Hong Kong's three major stock indices came under sustained selling pressure throughout Wednesday's session, with the Hang Seng Index losing the 26,000-point threshold and the Hang Seng Tech Index suffering a sharp decline of more than 3%. By the closing bell, the Hang Seng Index had fallen 1.89% or 492.13 points to 25,517.33, with total turnover reaching HK$291.151 billion. The Hang Seng China Enterprises Index dropped 1.89% to 8,471.36 points, while the Hang Seng Tech Index tumbled 3.61% to 4,594.04 points.

According to Huatai Securities, upward risks to US Treasury yields persist on a macro level, which could cap further valuation recovery. Micro-level earnings data will be the deciding factor in whether Hong Kong stocks can break out to the upside. Standing at a "crossroads," the broker continues to recommend a balanced allocation across three directions: first, low-volatility dividend stocks as a core holding; second, consumer goods companies whose interim results may confirm an operating cycle trough; and third, AI-related names that face funding pressure but still boast sound demand growth logic.

Blue-Chip Performance

Alibaba-W (09988) led the decline among blue-chip stocks, closing down 8.54% at HK$112.5 with turnover of HK$40.582 billion, dragging the Hang Seng Index down by 167.18 points. The e-commerce giant announced plans to place new shares to non-US persons outside the United States, with the total placement amount set at HK$80 billion. This marks Alibaba's first new share placement since its Hong Kong listing in 2019. The net proceeds will be 100% allocated to investing in full-stack AI capabilities and strengthening AI infrastructure construction.

Among other blue-chip stocks, SINOPEC CORP (00386) gained 5.9% to HK$4.665, contributing 9.06 points to the Hang Seng Index. Pop Mart (09992) rose 4.03% to HK$155, adding 6.81 points. On the downside, SMIC (00981) fell 7.93% to HK$66.75, dragging the index down 36.92 points, while Hansoh Pharmaceutical (03692) declined 6.11% to HK$31.06, shaving 4.61 points off the benchmark.

Hot Sectors

Large technology and internet stocks came under broad pressure, with Alibaba's massive placement fully committed to AI causing its share price to fall more than 10% at one point during the session. Popular AI hardware names, including optical communication and storage concepts, were the biggest drags, with ZJ INNOLIGHT (03308) plunging 11% after its earnings release. Robot-related concepts and most pharmaceutical stocks also faced widespread selling pressure. On the flip side, stocks affected by the Hang Seng Index quarterly review results surged against the market trend, while coal and aluminum stocks were active, and several new consumer names performed well, with Mixue Group jumping 7.82%.

Stocks impacted by the Hang Seng Index review results showed notable strength. By the close, DIAGENS-B (02526) soared 37.45% to HK$723, Lumino Optical (03774) climbed 25.27% to HK$17.5, Haiqing Zhiyuan (01392) advanced 18.89% to HK$24.8, and Zhen Health Medical-B (02697) rose 13.62% to HK$759. After the market close on August 21, Hang Seng Indexes Company announced the semi-annual index review results, with all changes to take effect after the close on September 4 and become effective from September 7. The Shanghai and Shenzhen stock exchanges will correspondingly adjust the eligible scope of stocks for the Stock Connect scheme. Notably, Hua Hong Semiconductor and Weichai Power will be added to the Hang Seng Index, increasing the number of constituents from 93 to 95. The Hang Seng Composite Index will see its constituent count expand from 534 to 580, adding 61 stocks including Diagens Bio, Zhen Health Medical, and Haiqing Zhiyuan, while removing 15 stocks such as JS Global Lifestyle, Haichang Ocean Park, and Refire Energy.

