A strong start to October sent Hong Kong stocks higher, with the Hang Seng index clearing 27,000 and the Hang Seng Tech Index climbing to fresh multi-year highs. On the first trading day of October, the benchmark Hang Seng rose 1.61% to surpass the 27,000 level, while the Hang Seng Tech Index jumped 3.54% to 6,682.86, a level not seen since November 2021. Tech, semiconductor and gold stocks led the rally, underscoring renewed investor enthusiasm amid expectations for further policy support and global rate cuts.
Tech and semiconductor shares were at the forefront of the gains. Semiconductor maker SMIC surged 12.70%, signaling renewed demand for domestic chipmakers even as competition in the sector remains intense globally. Internet-related peers also advanced: Kuaishou climbed 8.57%, Huahong Semiconductor rose 7.12%, while listed EV players such as NIO and search giant Baidu posted solid gains of 6.62% and 4.50%, respectively. The breadth of gains across technology and growth names contributed to the breadth of the October rally.
Analysts highlighted a confluence of domestic policy optimism and a favorable global macro backdrop. Guoxin Securities noted that valuations of Chinese online giants are converging toward overseas peers. Tencent and Alibaba, for instance, are now trading at levels similar to Meta and Google, suggesting a shift in narrative as domestic leaders intensify AI investment. The implication, according to the firm, is that the market will increasingly price in AI deployment progress, not just near-term earnings, with margins temporarily pressured by AI-related spending but longer-term upside driven by model maturity, data, and applications.
Beyond tech, gold shares were among the market’s strongest performers. With bullion holding firm near recent highs and international gold prices supported by safer haven demand, gold-related stocks posted double-digit gains. Tongguan Gold and Zijin Gold International each rallied more than 14%, reflecting both bullion strength and rising confidence in gold equities as a hedge within a volatile macro environment.
The broader macro backdrop also supported a constructive tone. Investors are again pricing in the potential for Federal Reserve rate cuts later this year as cooling employment data and softer domestic demand shape the trajectory of U.S. monetary policy. Fresh data from ADP showed a decline in U.S. private-sector payrolls in September, reinforcing expectations that the Fed could ease later this year if labor market slack persists. In parallel, CME’s FedWatch tool suggested a strong odds of a 25-basis-point rate cut in October, with continued expectations of further easing into December.
Investors are watching for the interplay between policy, liquidity and AI capital expenditure. China Galaxy Securities argued that the October environment could be favorable for both A-share and H-share markets, driven by a continued policy tilt and catalysts in industry, while a relatively loose liquidity backdrop supports a risk-on tone. Everbright Securities echoed a similar view, noting that Hong Kong’s market structure and the region’s open liquidity environment could keep the gains intact, provided earnings visibility improves and AI investment begins to translate into tangible competitive advantages.
Outlook and risks. While the near term appears positive, market watchers caution that valuations remain a key consideration. The AI investment cycle can weigh on near-term earnings, even as long-term returns hinge on model breakthroughs, data access, and monetizable AI applications. For now, several optimists see the October pulse as part of a larger re-rating process rather than a one-off move. If global rate cuts materialize as expected and supportive policy continues, the Hang Seng Tech Index could maintain its outperformance, while the broader market may experience a gradual, upward drift supported by improving profitability and liquidity.
Overall, October began with a clear risk-on signal from Hong Kong equities, led by tech, semiconductors, and gold stocks, underpinned by new AI investment narratives and a favorable macro backdrop.
