Hang Seng Index drops 446 points, falling below the 25,000 mark; semiconductor and both new and old tech stocks plunge sharply. For defensive positioning, consider the monthly dividend-paying CSOP FTSE UK Equity Covered Call ETF.

Global AI hardware stocks saw intensified corrections this week. U.S. semiconductor stocks experienced another bout of sharp volatility overnight, weighing on Asia-Pacific markets broadly on Friday. Hong Kong stocks shifted from previously 'following gains' to 'following losses.' The Hang Seng Index opened up 13 points in early trading, briefly rising to 25,166 before reversing course. It breached the 25,000 level and the 50-day moving average at around 24,766. Losses deepened in the afternoon, with the index plunging as much as 676 points to an intraday low of 24,332, finding support near the 10-day moving average at approximately 24,232. The HSI ultimately closed at 24,562, down 446 points or 1.8%, ending a five-day winning streak. Total market turnover reached HK$347.3 billion. The Hang Seng China Enterprises Index closed at 8,136, down 181 points or 2.2%. The Hang Seng Tech Index ended at 4,623, down 211 points or 4.4%. Southbound capital recorded net outflows of approximately RMB 1.4 billion, ending four consecutive days of net inflows.

New York State in the U.S. has suspended approval of new data centers consuming more than 50MW of power, sparking market concerns over the outlook for AI infrastructure investment. Semiconductor stocks have become the hardest-hit sector in this round of selling. Asian semiconductor shares extended their declines following Wall Street’s drop, with Japanese memory manufacturer Kioxia plunging over 16%. Hong Kong-listed chipmakers also slid sharply, with SMIC $SMIC (00981.HK)$ (0981) down 9.97% to close at HK$67.70, making it the worst-performing blue chip; Hua Hong $HUA HONG GRACE (01347.HK)$ (1347) plunged 11.88% to close at HK$138.70; ASMPT $ASMPT (00522.HK)$ (0522) fell 9.13%, closing at HK$161.30; Biren Technology $BIREN TECH (06082.HK)$ (6082) dropped 14.96%, closing at HK$35.80. PCB materials supplier Kingboard Laminates $KB LAMINATES (01888.HK)$ (1888) also declined 14.26%, closing at HK$41.98; Kingboard Chemical $KINGBOARD HLDG (00148.HK)$ (0148) fell 9.59%, closing at HK$51.40; Yangtze Optical Fibre and Cable $YOFC (06869.HK)$ (6869) dropped 11.17%, closing at HK$130.40.

Major internet stocks pulled back collectively, with Tencent $TENCENT (00700.HK)$ (0700) down 4.63%, closing at HK$461.60; Alibaba $BABA-W (09988.HK)$ (9988) down 3.68%, closing at HK$112.60; Meituan $MEITUAN-W (03690.HK)$ (3690) down 4.07%, closing at HK$83.65; Baidu $BIDU-SW (09888.HK)$ (9888) down 3.45%, closing at HK$106.50; Xiaomi $XIAOMI-W (01810.HK)$ Kuaishou (1024) fell 2.25%, closing at HK$26.88; $KUAISHOU-W (01024.HK)$ Kuaishou (1024) saw a sharper decline, dropping 7.76% to close at HK$43.28.

AI large-model stocks faced heavy profit-taking; Zhipu $Z.AI (02513.HK)$ (2513) plunged 28.49%, closing at HK$1,107; MiniMax $MINIMAX-W (00100.HK)$ (0100) dropped 15.62%, closing at HK$216, marking a cumulative loss of 17.11% over two consecutive trading days. South Korean markets were closed, but South Korea-focused leveraged tech ETFs listed in Hong Kong were not spared from the sell-off. CSOP 2x SK Hynix $CSOP SK Hynix Daily Max (2x) Leveraged Product (07709.HK)$ (7709) tumbled 20.68%, closing at HK$44.8; CSOP 2x Samsung $CSOP Samsung Electronics Daily Max (2x) Leveraged Product (07747.HK)$ (7747) declined 19.04%, closing at HK$67.2.

