Hong Kong stocks opened higher in the morning but quickly reversed course. The Hang Seng Index opened at 24,139.11 points, marking the intraday high and briefly reclaiming the 24,000 mark, before declining steadily under pressure from heavyweight stocks such as CATL. The Hang Seng Tech Index fell below the 4,000 level. By the close, the Hang Seng Index dropped 0.90%, or 215.87 points, to 23,651.87, with total daily turnover of HK$176.597 billion. The Hang Seng China Enterprises Index fell 1.08% to 7,943.41, while the Hang Seng Tech Index declined 1.26% to 3,994.77.

Industrial Securities noted that on the earnings front, consensus EPS forecasts for the Hang Seng Index and Hang Seng Tech Index for 2026 and 2027 remain broadly under downward revision and have yet to show clear stabilization. On the valuation front, although the Hang Seng Index's trailing PE has fallen back to around its historical average, the equity risk premium remains at a relatively low level given elevated risk-free rates, indicating limited appeal. On the capital flow front, foreign allocation to Hong Kong stocks has dropped to historic lows, yet the trend of active foreign outflows remains unchanged. Combined with a rebound in lock-up expiry supply in the first quarter of 2027, this could bring阶段性 pressure, and the market still lacks sufficient fundamental and incremental capital catalysts in the near term.

Blue-Chip Performance

CATL (03750) led blue-chip declines after its earnings report. By the close, it fell 11.41% to HK$364.8, with turnover of HK$4.961 billion. CATL's third-quarter operating revenue was RMB 165.221 billion, up 58.58% year-on-year, while net profit attributable to shareholders was RMB 21.246 billion, up 14.54% year-on-year but down 5.77% quarter-on-quarter, mainly affected by changes in product mix, reduced export tax rebates, and consumption tax.

Among other blue chips, Lenovo Group (00992) rose 2.93% to HK$26, and Techtronic Industries (00669) gained 2.09% to HK$131.9. On the downside, Tencent Holdings (00700) fell 4.04% to HK$393.8, and China Mobile (00941) dropped 3.66% to HK$77.55.

Hot Sectors

Large-cap tech stocks opened high but closed low, with Tencent Holdings falling below HK$400. Memory chip stocks bucked the trend, with Montage Technology surging nearly 9% after issuing a positive profit alert. With the ESMO annual meeting countdown underway, innovative drug stocks continued to be active. On the other hand, lithium battery stocks fell collectively, with CATL plunging over 11% after earnings. The three major telecom operators came under synchronized pressure, with China Mobile falling 3.66%. Autos, coal, and new consumer sectors showed weak performance.

Innovative drug stocks extended their gains. By the close, RemeGen (09995) rose 3.72% to HK$66.9, BeiGene (06160) gained 2.66% to HK$231.4, Innovent Biologics (01801) rose 1.95% to HK$89.1, and Akeso (09926) added 1.53% to HK$92.8.

The 2026 European Society for Medical Oncology (ESMO) annual meeting will be held in Madrid from October 23-27. A total of 29 domestic innovative drug studies were selected as late-breaking abstracts (LBA), accounting for about one-third of all LBAs, with 5 entering presidential symposia, covering cutting-edge areas such as ADCs, bispecific antibodies, and targeted drugs. Meanwhile, recent platform-type BD deals continue to convey confidence. Notably, the AI pharmaceutical industry has seen a cluster of recent developments, with OpenAI announcing it has completed the acquisition of biopharmaceutical R&D collaboration platform Orchestra Bio and will deeply integrate it with its own life sciences AI R&D platform Rosalind.

Pork concept stocks showed active performance. By the close, Dekon Agri (02419) rose 4.12% to HK$58.15, and Muyuan Foods (02714) gained 3.62% to HK$37.2.

Entering October, signals of capacity reduction in the hog industry chain continue to increase. On one hand, leading pig enterprises are proactively reducing sow capacity, with piglet prices and breeding profits continuing to bottom out. On the other hand, breeding sow numbers continued to decline in September, though the pace of reduction narrowed compared to August. Data showed that September breeding sow inventories fell 0.52% and 0.86% month-on-month according to Yongyi and Mysteel respectively, and with cumulative reduction exceeding 6.5% in July-August, full-year capacity reduction is expected to reach 10%.

