18.98% YoY, and improving construction-machinery demand supported the stock. GUANGSHEN RAIL benefited from valuation recovery in transport. YIHAI INTL, as a leading compound-condiment producer, gained market recognition for improving profitability. Since inception, the Top 33’s cumulative return has continued to outperform the HSI, highlighting the excess-return capability of the O’Neil stock-selection framework in identifying quality growth names. The model portfolio rose 0.17% on average this week; among its two constituents, one rose and one fell. MIDEA GROUP(00300) led with +1.91%, supported by solid operations and latest quarterly revenue of RMB 131.099 billion. BEONE MEDICINES(06160) fell 1.58%; despite short-term biotech weakness, its latest quarterly revenue still grew 29.63% YoY, and the long-term logic for innovative-drug leaders remains intact.
Technically, the HSI remains in the upper-middle zone of its one-year range, down 8.81% from its one-year high and up 13.62% from its one-year low. It is currently near the 5-day moving average (+0.07% vs. 5-day average), slightly below the 10- and 20-day averages, but still above the 50-day average. Short-term moving averages are converging, indicating relatively balanced bull-bear forces. Key supports are 25,000, then 24,500 (near the 200-day MA), with strong support around 22,500 (one-year low). Key resistances are 26,000, then 26,500 (prior high), with major resistance near 28,000 (one-year high). The HSTECH is weaker, down 31.42% from its one-year high; current levels remain below the 5-, 10-, 20-, 50-, and 200-day moving averages, and the medium-/long-term adjustment trend has not reversed. Support is around 4,230 (one-year low), while resistance lies near 4,800 and 5,000. In volume terms, HSI turnover was roughly flat week-on-week, but Friday volume was 22.24% below its 50-day average; HSTECH was 36.34% below its 50-day average, confirming a low-volume consolidation with limited chase-up appetite.
Southbound funds posted net inflows overall this week, with cumulative net buying of about HKD 9.771 billion. On Monday, funds bought against the trend with HKD 11.567 billion net inflow, showing strong mainland conviction in Hong Kong core assets during a sharp sell-off. Tuesday saw HKD 6.605 billion net outflow, the only outflow day of the week, mainly due to short-term profit-taking. Wednesday and Thursday recorded net inflows of HKD 453 million and HKD 3.180 billion, respectively, confirming a gradual return of capital. Overall flow behavior resembled “buy more on large dips, buy modestly on small dips.” A CITIC Securities report noted that as China-U.S. long-end rate inversion deepens and growth volatility rises, Hong Kong dividend assets (banks, utilities, telecoms, property management—“bond-like alternatives”) offer increasingly attractive relative allocation value, and southbound reallocation toward core high-dividend assets may continue.
Looking ahead, Hong Kong equities may still face short-term disturbances from long-end U.S. yields, China-U.S. trade frictions, and geopolitical uncertainty. But on a medium-term basis, China’s fundamentals continue to improve, industrial profits are recovering, AI supply-chain momentum remains strong, southbound inflows persist, and Hong Kong valuation advantages remain significant. Focus can remain on AI value-chain opportunities such as semiconductor equipment and computing hardware, as well as high-dividend assets like banks and utilities. Markets involve risk; investment requires caution.
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published on August 28, 2026