Lenovo Group surges 20% to a new high after earnings; Hang Seng Index falls 43 points for the day. Tencent's surge in capital expenditure drags down the broader market. The biotech sector maintains a steady upward trend and remains favorable; consider watching the ChinaAMC Hang Seng Biotech ETF.

US July CPI data met expectations and showed signs of cooling, easing market concerns about short-term Fed rate hikes, while US stocks performed softly. Tencent $TENCENT (00700.HK)$ (0700) ADR shares fell after its earnings announcement, dragging the Hang Seng Index to a lower open today. However, the intraday trend was volatile. Although the index rose to a high of 25,519 points in the afternoon driven by a surge in Lenovo's share price, it later reversed direction. The index closed down 43 points or 0.17% at 25,396 points, with total turnover of HKD 263.7 billion. The SOE Index closed at 8,426 points, down 19 points or 0.23%. The Hang Seng Tech Index closed at 4,792 points, up 15 points or 0.33%. Southbound capital recorded net buying of HKD 3.667 billion.

Tencent (0700) reported a 9% year-on-year increase in quarterly adjusted profit and an 11% rise in revenue, both beating expectations. However, Q2 capital expenditure surged to RMB 52.784 billion, up 65% quarter-on-quarter and 1.76 times year-on-year, turning free cash flow negative. At the earnings conference, Tencent President Martin Lau emphasized that renting out AI computing power can generate more revenue and substantial returns, and the group will prioritize investment in its two leading products, WorkBuddy and CodeBuddy. Market concerns over AI investments impacting short-term profitability weighed on the stock, which closed down 4.46% at HKD 441.

Lenovo Group $LENOVO GROUP (00992.HK)$ Lenovo Group (0992) reported a 176% year-on-year increase in adjusted profit for the first fiscal quarter to USD 1.075 billion, surpassing the USD 1 billion mark for the first time. Revenue rose 43% to USD 26.9 billion, both figures significantly beating expectations. Citi noted its strong quarterly performance, further reinforcing the narrative of AI-driven structural growth. Spurred by the results, Lenovo shares rallied further in the afternoon, closing up 20.18% at HKD 34.9, hitting a record high and making it the best-performing blue-chip stock of the day. Lenovo Holdings $LEGENDHOLDING (03396.HK)$ (3396) also rose 16.12%, closing at HKD 20.1, a record high.

In addition, market regulators in Beijing and Shanghai organized Meituan $MEITUAN-W (03690.HK)$ (3690), Taobao Flash Sales, and JD.com Food Delivery—the three major platforms—to conduct "Break the Race to the Bottom, Promote Good" consultation dialogues focused on optimizing algorithms for food delivery riders. The three platforms were the first to implement the "Red Light Stops the Clock" measure in Beijing. Among the "Big Three" food delivery stocks, Meituan $MEITUAN-W (03690.HK)$ (3690) fell 0.44%, closing at HKD 91.25; Alibaba $BABA-W (09988.HK)$ (9988) dropped 0.57%, closing at HKD 121.9; JD.com Group $JD-SW (09618.HK)$ (9618) remained flat, closing at HKD 123. Other tech and internet stocks showed mixed performance: Xiaomi $XIAOMI-W (01810.HK)$ (1810) fell 1.82%, closing at HKD 25.88; Baidu $BIDU-W (09888.HK)$ (9888) rose 0.98%, closing at HKD 103. In terms of AI concept stocks, Zhipu# $Z.AI (02513.HK)$ (2513) was included in the MSCI China Index, rising 9.02% to close at HKD 1,317; MiniMax $MINIMAX-W (00100.HK)$ (0100) rose 5.43%, closing at HK$376.8.

The CK Hutchison group performed outstandingly. Cheung Kong Infrastructure $CKI HOLDINGS (01038.HK)$ (1038) saw its interim net profit surge 3.89-fold to HK$21.25 billion, with dividends increased to 75 cents; the share price rose 3.52%, closing at HK$63.15; Power Assets Holdings $POWER ASSETS (00006.HK)$ (0006) saw its interim net profit rise 3.83-fold to HK$14.7 billion, maintaining dividends at 78 cents; the share price rose 3.05%, closing at HK$59.05; Cheung Kong Property Holdings $CK ASSET (01113.HK)$ (1113) rose 3.62%, closing at HK$48.1; CK Hutchison Holdings $CKH HOLDINGS (00001.HK)$ (0001) rose 1.47%, closing at HK$72.3.