Some coal stocks rose against the broader market trend. By the close, E-Commodities Holdings (01733) gained 4.55% to HK$0.805, Yancoal Australia (03668) climbed 4.23% to HK$33.5, China Coal Energy (01898) advanced 3.04% to HK$11.53, and Yankuang Energy (01171) rose 1.72% to HK$12.98. More than 20 coal-related listed companies have released interim earnings announcements, with three expecting to turn profitable, six anticipating narrower year-on-year losses, and six projecting profit growth—resulting in a positive report rate of nearly 70% across the sector. Guotai Haitong Securities noted that safety supervision in Shanxi's coal mines has been continuously tightened since late June. A safety incident following the resumption of production at the Xiqu Coal Mine on August 5 has further strengthened market expectations that regulatory scrutiny will remain stringent, mine resumption will be limited, and production releases will slow. As the market deepens its understanding of the sustainability of this round of supervision and its supply-side impact, the coal supply-demand landscape is expected to continue improving.

Optical communication concepts led the declines. By the close, ZJ INNOLIGHT (03308) fell 11.32% to HK$1,011, while Cambridge Industries (06166) dropped 6.79% to HK$89.85. Market analysts suggest that the sharp sell-off in optical modules may be linked to shifting expectations driven by technological iteration, with concerns that co-packaged optics (CPO) technology could reshape the existing industry chain structure and undermine the market position of traditional pluggable optical modules. Recently, researchers from SK Hynix and the University of Virginia published a paper in the top scientific journal Nature Electronics, systematically outlining the development roadmap for CPO technology in high-performance computing and AI applications. Separately, Nvidia announced that CPO technology has officially entered the stage of large-scale mass production, and its list of partners has drawn market attention, potentially altering capital expectations. Additionally, according to CommunicationsDaily, a US communications industry publication, the Information Technology Industry Council (ITI) formally expressed opposition to the US Federal Communications Commission (FCC) last week, urging the regulator not to include foreign-made optical modules on any restriction list. However, the market interpreted this development differently: ITI's public opposition as a representative of the US tech industry actually suggests that the FCC may indeed be considering such restrictions, which has intensified concerns about the export outlook for optical modules.

Notable Stock Movements

EAST BUY (01797) rose after its earnings release, closing up 7.72% at HK$21.78. The company reported fiscal year 2026 results with revenue of RMB 5.701 billion, up 29.8% year-on-year. Excluding the revenue contribution from the "Yu Hui Tong Xing" livestreaming room, the year-on-year growth would be 36.3%. Operating profit swung from a loss of RMB 110 million in the prior fiscal year to a profit of RMB 663 million, achieving a turnaround. Net profit for the year reached RMB 544 million, representing a staggering 8,684.8% increase from RMB 6.19 million in fiscal 2025.

SINOPEC CORP (00386) delivered a standout performance, closing up 5.9% at HK$4.665. The company released its 2026 interim results, reporting first-half revenue of RMB 1,436.6 billion, up 2% year-on-year, with net profit attributable to parent shareholders reaching RMB 25.6 billion, up 19.3% year-on-year. In addition, the company emphasized shareholder returns, with the board deciding to declare an interim dividend of RMB 0.105 per share, representing a cash payout ratio of 49.5%.

LIVZON PHARMA (01513) saw its A-share and H-share prices fall in tandem, closing down 15.73% at HK$21. The company reported first-half revenue of approximately RMB 5 billion, down 20.28% year-on-year, with net profit attributable to parent shareholders of RMB 932 million, down 27.23%. The sharp decline in its chemical preparations and traditional Chinese medicine preparations segments was the primary factor dragging down overall revenue.

Dajin Heavy Industry (01081) saw its share price tumble 10.01% to HK$29.5. The company posted second-quarter revenue of RMB 1.35 billion, down 20.9% year-on-year, with net profit attributable to parent shareholders of RMB 170 million, down 47.4% year-on-year and down 61.8% quarter-on-quarter. Analysts noted that the company's revenue and profit pressures in the second quarter were mainly attributed to shipment delays and foreign exchange losses.

Q Technology (01478) experienced a sharp afternoon sell-off, closing down 8.92% at HK$6.18. The company released its 2026 interim results at midday, reporting revenue of RMB 9.923 billion for the period, up 12.36% year-on-year. Profit attributable to equity holders of the company amounted to RMB 276 million, down 10.49% year-on-year, with a gross margin of approximately 6.6%, down about 0.8 percentage points year-on-year.