The rally that drove Hong Kong stocks to a strong start to 2026 continued to fizzle out on Thursday, with the benchmark falling for a second day as investors geared up for China economic data and digested the fallout of rising geopolitical tensions.

The Hang Seng Index fell 1.2%, while the Hang Seng Tech Index dropped 1.1%.

In terms of star stocks, Meituan, Baidu, and Kuaishou fell 3%; Alibaba and JD.com fell 2%; Tencent, NetEase, and Li Auto fell 1%; while Bilibili rose 3%.

A slew of coming China economic data will test the sustainability of the rally, with traders needing more conviction from the fundamentals front after little room was left for further valuation expansion.

Stocks have been oscillating recently against the backdrop of escalating geopolitical risks after the US launched a sudden military raid on Venezuela and China ratcheted up its sanctions against Japan by banning the export of products with potential military use.