Markets in Hong Kong saw significant declines on June 26th, with all three major indices closing lower. The Hang Seng Index fell below the 23,000-point mark, finishing the day down 1.76% at 22,671.86 points. The Hang Seng Tech Index dropped 3.41% to 4,255.59 points.

Among the largest Hong Kong-focused ETFs by size, the Tracker Fund of Hong Kong (02800) declined 1.79% to HK$23.08. In the mainland market tracking the Hang Seng Tech Index, the ChinaAMC Hang Seng Tech Index ETF (513180) fell 3.04% to 0.542 yuan.

Sector Performance Overview

South Korean stocks triggered another circuit breaker, leading to sharp declines in ETFs with exposure to the Korean market. The Samsung Group 2x Daily Leveraged ETF (07709) plunged 13.93% to HK$157.0. The Samsung Electronics 2x Daily Leveraged ETF (07747) tumbled 10.60% to HK$176.35. The TR Korea ETF (02848) dropped 5.77% to HK$2,010.0.

The benchmark KOSPI index closed down 5.81% at 8,411.20 points on June 26th, after plummeting nearly 9% intraday. Major constituents like SK Hynix and Samsung Electronics saw intraday losses exceeding 10%. The overnight sell-off in large-cap U.S. tech stocks heightened investor concerns over the sustainability of the 'AI trade'. Furthermore, news that South Korea's two leading memory chip manufacturers are planning substantial AI investments weighed on sentiment. These two stocks together account for nearly 60% of the KOSPI index weight.

The recent continuous decline in cryptocurrencies has put pressure on related exchange-traded funds. The Harvest Ethereum ETF (03179) fell 4.57% to HK$3.716. The ChinaAMC Ethereum ETF (03046) dropped 4.42% to HK$3.722. The Bosera Bitcoin ETF (03008) declined 1.85% to HK$4.656.

Cryptocurrencies have been falling recently, with Bitcoin repeatedly testing the $60,000 support level and Ethereum dropping below $1,600. Reports indicate Bitcoin's recent weakness is driven by two main factors: the expiration of nearly $10 billion worth of Bitcoin options on June 26th, and expectations of Federal Reserve rate hikes strengthening the U.S. dollar, which pressures risk assets like Bitcoin due to tightening liquidity.

In the A-share market, semiconductor equipment ETFs bucked the broader downtrend. The ChinaAMC Semiconductor Equipment ETF (562590) rose 3.54% to 3.744 yuan. The E Fund Semiconductor Equipment ETF (159558) gained 3.47% to 4.147 yuan.

Global wafer fabrication giants like TSMC, Samsung, and SK Hynix continue to increase capital expenditures. The latest forecast from TrendForce predicts global capital expenditure for the top nine wafer foundries will reach 830 billion yuan in 2026, a significant 79% year-on-year increase. Additionally, production line construction by leading domestic manufacturers like CxMT and YMTC is progressing steadily, driving sustained demand for domestic equipment in advanced process and packaging segments.

Institutional Perspectives

CITIC Securities notes that Hong Kong stocks have significantly underperformed other Asian markets this year due to three pressures. On the earnings front, profit expectations for heavyweights have been revised down, particularly for internet platforms and the automotive supply chain, with upward revisions for hard-tech firms failing to offset the declines. On the valuation front, the U.S. dollar and Treasury yields present dual constraints for the offshore market, leading to persistent foreign capital outflows. From a micro-trading perspective, liquidity in the third quarter faces disruptions from IPOs and share lock-up expiries.

Li Bohan, a fund manager at CCB Principal Emerging Markets, believes AI remains the primary driver for overseas tech stocks. The strong push from AI technology is fueling sustained demand growth in global sectors like memory, with some products facing supply shortages and significant price increases, contributing to the robust performance of the MSCI Korea Index. Given strong conviction in the AI revolution, the fund maintains holdings in leading AI technology and semiconductor companies.

ETF Developments

On June 26th, the first ETF tracking the 'HKEX Tech 100 Index', the E Fund HKEX Tech 100 ETF (03456), officially listed. The HKEX Tech 100 Index selects 100 technology stocks across six key sectors: artificial intelligence, biotech and pharmaceuticals, electric vehicles and autonomous driving, information technology, internet, and robotics.

Furthermore, six new ETFs debuted on the Shanghai and Shenzhen exchanges. The Penghua Hong Kong Stock Connect Internet ETF (159040) closed down 3.72% at 0.957 yuan with a turnover of 108 million yuan. The Harvest Construction Machinery ETF (159070) fell 2.48% to 0.945 yuan with a turnover of 47.012 million yuan. The Invesco Great Wall Construction Machinery ETF (159065) declined 2.08% to 0.941 yuan with a turnover of 40.079 million yuan. The HTSC Hong Kong Stock Connect Information Technology ETF (526030) dropped 5.69% to 0.961 yuan with a turnover of 51.276 million yuan. The HTSC STAR Market Chip Design ETF (589290) decreased 1.96% to 1.05 yuan with a turnover of 108 million yuan. The Guotai STAR 50 ETF (589360) closed down 1.6% at 1.046 yuan with a turnover of 94.155 million yuan.