Gaozhan | Where might the market turning point lie in the coming week? What impact will it have on Hong Kong and US stocks?

The global financial markets are about to face two events capable of reshaping the asset pricing landscape:"Stress Tests"：

The first is the Q2 earnings results, which will be released after the US market close on August 26 (early morning of August 27, Hong Kong time). $NVIDIA (NVDA.US)$ Q2 earnings,

The second is the Jackson Hole Global Central Bankers Symposium from August 27 to 29, where new Fed Chair Kevin Warsh will deliver his inaugural keynote address as Chairman on the morning of August 28.

While these two events may appear independent, they are in fact deeply coupled throughthe transmission chain of "AI capital expenditure – long-term interest rates – global valuation anchors".

Analysis of Impact Paths and Scenarios for HK and US Stocks

NVIDIA's earnings report transmits to US stocks via risk appetite and earnings expectations $Nasdaq Composite Index (.IXIC.US)$ A-share computing power chains and Hong Kong-listed tech stocks, as well as the storage chain ( $Samsung Electronics (005930.KR)$ 、 $SK hynix (SKHY.US)$ ) have already demonstrated the"sell on news"decline pattern;

Earnings guidance and Powell's remarks jointly impact long-end interest rates. The 30-year US Treasury yield $U.S. 30-Year Treasury Bonds Yield (US30Y.BD)$ if it holds firmly above 5.2%, will continue to suppress valuation expansion for the Hang Seng Tech Index; conversely, a decline in long-end yields would provide relief for HK stock valuations;

China's AI application and hardware sectors are seeing a shift in momentum— $Goldman Sachs (GS.US)$ On August 3, Morgan Stanley raised its 2026 annualized recurring revenue (ARR) forecast for China's large language models from $10 billion to $13 billion, $Hang Seng TECH Index (800700.HK)$ with AI hardware content accounting for only 14.48%, significantly lower than $Korea Composite Index (.KOSPI.KR)$ NVIDIA's 66.8%, implying that as capital rotates from hardware to software applications, the anti-fragility of HK-listed stocks becomes more pronounced (Source: Wind).

What are the potential scenarios?

NVIDIA's strong guidance, combined with Powell's dovish stance, could drive a synchronized rally in US tech stocks and Hong Kong equities;

Strong guidance coupled with Powell allowing long-end yields to rise,"Higher for longer" interest rateswill compress valuations and sustain a structural market driven by earnings support;

Weak guidance, regardless of the Fed's stance, will trigger severe deleveraging across the global AI supply chain.

For investors, the biggest pitfall right now is not betting on the wrong direction, but ignoring tail risks amplified by rising volatility. Before the two key anchors are tested, controlling position sizes and increasing cash weighting may be more important than any unilateral directional bet.

Below is a detailed commentary on the event:

NVIDIA Earnings: A "Watershed Test" for the AI Capex Cycle

NVIDIA management's revenue guidance for this quarter is approximately $91 billion, with a ±2% fluctuation range, nearly doubling the ~$46.7 billion recorded in the same period last year;

Market consensus is even more aggressive, forecasting a range of $93 billion to $95 billion, representing a year-over-year increase of approximately 96%. The data center business is expected to record about $85.4 billion, doubling year-over-year (Source: financecalendar.com; Intellectia AI).

In the previous quarter, NVIDIA achieved revenue of $81.6 billion, an 85% year-over-year increase, with data center revenue reaching $75 billion, up 92% year-over-year. It also generated $49 billion in free cash flow and authorized an $80 billion share buyback program (Source: 24/7 Wall St., cited by AOL).

However, this"treating the ceiling as the floor"pricing approach makes the binary nature of this earnings report particularly distinct—NVIDIA has beaten expectations for five consecutive quarters, yet its stock price still fell by over 9% within thirty days following each of the last two earnings announcements,"sell the news"risk has never truly subsided.

If NVIDIA provides strong guidance and confirms accelerated Blackwell shipments, along with a clear roadmap for Vera Rubin and HBM4, the AI capital expenditure cycle will continue, supporting the weight of US tech stocks. However, long-end US Treasury yields may not decline—fiscal deficits combined with tech capacity expansion are pushing up nominal growth expectations, keeping the 30-year yield anchored above 5.2%;

Conversely, if guidance weakens, the Nasdaq will bear the brunt of valuation compression first, and the 30-year yield may drop in the short term due to a unwind in term premiums. Meanwhile, the Hang Seng Tech Index might find some valuation relief, but"drop first as a courtesy"This is likely to cause Hong Kong stocks to fall in immediate response.

Notably, NVIDIA has informed its largest customers that prices for Vera Rubin and Grace Blackwell system servers scheduled for shipment early next year will increase by over 15%. The quoted price for a single NVL72 rack ranges from $2.8 million to $3.4 million, while inquiries for the Vera Rubin version have reached as high as $5 million to $7 million. The primary driver behind these price hikes issoaring memory costs(Source: Bloomberg).

