On June 30th, the Hang Seng Index opened slightly lower by 0.08%, while the Hang Seng Tech Index rose by 0.54%.

Technology stocks showed strength, with Baidu Group-SW (09888) surging nearly 6%, and Meituan (03690) and Lenovo Group (00992) gaining over 1%.

Regarding the outlook for the Hong Kong market, analysis suggests that since 2026, Hong Kong stocks have significantly underperformed other Asian markets due to three primary pressures.

On the fundamental side, there has been concentrated downward revisions to earnings for heavyweight stocks.

Earnings expectations for sectors like internet platforms and the automotive supply chain have been substantially lowered, while upward revisions for hard tech companies have been insufficient to offset this trend.

On the valuation side, the US dollar and US Treasury yields have imposed dual constraints on the offshore market, leading to persistent foreign capital outflows.

At the micro-trading level, the Hong Kong market faces liquidity supply disruptions in the third quarter due to IPOs and share lock-up expiries.

There remains confidence in the medium-to-long term attractiveness of Chinese renminbi assets globally, which underpins a stronger conviction for Hong Kong stocks.

However, for Hong Kong stocks to transition from underperformance to a position of strength, three conditions need to align.

First, an improvement in the global liquidity environment is required.

Second, the trend of downward earnings revisions must cease.

Third, the micro-level supply-side disruptions need to weaken.

If only one of these three pressures is alleviated, the market performance is more likely to be a valuation repair or a temporary rebound.

Should two factors begin to reverse, Hong Kong stocks would establish a foundation for repricing.

If all three factors resonate positively, Hong Kong stocks could potentially shift from being a discounted offshore asset back to a trending asset for strategic allocation.