Hong Kong's three major indices declined throughout the trading session, with the Hang Seng Index falling below the 27,000-point mark and the Hang Seng Tech Index dropping over 4% at one point in the afternoon. By the close, the Hang Seng Index had fallen 2.23%, or 611.54 points, to 26,775.57, with a total daily turnover of HKD 347.886 billion. The Hang Seng China Enterprises Index dropped 2.54% to 9,080.19, while the Hang Seng Tech Index declined 3.36% to 5,526.31. Huatai Securities suggested the current market pullback is more of a technical correction following rapid gains, triggered by the hawkish expectations associated with the nomination for Fed Chair. The bank believes that after such an adjustment, the key questions are the persistence of the volatility and whether it will end the market's performance. With sentiment already in optimistic territory and market crowding not having significantly eased, volatility may persist in the short term, but it is more likely a pullback than a reversal. The three drivers for market space in the first quarter—improved liquidity, coordinated capital flows, and upward revisions to earnings expectations—remain intact.

Blue-chip stocks saw Sands China Ltd (01928) buck the downward trend. By the close, it was up 4.05% at HKD 17.72, with a turnover of HKD 776 million, contributing 2.66 points to the Hang Seng Index. Data from the Macau Gaming Inspection and Coordination Bureau showed January's gross gaming revenue was MOP 22.633 billion, a 24% year-on-year increase and an 8.4% rise from the previous month. A Morgan Stanley research report noted that Macau's January gross gaming revenue exceeded market expectations. Furthermore, as the entire 8-day Lunar New Year holiday falls in February, it is expected to provide additional growth momentum for that month, with estimated revenue growth of 22% year-on-year. Among other blue chips, Lenovo Group (00992) rose 1.8% to HKD 9.04, contributing 1.92 index points; Galaxy Entertainment (00027) increased 1.56% to HKD 40.42, contributing 1.96 points; CHINA UNICOM (00762) fell 6.29% to HKD 7.45, dragging the index down by 4.99 points; and Zijin Mining Group (02899) dropped 5.58% to HKD 39.56, weighing on the index by 22.63 points.

In terms of sector performance, large-cap tech stocks were uniformly lower, with Alibaba down over 3% and Tencent falling more than 1%. The nomination of Warsh ignited a record slump in gold and silver, leading to another sharp decline in metal stocks like gold. Automobile stocks fell collectively as January vehicle sales data showed significant divergence among manufacturers. Semiconductor stocks tumbled, with HUA HONG SEMI (01347) down over 11% and GigaDevice (03986) falling more than 9%. Coal stocks, building materials and cement stocks, and oil stocks also moved lower. On the flip side, Macau's January gaming revenue beating expectations with a 24% year-on-year increase pushed gaming stocks higher against the market trend, while some dairy and beverage stocks also advanced.

Gold, copper, and other metal stocks suffered heavy losses again. At the close, SD GOLD (01787) was down 12.56% at HKD 38.70; Chifeng Jilong Gold Mining (06693) fell 12.18% to HKD 35.04; Jiangxi Copper (00358) dropped 8.64% to HKD 43.36; and Aluminum Corporation of China (02600) declined 6.57% to HKD 12.94. The nomination of Kevin Warsh for Fed Chair by former President Trump fueled hawkish market expectations, triggering panic selling in precious metals. On February 2, the international precious metals market extended the sharp sell-off from the previous Friday, with both gold and silver falling further in the afternoon. Spot gold once fell below $4,450 per ounce, hitting its lowest level since January 8; spot silver erased all its year-to-date gains, falling to a low of $71.31 per ounce. Additionally, the domestic commodities futures market closed mostly lower, with main contracts for silver, palladium, platinum, nickel, tin, copper, aluminum, and international copper all hitting their downside limits. BOCI believes that in the short term, following the previous accelerated rally, the market is reassessing the balance between "trend" and "volatility" in the metal sector. The progression of Warsh's nomination and the further clarification of his policy stance will continue to be key factors affecting commodity prices and the metal industry. If his "hawkish" stance is reinforced, it could temporarily reverse the "weak US dollar" expectation, thereby increasing price volatility for all base metals. However, the underlying trend of interest rate cuts remains unchanged, and the long-term industrial logic driven by supply-side rigidity and new demand drivers persists; short-term pullbacks may present better opportunities for positioning from a medium- to long-term perspective.

