Hong Kong's three major stock indices continued their downward trajectory on Wednesday, with all three falling more than 1%.
Among the constituents of the Hang Seng Tech Index, Trip.com Group Limited (ASX: TCOM) shares led the declines, dropping over 7%.
Other notable decliners included Horizon Robotics, which fell more than 4%.
Shares of Alibaba Group Holding Ltd (ASX: BABA), XPeng Inc (ASX: XPEV), and Li Auto Inc (ASX: LI) all decreased by more than 3%.
Stocks such as Meituan (ASX: 3690), Xiaomi Corp (ASX: 1810), Baidu Inc (ASX: BIDU), Kuaishou Technology (ASX: 1024), and JD.com Inc (ASX: JD) also saw losses exceeding 2%.
Brokerage Analysis and Outlook
In a recent research report, Bank of Communications International projected that the global macroeconomic narrative will shift towards "AI-driven growth in a reflationary environment" in the second half of 2026.
The firm highlighted three converging factors as key to the macro backdrop: ongoing geopolitical tensions in the Middle East sustaining inflationary pressures, the positive spillover from China's Producer Price Index turning positive, and the unexpected persistence of service sector inflation in the United States.
Concurrently, the wave of capital expenditure in artificial intelligence is still gaining momentum, providing a supportive floor for asset prices through its technological narrative and bolstering global economic resilience.
Against this backdrop, the brokerage suggests that major asset allocation will pivot towards companies demonstrating profit realization, pricing power, and premiums from supply constraints.
Looking ahead to the latter half of 2026, the bank recommends an overweight position on Hong Kong equities, advocating for a barbell strategy that balances exposure to the AI technology narrative with beneficiaries of rising prices.
This recommendation is based on the view that the Hang Seng Index and the Hang Seng Tech Index have a foundation for further gains, supported by the combined catalysts of price recovery, corporate earnings improvement, the AI industry narrative, and domestic substitution trends.