On Tuesday, October 6, Hong Kong's three major stock indices all closed higher, with the pharmaceutical and biotechnology sectors along with AI application themes leading the advance.

The Hang Seng Index closed at 24,280.56 points, up 240.22 points or 1.00%, with total market turnover of HK$98.265 billion (compared to HK$98.102 billion on the previous trading day). The Hang Seng Tech Index closed at 4,223.08 points, up 39.40 points or 0.94%. The Hang Seng China Enterprises Index closed at 8,128.97 points, up 77.30 points or 0.96%.

Among Hong Kong ETFs, the most actively traded products by turnover broadly posted gains. The Tracker Fund of Hong Kong (02800) closed at HK$24.920, up 1.14%, with turnover of HK$10.867 billion. Hang Seng China Enterprises (02828) closed at HK$83.360, up 1.09%, with turnover of HK$4.884 billion. CSOP Hang Seng Tech Index (03033) closed at HK$4.140, up 1.17%, with turnover of HK$4.711 billion. CSOP Hang Seng Tech Index Daily 2x Leveraged Product (07226) closed at HK$2.688, up 1.90%, with turnover of HK$531 million.

Sector Performance: Pharma and Biotech Lead, Innovative Drug Concept Surges Across the Board

The pharmaceutical and biotechnology sector led the broader market, with the innovative drug theme surging across the board. A JPMorgan research report expressed optimism that Hong Kong's biotech and CXO sub-sectors would be unaffected by U.S. rate hikes, and combined with overnight catalysts from overseas vaccine companies' R&D progress, pharmaceutical stocks rallied collectively: CanSino Biologics (06185) closed at HK$40.600, up 14.04%; Ascentage Pharma (06855) closed at HK$30.780, up 9.77%; Zai Lab (09688) closed at HK$20.800, up 9.07%; GenScript Biotech (01548) closed at HK$49.140, up 7.67%; WuXi Biologics (02269) closed at HK$57.900, up 4.51%; Sino Biopharmaceutical (01177) closed at HK$5.790, up 4.32%.

Hong Kong pharmaceutical-themed ETFs also advanced in tandem. ChinaAMC Hang Seng Hong Kong Biotech (03069) closed at HK$16.960, up 2.66%, with turnover of HK$52.67 million. CSOP Hang Seng Hong Kong Biotech (03174) closed at HK$4.026, up 3.18%.

AI Applications and Tech Stocks Strengthen, Software Services Sector Active

On the news front, Amazon Web Services' large model service platform Amazon Bedrock officially announced integration with Zhipu GLM-5.3, with AWS sharing revenue with Zhipu based on model usage volume. Driven by this, Zhipu (02513) closed at HK$715.500, up 7.59%, with turnover of HK$2.505 billion. MINIMAX-W (00100) closed at HK$249.200, up 2.05%.

Internet leaders also moved higher in tandem. Baidu Group-SW (09888) closed at HK$86.150, up 3.30%. Alibaba-W (09988) closed at HK$108.200, up 2.66%. Kuaishou-W (01024) closed at HK$30.180, up 2.31%. Among Hang Seng Tech Index constituents, Zhipu and BYD Electronic (00285), which rose 5.01%, along with Sunny Optical Technology (02382), which gained 3.47%, were the top performers.

AI Hardware Pulls Back Against the Trend, Korean Semiconductor Leveraged Products Lead Declines

The semiconductor and hardware equipment sectors posted the largest declines on the day. Among Hang Seng Index constituents, Hua Hong Semiconductor (01347) closed at HK$108.200, down 1.64%. Among Hong Kong leveraged products, CSOP SK Hynix Daily 2x Leveraged Product (07709) closed at HK$39.940, down 6.99%, with turnover of HK$2.520 billion, making it the fourth most actively traded exchange-traded product on the day. CSOP Samsung Electronics Daily 2x Leveraged Product (07747) closed at HK$80.240, down 5.27%, with turnover of HK$355 million.

Asia semiconductor-related products showed mixed performance, with E Fund Asia Semiconductor ETF (03486) up 0.99% and GlobalX Asia Semiconductor (03119) down 0.48%.

