Hong Kong stocks opened lower and drifted down on the first trading day of October, with the Hang Seng Index losing the 24,000-point mark, as internet and tech stocks broadly declined while optical communication and cryptocurrency-related names advanced.

At the close, the Hang Seng Index fell 2.6% to 23,972.29 points, with total daily turnover of HK$145.804 billion; the Hang Seng Tech Index dropped 2.26% to 4,157.94 points.

Among Hong Kong ETFs ranked by size, the Tracker Fund of Hong Kong (02800) fell 2.69% to HK$24.58; the CSOP SK hynix Daily Leveraged (2x) Product (07709) rose 5.24% to HK$42.2; and the Hang Seng China Enterprises (02828) dropped 2.54% to HK$82.08.

Sector Performance

Korean stock ETFs rose against the market as South Korea's export data set a record and an overseas memory chip leader reported better-than-expected earnings.

At the close, the CSOP SK hynix Daily Leveraged 2x Product (07709) gained 5.24% to HK$42.2; the CSOP 2x Long Samsung Electronics (07747) rose 4.17% to HK$81.96; and the TR Korea (02848) added 2.25% to HK$1,889.

On the news front, preliminary data released by South Korea's Ministry of Trade, Industry and Energy on October 1 showed the country's September exports surged 83.5% year-on-year to US$120.94 billion, surpassing the US$120 billion monthly threshold for the first time, with growth accelerating from 68.7% in August; semiconductor exports alone jumped 262.8% year-on-year to US$60.3 billion in September, exceeding the US$46.7 billion record set in August and accounting for roughly 49.9% of total monthly exports.

From January to September, South Korea's cumulative exports reached US$814.5 billion, already surpassing last year's full-year record of US$709.3 billion.

On the industry side, overseas memory chip leader Micron's latest earnings beat expectations, with revenue growth of 379% and gross margin reaching 87%.

Boosted by the news, the Philadelphia Semiconductor Index rose more than 1.5% overnight, Japan's Nikkei 225 closed up 3.30%, and South Korea's KOSPI rose 0.46% to 7,004 points, with recovering sentiment in global chip stocks providing direct support for Korean stock ETFs.

With long-end US Treasury yields elevated and southbound capital absent during the holiday, Hang Seng Tech Index ETFs fell collectively.

At the close, the CSOP 2x Long Hang Seng Tech (07226) dropped 5.03% to HK$2.604; the Hang Seng Tech ETF (03032) fell 2.68% to HK$4.142; and the iShares Hang Seng Tech (03067) declined 2.56% to HK$8.75.

The US 10-year Treasury yield briefly broke through 5.34%, the highest level since 2002, while the 30-year Treasury yield touched 5.65%; the surge in bond yields directly suppressed the valuation logic for tech stocks.

On the capital flow front, CLSA's China market fund flow weekly report published on September 30 noted that amid tightening global liquidity, foreign capital withdrew a total of HK$8.5 billion from Hong Kong stocks in the week ended September 30, with outflows concentrated in technology (HK$6.6 billion), raw materials (HK$1.6 billion), and financials (HK$1.4 billion); inflows into the healthcare sector, which had been consistently bought by foreign investors over the past month, also slowed to HK$2.2 billion for the week, compared with a cumulative HK$21.3 billion over the previous four weeks.

In addition, Stock Connect (southbound) trading was suspended from October 1 to October 7 and resumed on October 8, with the absence of mainland buying further amplifying the decline.

Institutional Views

SPDB International noted that global markets showed divergence since September, with US stocks staging a V-shaped rebound while major Chinese market indices all pulled back.

The Fed raised rates by 25 basis points on September 16 to 3.75%-4.00%, and the dot plot suggested possibly one more hike this year, with the 10-year US Treasury yield briefly touching 5.29% and the 30-year rising to 5.6%.

SPDB International believes that while the rapid rise in rates has disrupted valuations and sentiment, systemic risk remains low.

Short-term market volatility may persist, but fourth-quarter catalysts are expected to increase, including the Shenzhen APEC meeting, third-quarter earnings verification, listings of leading AI large-model companies, and the year-end Central Economic Work Conference.

Everbright Securities International strategist Kenny Ng said that with long-term US Treasury yields remaining elevated and news of possible increased bank taxes in the UK, financial stocks such as HSBC Holdings fell sharply, Hong Kong stocks broke down technically, and further short-term weakness cannot be ruled out, with a lack of "northbound" capital meaning no fund inflows for support; the Hang Seng Tech Index has continued to lag and hit new adjustment lows during this round of correction, some large tech companies lack strong earnings growth momentum, and the market's AI hype focus has not landed on them, leaving share prices weak, though in the long run some large internet tech stocks still offer medium-to-long-term investment value.