Fed removes rate-cut language; dot plot officials hint at rate hikes. Hang Seng Index falls for third straight day, dipping below 24,000 again. Tech stocks remain attractive due to low valuations—watch the upcoming launch of E Fund HKEX Tech 100 ETF.

As widely expected, the Federal Reserve announced it would hold rates steady but removed language hinting at potential rate cuts. The latest dot plot shows that nine out of 18 Fed officials believe a rate hike is warranted this year. The median projection for the year-end interest rate was raised to 3.8%, up from 3.4% forecast in March. All three major U.S. equity indices fell overnight: the Dow dropped 507 points, while both the Nasdaq and S&P 500 declined by more than 1%. Hong Kong stocks opened sharply lower this morning, down 166 points, with bears quickly intensifying pressure. Selling accelerated further during midday trading, pushing the index down as much as 562 points and breaching the 24,000 mark to an intraday low of 23,749. A slight rebound occurred near market close, leaving the Hang Seng Index finishing the session at 23,924, down 387 points or 1.59%, on turnover of HK$358.7 billion. The Hang Seng China Enterprises Index closed at 7,976, down 167 points or 2.06%, representing a weekly decline of 398 points or 4.76%. The Hang Seng Tech Index ended at 4,604, down 64 points or 1.39%, with a weekly drop of 100 points. Southbound capital recorded a net outflow of RMB 6.8 billion.

Concerns over rate hikes directly hit mainland property developers, with China Overseas Land & Investment (0688) $CHINA OVERSEAS (00688.HK)$ falling HK$1.34 or 9% to close at HK$13.56, marking the worst-performing blue chip of the day; China Resources Land (1109) $CHINA RES LAND (01109.HK)$ dropped HK$2.54 or 7.34% to close at HK$32.08; Longfor Group (0960 $LONGFOR GROUP (00960.HK)$ ) dropped HK$0.51 or 6.77%, closing at HK$7.02; three mainland property developers occupied the top three spots among Hang Seng Index decliners. Among non-blue chips, Sunac (1918) $SUNAC (01918.HK)$ fell HK$0.06 or 7.7%, closing at HK$0.72; Vanke (2202) $CHINA VANKE (02202.HK)$ declined HK$0.12 or 4.7%, closing at HK$2.42. Local property stocks also came under pressure, with New World (0017 $NEW WORLD DEV (00017.HK)$ ) down HK$0.24 or 3.3%; Henderson Land (0012) fell HK$0.52 or 2%; CK Asset (1113) $CK ASSET (01113.HK)$ dropped HK$0.88 or 1.9%, closing at HK$44.66; Sun Hung Kai (0016) $SHK PPT (00016.HK)$ declined HK$1.90 or 1.7%, closing at HK$112.70.

Renewed expectations of interest rate hikes also weighed on all mainland financial stocks. China Taiping (0966) $CHINA TAIPING (00966.HK)$ fell HK$1.77 or 8.3%, closing at HK$19.49; China Pacific Insurance (2601) $CPIC (02601.HK)$ dropped HK$2.08 or 6.7%, closing at HK$28.54; China Life (2628) $CHINA LIFE (02628.HK)$ declined HK$1.98 or 6.6%, closing at HK$28.02; Ping An (2318) $PING AN (02318.HK)$ fell HK$2.25 or 4%, closing at HK$53.85; New China Insurance (1336) $NCI (01336.HK)$ dropped HK$2.30 or 4.4%, closing at HK$49.80. Mainland Chinese banks also came under pressure, with ICBC (1398 $ICBC (01398.HK)$ ) down HK$0.19 or 2.7%, closing at HK$6.85; China Merchants Bank (3968) $CM BANK (03968.HK)$ fell HK$1.26 or 2.6%, closing at HK$47.16; Agricultural Bank of China (1288) $ABC (01288.HK)$ declined HK$0.16 or 2.7%, closing at HK$5.67. HSBC (0005) $HSBC HOLDINGS (00005.HK)$ gained against the market trend, briefly hitting a record high during trading, and closed up HK$1 or 0.7% at HK$149; Standard Chartered (2888) $STANCHART (02888.HK)$ rose HK$0.40 or 0.2%, closing at HK$211.

Tech and e-commerce stocks were generally weak, as mainland regulations targeting subsidies by food delivery platforms dampened anti-competitive sentiment. Meituan (3690 $MEITUAN-W (03690.HK)$ ) fell HK$2.60 or 3.49%, closing at HK$71.80; Xiaomi (1810 $XIAOMI-W (01810.HK)$ ) dropped HK$0.84 or 3.3%, closing at HK$24.58; NetEase (9999 $NTES (09999.HK)$ ) dropped HK$5 or 2.56%, closing at HK$190.5; Alibaba (9988) $BABA-W (09988.HK)$ fell HK$2 or 1.87%, closing at HK$104.9; Tencent (0700) $TENCENT (00700.HK)$ declined HK$5.2 or 1.17%, closing at HK$440.2; JD.com (9618) $JD-SW (09618.HK)$ dropped HK$2.2 or 2%, closing at HK$108.9. Lenovo (0992) $LENOVO GROUP (00992.HK)$ plans to issue US$2 billion in convertible bonds and simultaneously repurchase bonds; its share price fell HK$1.1 or 4.42%, closing at HK$23.78.

