Tencent plunged 7%, dragging the Hang Seng Index down 239 points and below the 25,000 mark; chip stocks reversed gains—defensive positioning could consider Fubon CSI 300 High Dividend ETF

Overnight, U.S. chip stocks staged a strong rebound, and Japanese, South Korean, and ** markets also rose early in the session, with the KOSPI surging over 6% at one point. However, Hong Kong stocks failed to follow the global uptrend. The Hang Seng Index opened 153 points lower and remained under pressure from large tech names throughout the day. Although losses briefly narrowed in the morning, they widened again afterward. In the afternoon, Japanese equities turned negative and the KOSPI’s gains significantly pared back, increasing selling pressure on the broader market. At its worst, the Hang Seng Index dropped more than 300 points, approaching 24,800, and eventually closed at 24,892, down 239 points or 0.95%, with total turnover of HK$312.7 billion. The Hang Seng China Enterprises Index closed at 8,251, down 109 points or 1.31%. The Hang Seng Tech Index ended at 4,668, down 146 points or 3.04%. Southbound capital bought over HK$7.5 billion worth of Hong Kong-listed stocks.

Tencent (0700) $TENCENT (00700.HK)$ was the main drag on the market today. Its share price opened at HK$468 and continued to decline, closing at HK$440.60, down 7.05%. According to reports, mainland China’s mutual fund Q2 holdings data shows Tencent was the stock most heavily reduced by value during the period, with active equity-oriented funds cutting positions by nearly RMB 18.5 billion. Additionally, southbound capital has recorded net outflows for three consecutive days. Market rumors also suggest the company’s mobile gaming revenue may have seen a slight decline in Q2, potentially triggering profit-taking after recent gains.

NetEase (9999) $NTES (09999.HK)$ Also hit by selling pressure in gaming stocks, it fell 7.39% to close at HK$193, becoming the worst-performing blue chip; other tech and internet stocks were similarly pressured, with Kuaishou (1024) $KUAISHOU-W (01024.HK)$ down 5.32% to close at HK$42.7; Alibaba (9988) $BABA-W (09988.HK)$ fell 2.91% to close at HK$113.6 as the market continued digesting news of AliExpress being fined by the EU; Baidu (9888) $BIDU-SW (09888.HK)$ dropped 2.61% to close at HK$104.4; JD.com (9618) $JD-SW (09618.HK)$ declined 2.06% to close at HK$118.6; Xiaomi (1810) $XIAOMI-W (01810.HK)$ fell 2.7% to close at HK$26.68; Meituan (3690) $MEITUAN-W (03690.HK)$ slipped 1.82% to close at HK$83.65.

Semiconductor stocks initially rose early in the session, boosted by gains in overseas semiconductor shares, with SMIC (0981) $SMIC (00981.HK)$ up about 3% at one point, and GigaDevice (3986) $GIGADEVICE (03986.HK)$ It had also risen by 0.5%, but after Asian markets weakened in the afternoon, the sector turned collectively lower. SMIC closed at HK$72.90, down 3.44%; Huahong Semiconductor (1347) $HUA HONG GRACE (01347.HK)$ closed at HK$161.50, down 4.15%; GigaDevice closed at RMB 584, down 4.89%.

AI large model stocks continued to be affected by valuation reassessments. JPMorgan noted that following Moonshot AI's launch of Kimi K3, competition among domestic large models has intensified further, leading the bank to cut its target prices for Zhipu AI $Z.AI (02513.HK)$ (2513) and MiniMax $MINIMAX-W (00100.HK)$ (0100) by one-third each. After surging sharply yesterday, Zhipu AI gave back 3.61% to close at HK$1,175; MiniMax dropped 11.42% to close at HK$197. AI hardware stocks experienced even steeper declines, with KB Group’s laminates business $KB LAMINATES (01888.HK)$ (1888) falling 15.28% to close at HK$40.26; KB Group $KINGBOARD HLDG (00148.HK)$ (0148) dropped 10.17% to close at HK$51.25; Yangtze Optical Fibre and Cable (6869) fell 10.28% to close at HK$127.40.

