Hong Kong's benchmark Hang Seng Index commenced trading down 0.54%, while the Hang Seng Tech Index fell 0.78%.

Technology and internet stocks were among the decliners, with Alibaba Group Holding Ltd (HKEX: 09988) shares falling more than 3% and Semiconductor Manufacturing International Corp (SMIC) shares dropping over 1%.

Market Outlook and Analysis

Regarding the future trajectory of the Hong Kong market, analysts at Soochow Securities suggest that for a sustained uptrend to materialize, several factors need monitoring: a recovery in overseas risk appetite; a broadening of the US stock market's AI theme—specifically, if the AI focus shifts from upstream hardware to infrastructure and application software, sectors where Hong Kong-listed stocks have significant weight, potentially creating a synchronized rally with US and Chinese markets; and a catalyst from incremental capital inflows. They note that the Hang Seng Tech Index currently offers highly attractive risk-reward, but a lack of significant fresh capital in the near term means new catalysts are still required.

Analysts from Guotai Junan Securities highlighted that in the short term, the Hong Kong market is facing a confluence of liquidity pressures, including a more hawkish-than-expected stance from the US Federal Reserve, passive index rebalancing, and a peak period for share lock-up expiries this year. They believe the market could return to a focus on fundamental value once these negative factors are digested.

Huatai Securities analysts expressed the view that for a fundamental reversal in the Hong Kong market's trajectory, catalysts are still needed, primarily from major tech companies' progress in AI and a recovery in consumption. They noted the timing is not yet opportune. Furthermore, the short-term technical rebound they had anticipated has been suppressed by consistently high short-selling pressure, resulting in brief, unsustainable rallies. Looking ahead, they suggest focusing on sectors with high short interest but showing marginal improvements in earnings expectations in the near term, such as media (core stocks) and innovative pharmaceuticals.