TradingKey - Major Hong Kong stock indices fluctuated during Thursday's Asian trading session. The Hang Seng Index and the Hang Seng Tech Index rose by more than 1.5% in early trading, but gains quickly retraced and turned into losses, indicating that market sentiment remains highly unstable.

Against a backdrop of heightened volatility in global risk assets, demand for safe-haven assets has risen, and the Hong Kong tech sector has become a concentrated area of selling pressure.

Structurally, the Hang Seng Tech Index has been retreating since its peak in October 2025, with a cumulative decline of more than 20%, technically entering "bear market territory." Some data show the index has dropped from a high of approximately 6,700 points to around 4,800 points recently, representing a cumulative correction of over 27%.

Market analysts believe the sustained pressure on the Hong Kong tech sector is due to a combination of factors. On one hand, rising global geopolitical risks and escalating tensions in the Middle East have pushed up energy prices; risk sentiment quickly spread to Asian markets, leading investors to generally reduce their allocations to risk assets.

On the other hand, the Hang Seng Tech Index has a high concentration of constituents, where the stock price volatility of heavyweight internet companies has a significant impact on the index. When core heavyweight stocks undergo a correction, the index's decline tends to be amplified.

Meanwhile, the Hong Kong tech sector has lagged in the current global AI rally. Compared to U.S. tech stocks, which continue to attract capital in the AI computing power and semiconductor sectors, most constituents of the Hang Seng Tech Index remain consumer internet-oriented. Their lower level of benefit from the AI hardware and computing power supply chains has, to some extent, weakened market appetite for sector allocation.

However, it is noteworthy that while the index continues to correct, some capital is still moving contrarian into Hong Kong tech assets through channels such as ETFs, indicating lingering divergence in market views regarding medium-to-long-term valuation recovery. Institutions generally believe that short-term performance will still depend on changes in global liquidity conditions, geopolitical risks, and earnings expectations for the tech sector.

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