- After a previous upward trend, the Hang Seng Tech Index (HSTECH) showed a corrective consolidation, closing down 2.06% in a day, dragging down the overall market performance. The Hang Seng Index (HSI) and the H-shares Index (HSCEI) fell slightly by 0.54% and 0.75% respectively, with technology blue chips and the gold sector becoming the main directions of adjustment.
- Due to the disruptions in the Middle East supply chain, major North American aluminum suppliers, Rio Tinto Group (RIO:US) and Century Aluminum (CENX:US), raised the premium on key semi-finished aluminum materials by about 12% (equivalent to $110 per ton), driving the Hong Kong stock aluminum sector higher against the trend. China Hongqiao recorded a gain of over 5%.
- Despite the pressure on the index level, liquidity data shows that southbound funds continued a net inflow trend, with a net purchase of HKD 12.593 billion in a single day. The Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect contributed HKD 8.181 billion and HKD 4.411 billion respectively, indicating that allocation funds are still conducting left-side layouts at key points.
Reassessment of Liquidity in Technology and Precious Metals Sectors
Against the backdrop of fluctuating geopolitical news, the risk appetite in the Hong Kong stock market has shown short-term contraction. The recovery momentum of large tech stocks yesterday could not be sustained; Xiaomi Group fell over 4%, Alibaba declined nearly 3%, and other core stocks like Baidu, Meituan, and Tencent recorded varying degrees of decline. This reflects that when macro uncertainties persist, overseas funds remain cautious in pricing long-term growth assets. Additionally, the gold sector fell broadly due to profit-taking at previous highs, with Lingbao Gold dropping nearly 6%. Morgan Stanley noted that despite recent headwinds in precious metals liquidity indicators, gold prices still have room for valuation recovery based on fundamentals after a phase of selling off.
Aluminum Supply Chain Premiums and Spot Market Dynamics
In contrast to the weakness in tech stocks, the aluminum sector within non-ferrous metals showed significant relative returns. China Hongqiao and Aluminum Corporation of China rose over 5% and 3% respectively. Their core pricing logic stems from disruptions to supply in the spot market. Due to tensions in the Middle East affecting the international logistics of primary aluminum and semi-finished products, major North American suppliers like Rio Tinto have increased aluminum billet premiums by about 3 cents per pound compared to previous levels. This rise in logistics friction costs due to geopolitical tensions is being transmitted to the capital markets in the form of spot premiums, raising market expectations for improved gross margins for upstream aluminum companies.
Price-for-Volume Strategy in the Auto Market and Real Estate Expectations
The traditional cycle and consumer sectors are also facing fundamental data tests. The automobile dealer sector is under pressure, with China Meidong Auto Holdings falling over 7% in one day. Micro data from the industry shows that the terminal price center for joint venture fuel vehicles is continuously moving downward, with some main models dropping to the RMB 60,000 to 80,000 range, indicating intensifying competition in the terminal market and pressure on profit margins. In the real estate sector, Longfor Group fell over 5%. Morgan Stanley predicts that due to a reduction in land reserve size, the scale of real estate pre-sales may face a year-on-year decline of about 12% in 2026, leading to ongoing pressure on valuations for domestic real estate stocks.