AI hardware stocks surged then retreated. By the close, Kinwong Electronic (03228) rose 5.79% to HK$66.65, Cambridge Technology (06166) gained 3.99% to HK$82, and GigaDevice (03986) rose 3.15% to HK$347.6.

Recently, the massive scale of AI infrastructure debt financing has raised investor concerns, with emerging cloud service providers and chip financing becoming the focus of this round of selling. However, SpaceX and Super Micro Computer's latest earnings both exceeded market expectations, boosting confidence in AI trades. SpaceX's third-quarter AI revenue grew more than 9-fold year-on-year to US$7.56 billion, becoming the company's largest revenue source for the first time. Super Micro Computer expects revenue for the quarter ending September 30 to surge 279% year-on-year, about 27% above previous guidance.

Lithium battery stocks fell collectively. By the close, CATL (03750) dropped 11.41% to HK$364.8, Lead Intelligent Equipment (00470) fell 9.58% to HK$19.06, and CALB (03931) declined 3.57% to HK$13.5.

CATL's third-quarter report released last night showed net profit attributable to shareholders of RMB 21.246 billion, up only 14.54% year-on-year and down about 5.8% from the second quarter. The third-quarter profit fell below market expectations mainly due to changes in product mix, reduced export tax rebates, and consumption tax. JPMorgan noted in a research report that battery stocks have significantly underperformed over the past few months, initially due to demand outlook concerns, but the focus has now shifted to profitability. The bank broadly lowered earnings forecasts across the battery industry chain, increasingly concerned that industry profitability is deteriorating faster than expected.

The three major telecom operators came under collective pressure. By the close, China Mobile (00941) fell 3.66% to HK$77.55, China Unicom (00762) dropped 3.59% to HK$5.37, and China Telecom (00728) declined 2.94% to HK$4.45.

China Mobile released its third-quarter results on October 20, with third-quarter operating revenue of RMB 242.3 billion, down 3.4% year-on-year, main business revenue of RMB 205.1 billion, down 5.1% year-on-year, and profit attributable to shareholders of RMB 27.3 billion, down 12% year-on-year. Citi noted that although mobile users and 5G and broadband customer numbers maintained steady growth, continued weakness in telecom business revenue and persistent cost pressures limited margin expansion, resulting in overall performance slightly below expectations.

Notable Stock Movers

Duiba (01753) surged on heavy volume. By the close, it rose 40.94% to HK$1.05. Duiba's AI short drama business recorded net profits for three consecutive months in July, August, and September, with third-quarter total new views across all platforms exceeding 45.8 billion, more than nine times the 5 billion accumulated in the first half. The company has now repositioned itself as an AI-Native content platform, with its core competitiveness not being any single hit title but rather a full-process AI workflow and self-developed Agent matrix covering everything from screenwriting to commercialization, transforming production from individual talent into systematic replication.

Deepexi Technology (01384) was strong throughout the day. By the close, it rose 10.30% to HK$17.35. Deepexi Technology's enterprise intelligent agent platform DeepWorks officially ended its trial application mode and opened self-registration to all users. This marks that beyond enterprise solution delivery, Deepexi Technology has formally built a scalable service model centered on platform-based, standardized cloud services, and its AI product system is expected to officially enter a new stage of scalable operations.

Montage Technology (06809) issued a positive profit alert. By the close, it rose 8.97% to HK$221.2. Montage Technology expects third-quarter operating revenue of approximately RMB 2.079 billion, up about 46.0% year-on-year, and net profit attributable to shareholders of RMB 1.2 billion to 1.3 billion, up 153.6% to 174.7% year-on-year. The strong growth was driven by rapid development of AI inference and Agent applications boosting server CPU demand, supporting memory module and interconnect chip demand.

Fuyao Glass (03606) fell after earnings. By the close, it dropped 6.50% to HK$51.75. Fuyao Glass disclosed its third-quarter report, with revenue for the first three quarters of RMB 34.123 billion, up 2.46% year-on-year, and net profit attributable to shareholders of RMB 6.006 billion, down 14.97% year-on-year. Third-quarter revenue was RMB 12.152 billion, with net profit attributable to shareholders of RMB 2.036 billion, down 9.87% year-on-year. The profit decline was mainly due to exchange losses of RMB 1.067 billion.