Short Products Decline Across the Board, Confirming Improved Bullish Sentiment

CSOP Hang Seng Index Daily 2x Short (07500) closed at HK$1.820, down 2.26%. CSOP Hang Seng Tech Index Daily 2x Short (07552) closed at HK$2.054, down 2.19%. CSOP Hang Seng China Enterprises Index Daily 2x Short (07588) closed at HK$1.600, down 2.91%. The collective decline in inverse products was consistent with the one-sided upward movement of the broader market on the day.

Gold-Themed ETFs Edge Lower, High-Dividend and Covered Call Products Steadily Rise

International gold prices fluctuated within a narrow range on the day. SPDR Gold (02840) closed at HK$2,997.000, down 0.10%. CSOP Gold Daily 2x Leveraged Product (07299) closed at HK$21.200, down 1.12%. Gold ETF-Hang Seng (03170) fell 0.61%.

On the income-oriented product front, GlobalX Hang Seng Covered Call (03419) rose 0.73%, GlobalX Hang Seng High Dividend (03110) gained 0.69%, and Hang Seng High Dividend Stock (03466) added 0.48%. Real estate investment trusts advanced broadly, with Link REIT (00823) closing at HK$36.860, up 1.26%, with turnover of HK$175 million.

Institutional Views

Huatai Securities released a Hong Kong strategy research report stating that Hong Kong stocks may usher in short-term rebound opportunities after the prior one-sided pessimistic trading. On allocation, oil prices and U.S. Treasury yields remain the main constraints on Hong Kong's valuation recovery space. Dividend stocks should continue to serve as the base position, with primary allocation to operational assets such as railways, highways, and ports. Innovative drug and CXO leaders have superior fundamentals with China-U.S. resonance. Overseas tech hardware sentiment is recovering but concentrated in a few giants with strong catalysts. Hong Kong stocks are mainly domestic supply chain-focused, and a window for trend-following long positions still needs to wait.

Haitong International's strategy team analyzed in a research report that although fundamental recovery still requires time, volatility in overseas bond markets triggered overly crowded pessimistic trades, causing Hong Kong stocks to adjust well beyond what fundamentals would justify. A subsequent rebound in Hong Kong stocks may only require short covering to initiate, without necessarily waiting for a comprehensive recovery in the economy and earnings. Whether U.S. long-end Treasury yields can stop their sharp rise and whether China's economic fundamentals can stabilize and recover are the two key variables that would open up room for Hong Kong stock recovery.

Guosen Securities pointed out that the fourth quarter is the traditional off-season for crude oil demand, and oil prices are expected to trade lower, which could cause U.S. Treasury yields to flatten or retreat in stages. Additionally, the RMB exchange rate continuing to strengthen around 6.7 or even further would improve the international capital environment for Hong Kong stocks. At the same time, the low valuations of internet giants also help with valuation recovery.

ETF Trends

There were no new on-market funds listed in the Hong Kong market on the day. Stock Connect was suspended in line with the A-share National Day holiday, and there was no southbound capital data for the day.

In terms of ETF trading structure, total exchange-traded product turnover across the market was approximately HK$26.120 billion on the day, with capital clearly concentrating on the two main themes of pharmaceutical/biotech and AI applications. Among broad-based products, the Tracker Fund of Hong Kong (02800) firmly held the top spot with HK$10.867 billion in turnover, accounting for 41.60% of total market ETF turnover. CSOP Hang Seng Tech Index (03033) traded HK$4.711 billion and Hang Seng China Enterprises (02828) traded HK$4.884 billion, with the three together accounting for 78.34% of total market ETF turnover, indicating that broader market capital remains primarily allocated through index-based products.

Among thematic products, pharmaceutical-related products saw both volume and price increases, with ChinaAMC Hang Seng Hong Kong Biotech (03069) and CSOP Hang Seng Hong Kong Biotech (03174) rising 2.66% and 3.18% respectively. Meanwhile, leveraged products in the AI hardware direction encountered profit-taking, with CSOP SK Hynix Daily 2x Leveraged Product (07709) ranking fourth in the entire market with HK$2.520 billion in turnover while falling 6.99% on the day, becoming the exchange-traded product with the greatest capital divergence.