The Hang Seng Tech Index extended its decline in the afternoon, dropping more than 3%, with most constituent stocks falling. As of the latest update, HUA HONG SEMI (01347) was down 8.5% at HK$116.2; ALI HEALTH (00241) fell 6.83% to HK$4.23; BABA-W (09988) declined 4.21% to HK$132.1.

Market sentiment was dampened by a broad sell-off in Asia-Pacific equities. On Friday, the U.S. dollar index broke above 99, reaching its highest level since April 13. U.S. Treasury yields also remained elevated, with the 10-year yield climbing above 4.5% and the 30-year yield holding steady at around 5%.

New York Federal Reserve President John Williams stated on May 14th that, given the uncertainties stemming from the Middle East conflict, he currently sees no need for the Federal Reserve to consider any adjustments to its interest rate policy. Additionally, the U.S.-Iran conflict shows no signs of a quick resolution, with reports suggesting geopolitical tensions could be a primary trigger for market adjustments.

Hua An Fund noted that despite persistent external liquidity constraints, continuous inflows of southbound funds provide crucial support for Hong Kong-listed technology stocks. The upcoming leadership transition at the Federal Reserve could profoundly impact Hong Kong tech stocks. The incoming chair, who advocates for interest rate cuts, balance sheet reduction, and Fed institutional reforms, may introduce new catalysts for the sector. Market participants are advised to closely monitor the progress and potential catalysts surrounding the new Fed chair's appointment. A true inflection point for Hong Kong tech stocks likely awaits the opening of an interest rate cut window, which could then spur valuation recovery and capital inflows.