In terms of individual stocks, Galaxy Entertainment Group $GALAXY ENT (00027.HK)$ (0027) rose 2.16% ahead of its earnings report, closing at HK$34.94, with Goldman Sachs noting a pleasant surprise in the increased interim dividend; Tingyi (Cayman Islands) Holding Corp. $TINGYI (00322.HK)$ (0322) was upgraded by CLSA to 'Outperform' following its earnings release, with the share price rising 6.75% to close at HK$13.12, marking two consecutive days of gains. Pop Mart $POP MART (09992.HK)$ (9992) saw Duan Yongping increase his stake to 7.7%, driving the share price up 2.12% to close at HK$154.2. Blokees $BLOKS (00325.HK)$ (0325) Interim net profit rose 31%, and the company announced its first-ever dividend since listing. The share price surged 19.73% to close at HK$71.

Gold prices remained around the $4,300 level, but resource stocks faced profit-taking today. China Hongqiao $CHINAHONGQIAO (01378.HK)$ (1378) fell 7.12% to close at HK$22.7; Aluminum Corporation of China $CHALCO (02600.HK)$ (2600) dropped 6.21% to close at HK$8.235; CMOC Group $CMOC (03993.HK)$ (3993) declined 4.25% to close at HK$17.33; Zijin Mining $ZIJIN MINING (02899.HK)$ (2899) fell 4.06% to close at HK$34.46.

Innovative drug concepts rallied collectively in early trading. Zai Lab $ZAI LAB (09688.HK)$ (9688) rose 4.73% to close at HK$20.6, marking its sixth consecutive day of gains; GenScript $GENSCRIPT BIO (01548.HK)$ (1548) gained 4.51% to close at HK$25.98; CSPC Pharma $CSPC PHARMA (01093.HK)$ (1093) rose 2.02% to close at HK$8.85; Hansoh Pharmaceutical $HANSOH PHARMA (03692.HK)$ (3692) rose 1.07%, closing at HK$33.86.

　　
The Hong Kong stock market fell 43 points today, but some biotech stocks continued to show robust gains. For investors looking to gain exposure to the biotechnology sector in a diversified manner, consider the ChinaAMC Hang Seng Biotech ETF. $ChinaAMC Hang Seng Biotech ETF (03069.HK)$ (3069) closed at HK$15.66, up 0.777%, outperforming the broader market today. As the first pure Hong Kong-listed biotech ETF, it tracks the Hang Seng Hong Kong Listed Biotech Index, covering three sub-sectors: pharmaceuticals, biotechnology, and healthcare equipment. It uses a free-float market capitalization weighting method, with a single stock weight cap of 10% and quarterly reviews. Major holdings include Wuxi Bio $WUXI BIO (02269.HK)$ (2269), Innovent Bio $INNOVENT BIO (01801.HK)$ (1801), JD Health $JD HEALTH (06618.HK)$ (6618), Akeso Bio $AKESO (09926.HK)$ (9926), and Sino Biopharm $SBP GROUP (01177.HK)$ (1177), among others.

3069 rose as much as 2.32% during midday trading, with its price briefly touching HK$15.9, returning to levels seen around April 15. This gradually repaired the correction that occurred from mid-April to late June. The decline during that period was mainly driven by factors such as the US House of Representatives proposing a bill to restrict capital inflows into China's biotech industry, the Chinese government consulting on and reviewing outbound licensing in the biotech sector, and rapid gains in the AI hardware supply chain attracting capital outflows. However, the industry's fundamentals remain quite positive. Looking ahead, the noise surrounding the Chinese government's review policies has subsided; the Ministry of Commerce has repeatedly expressed support for foreign enterprises investing in China, and the US House proposal has made no progress due to lack of support. As capital gradually shifts from the AI supply chain to other sectors in July, the current position of the biotech sector can be viewed as having completed its recovery from the previous decline caused by capital flow effects. Future drivers will return to industry trends and broader market stability.

Investors who are bullish on the long-term development of the Hong Kong biotech sector and can tolerate higher volatility may consider this ETF. However, note that the biotech industry is significantly influenced by policy, R&D progress, and market sentiment, leading to potentially significant short-term price fluctuations. Investors should adopt a medium-to-long-term perspective when allocating.

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