Under pressure from tech/internet and mainland property sectors, the Hang Seng Index fell 237 points but held above its 100-day moving average. Southbound capital net inflows supported the market. Consider accumulating positions in the E Fund HKEX Tech 100 ETF during the dip in tech stocks.

The US confirmed another airstrike on rocket launchers inside Iran, prompting Iran to retaliate against US facilities in the region. Market concerns over an escalation of Middle East conflicts pushed up energy prices and inflationary pressures, while US Treasury yields rose again. Affected by weakened risk appetite due to external factors, Hong Kong stocks opened lower on the first trading day of September. The Hang Seng Index hit an intraday low of 25,240 points, found support near the 100-day moving average, and closed at 25,329 points, down 237 points or 0.93%, with full-day turnover of HK$238.7 billion. The SOE Index fell 50 points or 0.59% to close at 8,462 points. The Tech Index dropped 68 points or 1.49% to close at 4,550 points. Southbound capital actively entered the market, with net inflows exceeding HK$7.7 billion despite the broader market decline.

Rising geopolitical tensions have generally weighed on tech stocks. Alibaba ($BABA-W (09988.HK)$ ) fell 3.33% to close at HK$110.4; Tencent ($TENCENT (00700.HK)$ ) dropped 2.56% to close at HK$441.4; Meituan ($MEITUAN-W (03690.HK)$ ) gave back 2.85% on the second day following its earnings release, closing at HK$76.65; JD.com ($JD-SW (09618.HK)$ ) declined 3.21% to close at HK$108.6; Baidu ($BIDU-W (09888.HK)$ ) completed its transition to a dual-primary listing, paving the way for future inclusion in the Stock Connect Southbound Trading scheme, but its share price still fell 2.6% to close at HK$93.7; Xiaomi ($XIAOMI-W (01810.HK)$ ) edged down 0.22% to close at HK$27.56; Kuaishou ($KUAISHOU-W (01024.HK)$ ) saw its subsidiary Beijing Kling receive a RMB 1.4 billion investment from the National Artificial Intelligence Fund, with CP Group Robotics brought in as an additional investor. Market optimism that Kling's video generation and AI business would gain capital support drove its shares to outperform peers in the tech sector, rising 3.16% against the trend to close at HK$34.64. AI model stocks showed mixed performance; Zhipu ($Z.AI (02513.HK)$ ) saw a significant increase in interim revenue and token usage volume, but its adjusted loss widened. The stock opened lower and briefly turned positive, but ultimately fell 1.34% to close at HK$1,179; MiniMax ($MINIMAX-W (00100.HK)$ ) dropped 3.5% to close at HK$336.8. Xunce ($XUNCE (03317.HK)$ ) rose 2.43% to close at HKD 130.5.

Mainland Chinese bank stocks extended their post-earnings rally. China's August Caixin Manufacturing PMI rose to 51.5, beating market expectations. Coupled with solid earnings performance from mainland banks, capital continued to flow into high-dividend financial stocks. Agricultural Bank of China ($ABC (01288.HK)$ ) rose 2.6% to close at HKD 6.51; ICBC ($ICBC (01398.HK)$ ) rose 1.52% to close at HKD 7.685; China Construction Bank ($CCB (00939.HK)$ ) rose 1.05% to close at HKD 9.6, hitting a new high; Bank of China ($BANK OF CHINA (03988.HK)$ ) rose 1.27% to close at HKD 5.975, also setting a new listing high; Bank of Communications (3328) rose 1.03% to close at HKD 7.88, likewise reaching a new high.

Domestic consumption stocks weakened. Nongfu Spring ($NONGFU SPRING (09633.HK)$ ) fell 3.39% to close at HKD 41.56; Master Kong ($TINGYI (00322.HK)$ ) fell 3.13% to close at HKD 12.36; Xinyi Solar ($XINYI SOLAR (00968.HK)$ ) fell 3.1% to close at HKD 2.185. Mainland property stocks remained under pressure as well. Data from the China Index Academy showed that the average price of second-hand residential properties in 100 mainland cities fell 0.45% month-on-month in August, indicating that the property market is still in an adjustment phase. CMB International also pointed out that while raising the threshold for new home pre-sales in the mainland may bring short-term adjustment pressure, it will help improve the industry in the long run. Longfor ($LONGFOR GROUP (00960.HK)$ ) fell 3.8%, closing at HK$6.07; China Resources Land ($CHINA RES LAND (01109.HK)$ ) fell 3.59%, closing at HK$28.98; China Overseas Land & Investment ($CHINA OVERSEAS (00688.HK)$ ) fell 1.76%, closing at HK$12.31; C&D International ($C&D INTL GROUP (01908.HK)$ ) fell 5.5%, closing at HK$12.21.