The three major telecom operators faced pressure throughout the day. At the close, CHINA UNICOM (00762) was down 6.29% at HKD 7.45; China Telecom (00728) fell 5.02% to HKD 5.11; and China Mobile (00941) declined 2.26% to HKD 78.00. China Mobile, China Unicom, and China Telecom successively issued announcements on February 1 stating that an adjustment to the applicable scope of the value-added tax category for telecommunications services, with the rate increasing from 6% to 9%, would impact their revenue and profits. Industry analysis suggests this adjustment is essentially a "reclassification" of the tax category rather than a new tax burden, representing a reasonable definition of the nature of telecommunications services by tax policy. This "reclassification" further clarifies the public utility attribute of basic communication services, which will push operators to focus more on core businesses like network construction and service guarantees, reduce homogeneous marketing competition, enhance overall industry operational efficiency, and support the high-quality development of digital economy infrastructure.

Semiconductor stocks declined significantly. At the close, HUA HONG SEMI (01347) was down 11.24% at HKD 103.40; GigaDevice (03986) fell 9.25% to HKD 304.00; Shanghai Fudan Microelectronics (01385) dropped 6.08% to HKD 48.84; and SMIC (00981) decreased 4.24% to HKD 72.20. South Korean stocks fell sharply by 5% on Monday, with semiconductors and the AI industry chain being the main declining sectors; Samsung Electronics fell nearly 6%, and SK Hynix dropped over 8%. Media reports indicated that the three major original manufacturers—Samsung, SK Hynix, and Micron—have tightened order reviews and are conducting stricter due diligence on customers. Furthermore, according to the China Securities Journal, institutional research showed that DRAM spot prices fell last week for the first time in months. Industry insiders commented that the overall memory market景气度 remains in an upward trend; the first decline in DRAM prices in months is mainly attributable to the significant gap between spot and contract prices. Currently, the high-priced spot market is largely illiquid, while contract prices continue their upward trend.

Automobile stocks fell collectively. At the close, XPENG-W (09868) was down 6.77% at HKD 66.80; Great Wall Motor (02333) fell 4% to HKD 12.72; and Li Auto-W (02015) declined 2.27% to HKD 64.45. On February 1, several automakers announced their sales figures for January 2026, with the vast majority achieving year-on-year sales growth, though the characteristics of divergence were notable. XPeng delivered 20,011 new vehicles in January, a decrease of 34.07% year-on-year and 46.65% month-on-month; Li Auto delivered 27,668 new vehicles, up 7.55% year-on-year but down 37.47% month-on-month; NIO delivered 27,200 vehicles, a significant 96.1% year-on-year increase. According to Cailian Press, a executive from a new energy vehicle manufacturer stated that because the beginning of the year is traditionally a slow season, coupled with the expiration of the vehicle purchase tax exemption policy at the end of last year which pulled forward some demand, the overall market has experienced a relatively large decline this year.

Oil and oil services stocks moved lower. At the close, Shandong Molong Petroleum Machinery (00568) was down 10.7% at HKD 3.84; Sinopec Oilfield Service (01033) fell 8.25% to HKD 0.89; and CNOOC (00883) declined 4.76% to HKD 23.22. WTI crude oil plunged 6% intraday after former President Trump stated over the weekend that Iran was engaged in "serious talks" with Washington, signaling a de-escalation of tensions with the OPEC member. Crude oil had previously touched a six-month high due to heightened US-Iran tensions, with WTI trading near its highest levels since late September last year, but both contracts retreated sharply today. Analyst Sachdeva pointed out, "The recent retreat in oil prices has also been exacerbated by a stronger US dollar. A stronger dollar typically makes dollar-denominated oil more expensive for non-US buyers, further pressuring prices."

Notable movers included MINIMAX (00100), which showed strength, closing up 10.68% at HKD 523.50. Tianfeng Securities noted that considering MiniMax's depth in full-modal technology, engineering capabilities, and global commercial layout, it possesses rarity as one of the few domestic large model companies that can be directly compared to international giants like OpenAI and Google. With increased investment in R&D and computing power post-IPO, the firm is optimistic that the company's technological advantages will continue to translate into applications and revenue, entering a phase of accelerated performance growth driven by globalization. China National Building Material (03323) issued a profit warning, closing down 10.14% at HKD 5.05. The company announced that it expects an unaudited loss attributable to equity holders for the twelve months ended December 31, 2025, to be between approximately RMB 2.3 billion and RMB 4.0 billion, compared to a profit attributable to equity holders of approximately RMB 2.387 billion for the twelve months ended December 31, 2024. China Shenhua Energy (01088) saw its share price fall, closing down 5.07% at HKD 40.84. China Shenhua announced that it expects profit attributable to owners of the company for 2025 to be between RMB 50.8 billion and RMB 55.8 billion, representing a year-on-year decrease of 18.6% to 10.6%; compared to the restated prior year figure, the decrease is 14.7% to 6.3%. Morgan Stanley noted that China Shenhua's profit forecast met expectations, but weak industry fundamentals may continue to pressure its earnings.