The biotech and pharmaceutical sector also saw significant corrections alongside the broader market; Wuxi Bio $WUXI BIO (02269.HK)$ (2269) fell 5.95%, closing at HK$36.98; CSPC Pharma $CSPC PHARMA (01093.HK)$ (1093) dropped 5.81%, closing at HK$8.1; Innovent Bio $INNOVENT BIO (01801.HK)$ Wuxi Apptec (1801) fell 5.57%, closing at HK$88.95; $WUXI APPTEC (02359.HK)$ Sino Biopharm (2359) dropped 5.56%, closing at HK$153; $SBP GROUP (01177.HK)$ Sino Biopharm (1177) declined 5.32%, closing at HK$4.98. Auto stocks were also under pressure, with XPeng $XPENG-W (09868.HK)$ (9868) down 8.66%, closing at HK$51.65; Geely $GEELY AUTO (00175.HK)$ (0175) fell 4.69%, closing at HK$18.48; BYD Company $BYD COMPANY (01211.HK)$ (1211) dropped 2.47%, closing at HK$88.70.

Market risk-aversion sentiment clearly intensified, driving funds into utilities and defensive stocks. CLP Holdings $POWER ASSETS (00006.HK)$ (0006) rose 3.01% against the market trend, closing at HK$59.80, making it the best-performing blue chip of the day; MTR Corporation $MTR CORPORATION (00066.HK)$ (0066) gained 2.07%, closing at HK$32.52; Towngas $HK & CHINA GAS (00003.HK)$ (0003) advanced 1.64%, closing at HK$6.80; CK Infrastructure $CKI HOLDINGS (01038.HK)$ (1038) rose 1.63% to close at HK$62.25; Link REIT $LINK REIT (00823.HK)$ (0823) gained 1.13% to close at HK$39.22. Financial stocks also held up well, with China Construction Bank $CCB (00939.HK)$ (0939) up 1.22% to close at HK$8.29; China Merchants Bank $CM BANK (03968.HK)$ (3968) rose 1.69% to close at HK$47.08; ICBC $ICBC (01398.HK)$ (1398) gained 0.44% to close at HK$6.91.

Today, Hong Kong stocks were led lower by technology and semiconductor shares, with the tech index plunging 4.4%. However, as market risk-off sentiment intensified, capital rotated into defensive sectors such as utilities and financials. The CSOP FTSE China 50 Covered Call Active ETF $CSOP HSCEI Covered Call Active ETF (02802.HK)$ (2802) closed at HK$7.265, down only 0.206% compared to the 2.18% decline in the Hang Seng China Enterprises Index (HSCEI). This ETF follows an income-oriented HSCEI strategy rather than purely tracking the index’s movements. The fund invests in constituents of the Hang Seng China Enterprises Index while actively writing HSCEI call options to collect option premiums as an additional source of income. Thus, in sideways, moderately rising, or more volatile markets, these option premiums can provide a certain buffer for the portfolio. Currently, the ETF is primarily invested in equities, with financial services accounting for 27.38%, consumer discretionary 24.98%, communication services 17.36%, technology 9.48%, and energy 8.88%. This diversified allocation means its performance is not solely driven by any single internet or semiconductor stock but instead reflects the broader trends of large-cap Chinese financial, telecom, consumer, and energy companies. Today, technology, healthcare, and auto stocks faced heavy selling pressure, whereas mainland banks and utility stocks showed relative resilience—highlighting the strategic distinction between this covered-call HSCEI ETF and high-volatility tech-themed ETFs during sharp market shifts.

This ETF is better suited for income-focused investors who wish to hold HSCEI-related assets while prioritizing regular cash flows. Its most recent dividend was HK$0.15 per unit, though dividends are not guaranteed and will vary depending on market volatility, option premium levels, fund performance, and management decisions. Investors should note that the core trade-off with 2802 is not simply about achieving 'higher dividends' but whether total returns can balance capital price fluctuations with cash income. If an investor expects a strong, one-sided rally in the HSCEI in the near term, a direct HSCEI-tracking ETF may better capture the upside. Conversely, if the investment objective is to reduce reliance on share price appreciation alone and accept potentially underperforming the index in rising markets, then this ETF’s covered-call strategy aligns better with a dual focus on income generation and downside protection.

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