At midday on September 16, Hong Kong's three major stock indexes showed mixed performances. The Hang Seng Index edged up 0.12% to 24,697.35 points, the Hang Seng Tech Index climbed 0.87%, while the Hang Seng China Enterprises Index slipped 0.05%.

On the sector front, internet and tech stocks were mostly lower, with Lenovo Group (HKEX: 0992) surging over 7%, while Bilibili (HKEX: 9626) fell more than 2% and JD.com (HKEX: 9618) dropped over 1%. The optical communication sector led gains, with Zhongji Innolight rising more than 8%. Chip stocks rallied broadly, as Longsys Electronics climbed over 7%. Gold-related stocks rebounded, with Chifeng Jilong Gold Mining advancing more than 6%.

Where the momentum is coming from

In the optical communication sector's strong performance, Zhongji Innolight was a standout, rising over 8%. This follows the joint release on September 15 of the "15th Five-Year Plan for the Electronic Information Manufacturing Industry" by the Ministry of Industry and Information Technology and the National Development and Reform Commission. The plan sets a target for China's electronic information manufacturing industry to further solidify its position in the global industrial landscape by 2030, with revenue from enterprises above a designated size expected to surpass 30 trillion yuan. Meanwhile, in its latest industry research, Goldman Sachs raised its procurement forecasts for ultra-high-speed optical modules across the board, increasing its 2027 and 2028 demand projections for 800G-and-above optical modules by 39% and 36%, respectively, with total shipments expected to reach 144 million and 171 million units.

What's driving the chip rally

The broad advance in chip stocks featured Longsys Electronics gaining over 7%. According to a Goldman Sachs research report, driven by generative AI and domestic demand, capital expenditure in China's semiconductor industry is expected to grow at a compound annual rate of 10% to 15% from 2026 to 2030, reaching $82 billion by 2030. The report also forecasts that the potential market size for China's AI chips will achieve a compound annual growth rate of 69% between 2025 and 2030, reaching $678 billion. Zhongyuan Securities noted that the semiconductor industry remains in an upward cycle, with AI serving as a key driver of industry growth.

Gold stocks rebound ahead of Fed decision

Gold-related equities recovered, with Chifeng Jilong Gold Mining jumping over 6%. Spot gold surged back above the $4,300 mark this morning. With the Federal Reserve's interest rate decision imminent, the sell-off in US Treasuries has intensified. According to the CME FedWatch Tool, traders are pricing in a more than 90% probability of a 25-basis-point rate hike at the Fed's September meeting, with the market nearly fully pricing in such a move. Analysts suggest that if the Fed raises rates by 25 basis points as expected, gold could experience a modest "sell-the-news" rebound as prolonged uncertainty is removed. However, if the Fed unexpectedly holds rates steady, gold prices could rise significantly.