Memory supply chain takes the first hit: From Samsung's shareholder returns to "RAMageddon"

The memory industry is currently experiencing"super cycle": According to TrendForce statistics, contract prices for conventional DRAM surged by 93% to 98% quarter-on-quarter in Q1 this year, rose another 58% to 63% in Q2, and server DRAM prices are expected to increase by another 13% to 18% in Q3.

The introduction of HBM4 means each Rubin GPU is equipped with 288GB of high-bandwidth memory, causing the proportion of memory costs in rack pricing to jump sharply from approximately 9% in the Grace Blackwell era to around 26% in the Vera Rubin era (Sources: TrendForce; AI2Work citing Morgan Stanley estimates).

However, there is a clear divergence between industry prosperity and stock performance—Samsung Electronics announced South Korea's largest-ever shareholder return plan on August 21, amounting to KRW 90 trillion to 110 trillion, roughly five times the record set in 2020,

but it was sold off due to falling short of market expectations of KRW 150 trillion to 200 trillion and a lack of details on buyback cancellations. The stock plummeted 8.7% in a single day on August 24, and fell another 4%+ during trading on August 25;

Although SK Hynix took the lead on August 19 by announcing a KRW 40 trillion share buyback and cancellation plan, committing to return over 50% of cumulative free cash flow, Korean stocks still plummeted with the broader market on August 25. The KOSPI index opened 2.4% lower and dropped as much as 4.3% intraday. SK Hynix fell more than 6% at one point, while Samsung Electronics declined over 4%, before losses slightly narrowed (Source: Futu).

The memory chip sector led the correction, reflecting the market's anticipation ahead of NVIDIA's earnings report."Good news fully priced in or a mid-cycle pause"is a microcosm of this sentiment.

Jackson Hole: Waller's Debut and "Unpredictable" Monetary Policy

Since taking office in May, Waller has reshaped the Fed's communication framework by compressing post-meeting statements, eliminating the dot plot, and reducing forward guidance, describing his Jackson Hole speech as"a blank sheet"and emphasizing that the Federal Reserve is"not constrained by market prices."

—But what the market has always feared is not hawkishness, butUnpredictable。

The current federal funds target rate remains at 3.50% to 3.75%, with the full year characterized by"rate hike watch"rather than a rate-cut cycle: July non-farm payrolls unexpectedly dropped by 23,000; July CPI rose 3.4% year-over-year, core CPI by 2.5%, and PPI by 4.7% year-over-year, indicating coexisting cooling in employment and sticky inflation;

The probability of the FOMC holding rates steady on September 15-16 is around 60% according to CME FedWatch, while the probability of a rate hike in October has rebounded to 55%, approaching 75% in December. Notably, three regional Fed presidents dissented in favor of a rate hike at the July meeting (Source: CME FedWatch).

Investors should closely monitor three key points from Waller's speech: his stance on long-end U.S. Treasury yields, whether he will revisit the inflation targeting framework, and whether he will hint at reducing the number of annual meetings from eight to six.

If long-end yields are allowed to rise further, keeping the 30-year U.S. Treasury yield above 5.2%, the valuation ceiling for the Hang Seng Tech Index will remain under pressure;

Conversely, any dovish hints will ignite a rebound in global duration assets.

Long-end U.S. Treasuries: The Global Valuation Ceiling Above 5.2%

The dominant variables for long-end interest rates have shifted from rate-cut expectations to fiscal supply and term premiums—on August 18, the 30-year U.S. Treasury yield surged intraday to 5.337%, hitting a new high since 2007; the winning bid yield for the August 13 30-year auction was 5.216%, marking the highest level for this maturity since 2001. The 10-year yield also hovers near multi-year highs of 4.68% to 4.71%.

Behind this is the US fiscal deficit of $432.3 billion in July, marking a monthly high since March 2021. The year-to-date deficit gap has approached $1.8 trillion, while federal debt is nearing $40 trillion. Coupled with Brent crude oil prices rising back above $90 per barrel, inflation expectations have intensified."Renewal", the IMF has further raised its global inflation forecast for 2026 to 4.7%, stating bluntly that"the disinflation trend has stalled"(Source: IMF).

Hu Jie, a former senior economist at the Federal Reserve, pointed out that the AI industry boom is boosting growth expectations on one hand, while competing for capital with Treasury bonds through corporate debt issuance on the other. This serves as a persistent factor supporting a shift higher in the long-term interest rate center.

Long-term bond yields in major economies such as Germany, France, the UK, and Japan have simultaneously hit multi-year highs. As the window for global liquidity tightening closes, this represents the most rigid constraint on the valuation recovery path for the technology sector in Hong Kong stocks.

Acknowledging unpredictability is the greatest respect one can show to the market.

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