Hong Kong's three major indices showed divergent performances today. The Hang Seng Index opened slightly higher before turning negative, while the Hang Seng Tech Index gained strength throughout the session, driven by semiconductor and AI-related stocks, rising nearly 2% at one point. At the close, the Hang Seng Index was down 0.04%, or 10.76 points, at 25,132.29, with a total turnover of HK$289.943 billion. The Hang Seng China Enterprises Index fell 0.25% to 8,360.68, and the Hang Seng Tech Index advanced 1.32% to 4,814.83.

Analysts suggest the Hong Kong market remains in a window for catch-up gains, but the sustainability and strength of the rebound are subject to multiple variables. The market is currently at a critical juncture for observation. Key future drivers for Hong Kong stocks include the pace of the AI tech narrative in the U.S. market, expectations for the Federal Reserve's monetary policy within the year, valuations, and domestic catalysts. Further market momentum likely awaits the implementation of domestic policy stimulus or new narratives within the AI industry.

Blue-Chip Performers

Lenovo Group (0992.HK) led the gains among blue-chips. Its shares closed up 8.5% at HK$23.24, with turnover of HK$2.3 billion, contributing 19.01 points to the Hang Seng Index. For the 2025/26 fiscal year, Lenovo reported revenue of $83.075 billion, a 20% year-on-year increase, with adjusted net profit reaching $2 billion, up 42%. All three of its business groups—IDG, ISG, and SSG—achieved full-year profitability for the first time. The company's AI server order backlog has exceeded $21 billion.

Among other blue-chips, SMIC (0981.HK) surged 8.24% to HK$75.50, Zijin Mining (2899.HK) rose 4.65% to HK$31.52, China Resources Mixc Lifestyle Services (1209.HK) fell 3.24% to HK$38.84, and Tingyi (Cayman Islands) Holding Corp. (0322.HK) dropped 3.15% to HK$11.38.

Key Market Sectors

In terms of sector performance, large-cap tech stocks were mixed, with Lenovo and SMIC gaining over 8% while Tencent (0700.HK) fell 0.8%. Semiconductor and PCB concept stocks related to computing power hardware staged a strong rebound. Shares in Huahong Grace (1347.HK) jumped nearly 18%, and GigaDevice (3986.HK) surged more than 15%. Electrical equipment stocks rose throughout the day, with Harbin Electric (1133.HK) soaring 23% after a positive profit alert. Gold stocks extended their gains, with Zhaojin Mining (1818.HK) rallying over 10%. The leading large model players were also strong, with Zhipu (2513.HK) skyrocketing nearly 37% in a single session.

On the downside, oil stocks mostly declined, with CNOOC (0883.HK) and PetroChina (0857.HK) falling over 1%. Mainland bank stocks were generally softer.

1. Semiconductor and Computing Hardware Stocks Rebound

Shares in semiconductor, PCB, and other computing power hardware stocks rebounded. At the close, Huahong Grace (1347.HK) was up 17.91% at HK$168.50, GigaDevice (3986.HK) gained 15.09% to HK$614.00, Iluvatar CoreX (9903.HK) rose 12.13% to HK$582.50, and SMIC (0981.HK) advanced 8.24% to HK$75.50.

Analysis indicates that the global semiconductor sector has been undergoing a correction since July, with no major negative fundamental drivers. The pullback is attributed to factors like fund deleveraging, profit-taking in the memory segment, and valuation adjustments for some stocks. The sector's current position is seen as having largely priced in risks. Focus is advised on areas related to capacity expansion, such as advanced packaging, wafer foundry, semiconductor equipment and materials, as well as domestic computing power.

A market strategist pointed out that there is no need for excessive pessimism regarding domestic tech leaders. The medium-term logic for AI industry growth remains intact, with the expansion cycle for domestic chips and computing power expected to sustain strong momentum. Compared to the cyclical patterns in the overseas memory industry, the current tactical value of selling upstream silicon assets at low levels to chase dividend plays appears limited. Trading-oriented funds could participate in the sector's rebound, while allocation-focused funds should hold firm on core domestic tech assets like wafer foundries, semiconductor equipment, and Hong Kong-listed internet stocks.

2. Gold Stocks Extend Gains

Gold stocks continued their upward trend. China Gold International Resources (2099.HK) closed up 10.67% at HK$157.70, Zijin Gold International (2259.HK) rose 10.46% to HK$108.20, and Zhaojin Mining (1818.HK) gained 10.05% to HK$20.36.

