Market snapshot: HK equities spark October with broad gains
Hong Kong shares kicked off October with a broad rally, driven by strength in technology, semiconductors and gold miners. On the first trading day of the month, the Hang Seng Index rose 1.61% to clear the 27,000-point threshold, while the Hang Seng Tech Index jumped 3.54% to 6,682.86, a level not seen since November 2021. Among the list of big movers, semiconductor plays led the charge with SMIC surging 12.70%, setting the tone for a tech-led rally. Other notable gainers included Kuaishou (+8.57%), Hua Hong Semiconductor (+7.12%), NIO (+6.62%), and Baidu (+4.50%). In the gold sector, Tongguan Gold and Zijin Gold International each climbed more than 14% as bullion prices linger at elevated levels.
Macro backdrop: Fed‑cut expectations lift Asia markets
The rally in Hong Kong accompanied a broad upswing across Asia. In particular, investors priced in a higher likelihood of the U.S. Federal Reserve delivering rate cuts later this year. Data released around the start of October pointed to cooling U.S. payroll dynamics, with ADP data showing a larger-than-expected drop in private-sector employment in September. Analysts argued that a softer U.S. labor market could accelerate a rate cut cycle, a view echoed by traders monitoring the CME’s Fed Watch tool, which indicated a high probability of a 25-basis-point cut in October and a meaningful chance of further easing by year-end.
Specifically, the market has been weighing the odds of continued easing in December and beyond. While the odds of a December cut were lower than October, the overall bias favored looser policy, a condition that tends to support liquidity and equity valuations in rate-sensitive markets like Hong Kong.
Sector spotlight: tech, semis and gold lead the charge
Tech and semiconductor stocks carried the heaviest weight in the session’s gains. The strength in Chinese tech names occurred alongside what some analysts described as a normalization of valuations. GuoXin Securities noted that valuations of heavyweight internet platforms in China are converging with their overseas peers, with Tencent and Alibaba trading at levels approaching their global peers such as Meta and Google. In their view, domestic technology champions are entering a new phase of AI investment, where the driver of stock prices may shift from near-term profitability to longer-term capital expenditure in AI models, platforms, and applications. This shift could temper near-term earnings visibility but support longer-term upside as AI capabilities scale.
Gold miners benefited from a backdrop of higher bullion prices, while the broader tech and semiconductor rallies suggested a renewed appetite for exposure to AI-enabled productivity gains. Notably, SMIC’s double-digit jump underscored the market’s willingness to reward semiconductor exposure as demand for chips remains robust globally.
Outlook: cautious optimism amid policy and liquidity bets
Looking ahead, several brokerages remain cautiously optimistic about the Hong Kong market’s trajectory, anchored by policy cycles and external liquidity expectations. China Galaxy Securities argues that October could see A-share and HK markets benefit from policy implementation and catalytic industry events, complemented by a relatively loose liquidity environment. While profits in the near term may be dampened by AI investment and the costs of deploying new capabilities, the broader narrative is that AI-driven growth and productivity gains will increasingly drive equity valuations in the months ahead.
Everbright Securities echoes a similar view, noting that HK equities still offer relatively robust profitability and that online services, consumer tech, and innovative medicines remain attractive themes in a market that may still look attractive despite a multi-month uptrend. As AI adoption accelerates and the Fed’s rate-cut cycle materializes, HK’s linked-exchange regime could attract more inflows, stimulating ongoing risk-taking and potential carry in the local market.
Bottom line for investors
October’s opening gains highlight a renewed appetite for tech, semiconductors, and AI exposure in Hong Kong. While investors should monitor the pace of policy changes and any shifts in global liquidity, the current setup suggests the potential for continued consolidation with a gradual upward bias, provided that external drivers such as U.S. rate decisions and regional growth remain supportive.
Source: Guangzhou Daily Xin Hua Cheng (Original reporting on HK market action and commentary on sector dynamics).
