The Hong Kong stock market maintained a volatile trajectory today, with the Hang Seng Tech Index turning negative. Expectations for interest rate hikes weighed on gold prices, leading to significant declines in gold ETFs. Meanwhile, escalating geopolitical tensions contributed to a downturn in South Korea-focused ETFs.

At the close, the Hang Seng Index was down 0.64% at 24,407.96 points, with a total daily turnover of HK$3,205.54 billion. The Hang Seng Tech Index fell 0.94% to 4,724.79 points.

Among major Hong Kong-listed ETFs by size, the Tracker Fund of Hong Kong (02800) closed 0.64% lower at HK$24.74. The CSOP Hang Seng TECH Index Daily (2x) Leveraged Product (07709) tumbled 13.55% to HK$98.34, and the CSOP Samsung Daily (2x) Leveraged Product (07747) dropped 12.03% to HK$148.5.

Sector Performance Overview

1. Gold ETFs Tumble on Rate Hike Expectations

Gold-related exchange-traded funds experienced a broad sell-off by the market's close. The CSOP Gold Futures Daily (2x) Leveraged Product (07299) fell 6.68% to HK$22.64. The E Fund Gold Miners ETF (02824) declined 3.83% to HK$8.67, and the Value Gold ETF (03081) decreased 3.13% to HK$19.78.

The decline was driven by robust U.S. non-farm payroll data and rising inflation expectations. Analysis suggests strong U.S. employment figures and prevailing hawkish monetary policy expectations led to a sharp drop in precious metals late last week, with spot gold in London falling below $4,400 per ounce.

Market focus this week shifts to the upcoming U.S. inflation data. With oil prices elevated due to geopolitical events, the year-on-year CPI figure for May is anticipated to rise further, reducing the likelihood of a Federal Reserve rate cut this year and placing short-term pressure on gold.

The immediate focus for precious metals is the Federal Reserve's June policy meeting. While market pricing has nearly eliminated the chance of a rate cut this year and instead reflects a steady increase in the probability of a hike, investors still hope to glean the Fed's stance on inflation and its future policy direction.

For gold, expectations of higher U.S. real interest rates imply persistently high holding costs. Global gold ETFs have seen net outflows since May, and speculative long positions on COMEX have been significantly reduced. The market is caught in a tug-of-war between "hawkish expectations" and "geopolitical safe-haven support," making it likely that gold prices will continue to consolidate within a range of $4,000 to $4,500 per ounce.

Expectations for gold in the first half of the year have been further tempered. Attention is on potential abnormal market volatility around the Fed meeting, characterized by "buying the rumor and selling the news," and on the progress of U.S.-Iran negotiations.

2. South Korea ETFs Weaken Amid Geopolitical Tensions

South Korea-focused ETFs also trended lower. The CSOP Hang Seng TECH Index Daily (2x) Leveraged Product (07709) dropped 13.55% to HK$98.34. The CSOP Samsung Daily (2x) Leveraged Product (07747) fell 12.03% to HK$148.5. The TR Korea ETF (02848) declined 5.58% to HK$1,828.5.

This followed an overnight slump in U.S. semiconductor stocks. On June 10, South Korea's KOSPI index suddenly plunged over 6% in the afternoon, prompting the Korea Exchange to trigger a circuit breaker and halt program trading. The escalation in U.S.-Iran tensions further dampened overall market risk appetite.

Analyst Commentary

A leading overseas strategy analyst noted that as negative macro and micro factors become fully priced into the market, pressure from earnings downgrades for Hong Kong stocks is expected to gradually ease. Should macro fundamentals and corporate profit data show signs of recovery in the third quarter, Hong Kong stocks could potentially experience a "double boost" from both earnings and valuation expansion in the fourth quarter.

However, with overall index earnings expectations lacking significant upside momentum, the market's trading focus will inevitably center on structural divergence among sectors.

ETF Listings and Activity

Three ETFs debuted on the exchange on June 10:

1. The Da Cheng Robotics ETF (159048) listed for the first time, closing down 3.8% at 1.039 yuan with a turnover of 1.85 billion yuan. The fund tracks the CNI Robotics Industry Index, focusing on listed companies within the robotics industry chain.

2. The Penghua Agriculture ETF (159041) made its debut, ending the day 0.21% lower at 0.957 yuan with a turnover of 292.133 million yuan. This fund tracks the CSI Agriculture Theme Index, covering sectors like agricultural products, machinery, fertilizers, and pesticides.

3. The SPDB Grain ETF (159060) commenced trading, closing down 0.6% at 0.988 yuan with a turnover of 562.02 million yuan. It tracks the CNI Grain Industry Index, concentrating on listed companies in the grain industry.