Overnight, the Philadelphia Semiconductor Index rose 1.38% against the broader market trend, with chip stocks outperforming. Hua Hong Semiconductor (1347) $HUA HONG GRACE (01347.HK)$ gained HK$8.9 or 5.59%, closing at HK$168.1; Tianshu ZhiXin (9903) $ILUVATAR COREX (09903.HK)$ surged HK$110 or 21.15%, closing at HK$630; GigaDevice (3986) $GIGADEVICE (03986.HK)$ rose HK$96 or 11.39%; Biren Technology (6082) $BIREN TECH (06082.HK)$ gained HK$5.05 or 9%, closing at HK$61.45; Montage Technology (6809) $MONTAGE TECH (06809.HK)$ rose HK$25.8 or 6.13%, closing at HK$446.4; SMIC (0981 $SMIC (00981.HK)$ ) gained HK$0.75 or 0.99%, closing at HK$76.5.

Zhipu AI (2513) $Z.AI (02513.HK)$ 's GLM-5.2 model has received a positive market response since its launch. According to a report by Jefferies, it ranked third in the Artificial Analysis Global Model Intelligence Index—the first time a Chinese model has entered the top three—sending the stock surging HK$434 or 26.14% to break through the HK$2,000 mark and close at a record high of HK$2,094; MiniMax (0100) $MINIMAX-W (00100.HK)$ received its first coverage from Yangtze Securities with a 'Buy' rating, rising HK$54.6 or 12.33% to close at HK$497.6. The PCB concept continued to rally, with Kingboard (0148) $KINGBOARD HLDG (00148.HK)$ jumping another HK$10.1 or 8.67% to close at HK$126.6, hitting a new all-time high; Kingboard Laminates (1888) rose HK$3.3 or 3.73%, closing at HK$91.85, also reaching a new post-listing high.

Biopharmaceutical stocks performed strongly against the broader market trend, with Wuxi Apptec (2359) $WUXI APPTEC (02359.HK)$ gaining HK$6.2 or 5.06% to close at HK$128.7, making it the best-performing blue-chip stock of the day; BeiGene (6160 $BEONE MEDICINES (06160.HK)$ ) rose HK$6.3 or 4% to close at HK$163.7; Wuxi Bio (2269) $WUXI BIO (02269.HK)$ advanced HK$0.96 or 3.22%, closing at HK$30.82.

Hong Kong stocks have fallen for three consecutive days, losing a cumulative 917 points. For the week, the market dropped 793 points—the largest single-week decline in three months. Tech stocks were similarly hit by selling pressure, with the Hang Seng Tech Index closing at 4,604 points, down 64 points. However, market participants should note that the Hang Seng Tech Index currently trades at around the 12th percentile of its valuation range over the past five years, placing it in a historically low zone and indicating that valuations in the Hong Kong tech sector remain attractive. At this juncture, the first ETF tracking the 'HKEX Tech 100 Index,' the E Fund HKEX Tech 100 Index ETF (3456), $E Fund HKEX Tech 100 ETF (03456.HK)$ has received approval from the Securities and Futures Commission of Hong Kong and will officially list on the Hong Kong Stock Exchange next Friday, June 26, with an issue price of HK$7.80 per share (board lot: 100 shares). Unlike previous Hong Kong stock indices, which have traditionally been compiled by Hang Seng Indexes Company, HKEX is now stepping in directly to launch its own index—the 'HKEX Tech 100 Index'—with a base date of December 31, 2020, officially released on December 9, 2025. This marks the first time HKEX has compiled its own Hong Kong equity index.

The index selects 100 constituent stocks focused on six cutting-edge technology sectors: artificial intelligence, biotechnology and pharmaceuticals, electric vehicles and autonomous driving, information technology, internet, and robotics. It includes industry leaders such as Tencent (0700), Xiaomi (1810), and Alibaba (9988), as well as segment leaders like CATL (3750), BeiGene (6160), and Innovent Bio (1801). The combined weighting of the top 10 constituents is approximately 64.1%. The index methodology imposes strict fundamental eligibility criteria: constituents must have spent at least 3% of revenue on R&D over the past two fiscal years, or achieved annual revenue growth of no less than 5%. Additionally, a fast-track inclusion mechanism allows newly added Stock Connect stocks with a closing market cap ranking within the top 35 to be immediately included without waiting the usual six-month listing requirement, ensuring timely capture of emerging tech leaders.

As of May 29, 2026, the index’s price-to-earnings ratio stood at 25.5x—just 71% of the Nasdaq 100 Index and 55% of the Philadelphia Semiconductor Index—indicating relatively low valuation. Historical data shows that in the three months following the last four Hong Kong market rally starting points, the index delivered an average gain of 28%, outperforming the Hang Seng Index’s 18% and demonstrating stronger upside momentum during periods of market sentiment recovery. Investors should note that the index concentrates heavily in the technology and biotech sectors and includes companies with substantial operations in mainland China, thereby exposing investors to sector-specific and regional concentration risks. Its net asset value may exhibit higher volatility compared to broadly diversified funds. Past performance does not guarantee future results, and the index is suitable for investors seeking exposure to China’s hard-tech growth theme who can tolerate higher volatility.

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