Macau's gaming revenue in August was MOP 21.89 billion, down 1.2% year-on-year, missing market expectations, leading to a broad decline in casino stocks. Galaxy Entertainment Group ($GALAXY ENT (00027.HK)$ ) fell 3.16%, closing at HK$33.08; Sands China Ltd. ($SANDS CHINA LTD (01928.HK)$ ) fell 1.92%, closing at HK$13.78; Wynn Macau ($WYNN MACAU (01128.HK)$ ) fell 1.31%, closing at HK$5.65; Melco International Development ($MELCO INT'L DEV (00200.HK)$ ) fell 2.27%, closing at HK$3.015; SJM Holdings (0880) fell 2.17%, closing at HK$1.35; MGM China (2282) fell 1%, closing at HK$9.95.

In terms of individual stocks, Shenzhou International ($SHENZHOU INTL (02313.HK)$ ) rose 4.16% to close at HK$36.56, making it the best-performing constituent of the Hang Seng Index; Sunny Optical ($SUNNY OPTICAL (02382.HK)$ ) rose 1.13%; Nio ($NIO-SW (09866.HK)$ ) fell 6.39% after announcing its August delivery figures, closing at HK$31.06 and hitting an intraday low of HK$29.44, a new low in over a year; Zhongsheng Group Holdings ($ZHONGSHENG HLDG (00881.HK)$ ) saw its interim profit drop by 89%, with its share price falling 7.96% to close at HK$3.93; The Ministry of Industry and Information Technology launched a special initiative to cultivate AI application service providers, Black Sesame International Holding ($BLACK SESAME (02533.HK)$ ) rose 13.21% to close at HK$11.23; Minglue Technology ($MININGLAMP-W (02718.HK)$ ) rose 21.25% to close at HK$54.20; Haizhi Technology ($HAIZHI TECH GP (02706.HK)$ ) rose 12.92% to close at HK$57.25; Unisound ($UNISOUND (09678.HK)$ ) rose 11.57% to close at HK$85.35; GenScript ($GENSCRIPT BIO (01548.HK)$ ) rose 7.32% to close at HK$36.36, hitting a record high; Horizon Robotics ($HORIZONROBOT-W (09660.HK)$ ) turned a profit of RMB 3.784 billion in the interim period, reversing previous losses, but its share price still fell 2.65%

New listings showed weak performance on their debut trading day. Shein ($Chongqing Changan Automobile (000625.SZ)$ ) closed at HK$48.5, down 0.1% from its IPO price of HK$48.56; Mech-Mind Robotics ($MECH-MIND ROBOT (09615.HK)$ ) closed at HK$99.8, down 1.9% from its IPO price of HK$101.7.

Hong Kong stocks fell on the first trading day of September, weighed down by escalating tensions in the Middle East and rising US Treasury yields. The Hang Seng TECH Index dropped 1.49%. However, if investors are looking to accumulate positions amid the tech stock decline, they may consider the E Fund HKEX Tech 100 ETF ($E Fund HKEX Tech 100 ETF (03456.HK)$ ), which closed at HK$8.135 today, down 1.27%. Its decline was slightly smaller than that of the tech index, reflecting the fund's diversified holdings beyond large-cap internet stocks, including biotech, electric vehicles, semiconductors, and other innovative industries, helping to mitigate risk.

3456 tracks the HKEX Tech 100 Index and currently holds 105 constituent stocks. The top ten holdings include Alibaba ($BABA-W (09988.HK)$ ), Tencent ($TENCENT (00700.HK)$ ), SMIC ($SMIC (00981.HK)$ ), BeiGene ($BEONE MEDICINES (06160.HK)$ ), Wuxi Bio ($WUXI BIO (02269.HK)$ ) and Lenovo ($LENOVO GROUP (00992.HK)$ ), etc. While allocating to tech stocks, 3456 also holds positions in sectors such as biotech companies. Although Tencent and Alibaba declined today, its constituent GenScript Biotech ($GENSCRIPT BIO (01548.HK)$ ) rose 7.32% against the market trend, enabling the ETF to demonstrate greater resilience than a portfolio strictly tracking the Hang Seng TECH Index. This also reflects how the individual performance of different sub-sectors within the Tech 100 can provide diversification benefits to the portfolio. 3456 is more suitable for investors looking to gain exposure to innovative industries in the Hong Kong stock market—such as AI, internet technology, biotechnology, semiconductors, smart vehicles, and robotics—through a single ETF, and who can tolerate short-term market volatility. However, as the fund's top holdings remain concentrated in large-cap tech stocks, the fund's NAV and market price may still experience significant fluctuations when risk appetite is impacted by geopolitical factors, US Treasury yields, or the earnings results of internet tech stocks.

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