Spot gold staged a V-shaped recovery on Tuesday, briefly dipping below $4,000 per ounce before rebounding above $4,060. Analysts note that physical demand for the metal and central bank purchases are supporting the gold market. While gold faces short-term headwinds from expectations of Federal Reserve tightening and a strong U.S. dollar, investment positioning in gold appears thin after months of ETF outflows, suggesting limited room for further downside. High-interest-rate environments typically weigh on non-yielding assets like gold. Some investment banks believe central bank buying will provide a price floor for gold, offsetting short-term downward pressure from hawkish Fed expectations.

3. Electrical Equipment Stocks Rally

Electrical equipment stocks were strong throughout the session. Harbin Electric (1133.HK) surged 23.36% to HK$16.16, Weichai Power (2338.HK) gained 8.43% to HK$32.16, Wasion Holdings (3393.HK) rose 8.11% to HK$19.33, and Dongfang Electric Corporation (1072.HK) advanced 6.35% to HK$22.10.

Harbin Electric announced it expects to report a net profit attributable to shareholders of approximately RMB 1.7 billion for the first half of 2026, representing a year-on-year increase of 61.9%. Analysts view the positive profit alert as significantly exceeding market expectations. Coupled with the potential catalyst of inclusion in the Southbound Stock Connect program in August, the current moment is seen as an opportune entry point.

It is noteworthy that the global grid upgrade cycle, combined with the explosion in AI computing power demand, is propelling the electrical equipment industry into a new growth phase. The current AI computing power surge is fundamentally reshaping global power supply and demand dynamics. The United States, as a core region for global AI data center construction, is facing an unprecedented power supply gap crisis. This capacity bottleneck is expected to create spillover opportunities for the Chinese supply chain.

Notable Movers

Zhipu (2513.HK) soared significantly, closing up 36.89% at HK$1,219.00. The company has formally completed the acquisition of domestic AI heterogeneous computing software firm Zhongke Jiahe. Simultaneously, Zhipu has commenced construction on a 1GW-scale domestic AI computing power data center, which will exclusively use domestic AI chips. Observers believe these two moves address the two key capabilities of computing power supply and computing power utilization.

Kaixin International Resources (3858.HK) remained strong all day, closing up 12.64% at HK$51.05. The company announced its intention to implement a share buyback plan for the second half of 2026, with up to HK$200 million allocated for the program. Implementing the buyback plan demonstrates the company's firm confidence in its intrinsic value and long-term prospects, and is expected to optimize its capital structure and enhance shareholder returns.

Sanan Optoelectronics (6951.HK) issued a positive profit alert, with its shares closing up 12.49% at HK$101.80. The company expects net profit for the first half of 2026 to be between RMB 1.794 billion and RMB 2.041 billion, representing a year-on-year increase of 45% to 65%. Benefiting from increased customer recognition and improved industry sentiment, prices for some MLCC product specifications have recovered to reasonable levels, with both sales volume and value showing significant year-on-year growth.

Huqin Technology (3296.HK) extended its gains, closing up 12.61% at HK$69.20. In its investor relations activity report, the company stated that its hyper-node products began small-batch shipments in the second quarter and will enter mass delivery starting in the third quarter. Revenue from hyper-node products alone is expected to exceed RMB 10 billion for the full year, with high growth anticipated in the following two years as well. Data center business revenue is projected to grow 50% year-on-year for the full year.

Lee & Man Paper Manufacturing (2314.HK) gapped higher, closing up 10.85% at HK$3.78. The company announced it expects to report a profit attributable to owners for the six months ended June 30, 2026, in the range of HK$1.33 billion to HK$1.39 billion, representing an increase of 64% to 71% compared to HK$811 million in the same period last year. This profit growth is primarily due to an increase in the group's profit margin.

Modern Dairy (1117.HK) performed strongly, closing up 8.70% at HK$1.25. The company announced that its voluntary conditional cash offer for China Shengmu Organic Milk has become unconditional. Combined with its existing shareholding and shares accepted under the offer, Modern Dairy and its concert parties now hold the vast majority of China Shengmu's shares. Following the completion of the transaction, the group's total dairy herd will exceed 610,000 head, with annual raw milk production capacity surpassing 4 million tons, and the proportion of specialty organic milk increasing to over 20%.