Hang Seng Index Down 3.02%
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The Hang Seng Index(HSI) declined by 3.02% this week, while the Hang Seng TECH Index(HSTECH) performed even worse, plunging 6.51%. The market faced broad pressure, primarily dragged down by shifting global liquidity expectations and sharp volatility in commodity prices. Although HSI’s trading volume on the final day rose by +5.87% compared to its 50-day average, overall sentiment remained cautious throughout the week.
The core driver of Hong Kong market volatility stems from abrupt shifts in the external macro environment. In the U.S., January ADP employment added only 22,000 jobs—far below the expected 48,000—and initial jobless claims climbed to 231,000, jointly signaling a slowdown in labor market momentum. More decisively, a political signal emerged: former President Trump nominated hawkish figure Kevin Warsh as Fed Chair, which completely reversed market optimism about rate cuts within the year and triggered a global repricing of risk assets. Against this backdrop, precious metals suffered an epic sell-off—spot gold tumbled over 10% in a single week, and silver dropped nearly 20%, severely dragging down HK-listed resource and gold-related sectors.
However, China continues to reinforce domestic policy support, providing a solid underpinning for Hong Kong equities. On February 4, the People’s Bank of China conducted an RMB 80 billion outright reverse repo operation, injecting ample liquidity into the market. The first “No. 1 Central Document” of the 15th Five-Year Plan focused on comprehensive rural revitalization and explicitly called for developing future industries such as 6G, quantum computing, and embodied AI. Additionally, eight ministries jointly issued the “Implementation Plan for High-Quality Development of the Traditional Chinese Medicine Industry,” charting a clear course for industrial upgrading. These measures have effectively offset external shocks and stabilized market sentiment.
Critically, targeted policy support specifically for Hong Kong’s local market is now coalescing into a powerful synergy. First, regarding the Stock Connect mechanism, the China Securities Regulatory Commission (CSRC) is exploring deeper cooperation with the UK’s Financial Conduct Authority (FCA), potentially broadening channels for international capital to access Hong Kong equities. Second, the pace of RMB internationalization is accelerating: the Ministry of Finance will issue RMB 14 billion in sovereign bonds in Hong Kong on February 11. This not only provides high-credit-quality assets for the offshore RMB market but also reinforces Hong Kong’s role as the world’s premier offshore RMB hub—long-term positive for market liquidity. Third, eleven government departments jointly enhanced digital services for foreign visitors’ entry procedures, aiming to attract more international investors and talent to Hong Kong and stimulate market vitality from the demand side. Moreover, regulatory uncertainty previously weighing on platform economy stocks is dissipating; rumors about a VAT rate hike for the gaming sector were swiftly debunked, underscoring policymakers’ strong commitment to market stability. Together, these precise and pragmatic policy measures form a robust “moat” shielding Hong Kong equities from external turbulence.
Sector performance diverged sharply, with strength concentrated in a few high-momentum segments. WANGUO GOLD GP(03939) belongs to an industry ranked 2 in strength, boasts an EPS Rating of 99 and an RS Rating of 96, and delivered a counter-trend weekly gain of 18.07%, making it a dual play on both safe-haven demand and earnings certainty. TCL ELECTRONICS(01070), operating in an industry ranked 18, rose 4.41% for the week, benefiting from its diversified business portfolio and steady profit growth (O’Neil Score: 84). In contrast, tech and internet stocks broadly came under pressure, reflecting market concerns about the vulnerability of high-valuation sectors amid tightening liquidity expectations.
U.S. markets also experienced a sharp correction. The Nasdaq Composite(0NDQC) plunged 3.93%, the S & P 500 Index(0S&P5) fell 2.03%, while the Dow Jones Indus Actual(0DJIA) edged up just 0.03%, highlighting pronounced style divergence.
The central market contradiction lies in the clash between a strong AI capex narrative and weak macroeconomic data. Amazon’s stock plunged 10% after hours following its announcement of a $200 billion annual capital expenditure plan, while tech giants like Microsoft and AMD also sold off sharply amid doubts about earnings sustainability. Although January ISM Manufacturing PMI came in surprisingly strong at 52.6 (vs. expected 48.5), weak ADP data and a partial government shutdown delayed the release of key nonfarm payroll figures, amplifying market uncertainty. While the Fed held rates steady, Warsh’s nomination significantly elevated hawkish policy expectations, pressuring growth stock valuations.
The A-share market was not immune either. The CSI 300(000300) index fell 1.33% for the week, with trading volume on the final day contracting by -12.24% versus its 50-day average, indicating strong investor caution.
Sector rotation was intense: previously leading resource stocks—precious metals, photovoltaics, and nonferrous metals—suffered widespread limit-down moves, while domestic consumption sectors like baijiu and retail showed relative resilience. Policy signals remain supportive: the release of the “Implementation Plan for High-Quality Development of the TCM Industry (2026–2030)”, the 15th Five-Year Plan’s No. 1 Central Document anchoring agricultural modernization, and Shanghai’s deepened “AI+” initiatives all lay the groundwork for medium-to-long-term structural opportunities. However, with the Lunar New Year holiday approaching and global markets volatile, the near-term focus remains on profit-taking and risk aversion.
This week, the HK33 portfolio declined by 3.75%, with 10 stocks rising and 23 falling. The top performer was WANGUO GOLD GP(03939), surging 18.07%, supported by its industry leadership and an exceptional EPS Rating of 99. The Model Portfolio fell 4.05%, led by GUMING(01364) with a 5.91% gain and a high RS Rating of 90. Since its inception, HK33 has consistently outperformed the Hang Seng Index (HSI), reaffirming the resilience of a strategy focused on high-industry-strength and high-quality fundamentals in volatile markets.
Technically, the Hang Seng Index(HSI) remains above its 50-day moving average (+1.03%) but has broken below both the 10-day and 20-day moving averages, suggesting short-term consolidation. Key support sits at the psychological 26,000 level, with resistance around 27,000. The Hang Seng TECH Index(HSTECH), however, shows clear weakness—currently trading 5.11% below its 50-day moving average. Failure to reclaim this level quickly could trigger further downside toward the 5,200 support zone.
Southbound capital flows surged this week, with net inflows reaching approximately HK$55.308 billion—dramatically exceeding last week’s HK$2.704 billion—highlighting mainland investors’ strong appetite to buy the dip. Key buying targets included platform economy leaders and high-dividend resource stocks, providing a solid funding floor for the Hong Kong market.
In summary, global markets broadly corrected this week under the dual pressures of hawkish policy expectations and soft economic data. Although Hong Kong equities were dragged lower, the robust southbound inflows underscore their strategic value as the offshore listing platform for China’s core assets. The counter-trend strength of high-scoring names like WANGUO GOLD GP (03939) validates that the investment logic of “the strongest stocks in the strongest industries” remains effective even in turbulent environments. Looking ahead, as the Lunar New Year holiday concludes and domestic policy details gradually roll out, the market may regain upward momentum after digesting external disruptions. Investors should closely monitor the Fed’s final policy trajectory and corporate earnings delivery. Investing involves risks—please proceed with caution.
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published on February 6, 2026