Gold-related stocks stood out as a bright spot amid the downturn, as spot and futures gold prices climbed back above USD 4,100 per ounce, prompting capital to flow into gold mining and jewelry stocks. Zijin Mining $ZIJIN MINING (02899.HK)$ (2899) rose 6.03% to close at HK$33.42; Lingbao Gold $LINGBAO GOLD (03330.HK)$ (3330) gained 15.13% to close at HK$19.18; Zhaojin Mining $ZHAOJIN MINING (01818.HK)$ Zhaojin Mining (1818) rose 3.19% to close at HK$21.02; Shandong Gold $SD GOLD (01787.HK)$ (1787) gained 4.86% to close at HK$19.86. Laopu Gold $LAOPU GOLD (06181.HK)$ (6181) climbed 6.09% to close at HK$397.20; Luk Fook Holdings $LUK FOOK HOLD (00590.HK)$ (0590) rose 4.59% to close at HK$24.14.

HSBC $HSBC HOLDINGS (00005.HK)$ (0005) saw its price target raised to HK$200 by JPMorgan; the share price increased 1.53% to close at HK$158.90, hitting a new record high. Xinyi Solar $XINYI SOLAR (00968.HK)$ (0968) rose 6.37% to close at HK$2.17, becoming the best-performing blue chip; Lenovo Group $LENOVO GROUP (00992.HK)$ (0992) rose 3.7% against the market trend, closing at HK$24.10, buoyed by expectations of domestic super-node deliveries. Cathay Pacific $CATHAY PAC AIR (00293.HK)$ (0293) issued a profit warning, expecting interim consolidated profit between HK$6 billion and HK$6.5 billion; the share price rose 2.57% to close at HK$13.59. In contrast, Topsports $TOPSPORTS (06110.HK)$ (6110) dropped 24.08% to close at HK$1.45, impacted by Nike's termination of its online platform sales arrangement in China.

Hong Kong stocks were dragged lower today by tech and AI hardware shares, causing the Hang Seng Index to fall below the 25,000 mark, but Fubon CSI SSE SZSE HK High Dividend ETF $Fubon Hang Seng Shanghai-Shenzhen-Hong Kong (Selected Corporations) High Dividend Yield Index ETF (03190.HK)$ (3190) remained flat, closing at HK$16.62. The ETF tracks the Hang Seng CSI SSE SZSE (Select Enterprises) High Dividend Yield Index, selecting 30 high-dividend companies from the Shanghai, Shenzhen, and Hong Kong markets. Its portfolio focuses not on tech growth themes, but rather on traditional cash-generative sectors such as financials, energy, real estate and construction, telecommunications, and materials. Based on the most recent portfolio data, financials account for approximately 27.75% of assets, while energy makes up 19.78%. $COSCO SHIP INTL (00517.HK)$ (0517), Yankuang Energy $YANKUANG ENERGY (01171.HK)$ (1171), Henderson Land $HENDERSON LAND (00012.HK)$ (0012), PetroChina $CNOOC (00883.HK)$ (0883), and HKT $HKT-SS (06823.HK)$ (6823), reflecting the fund’s strategy of seeking cyclical returns through energy and resource stocks, while using real estate, telecom, and financial holdings to provide more defensive dividend income.

ETF 3190 operates via physical replication, charges an annual management fee of 0.6%, and follows a quarterly dividend policy. It is suitable for investors seeking a single ETF to gain diversified exposure to high-dividend stocks across Greater China, prioritizing dividend income and lower volatility, and wishing to avoid concentrated exposure to the sharp price swings of individual tech stocks. However, a high dividend yield does not guarantee fixed returns—corporate earnings, dividend policies, and the fund’s share price may all change, so investors should evaluate total return, which includes both price performance and dividend income.

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