On the morning of August 15, Hong Kong’s three major indices opened lower across the board. The Hang Seng Index fell 0.77% to 25,322.10 points, the Hang Seng Tech Index dropped 1.20%, and the China Enterprises Index declined 0.81%. On the sector front, technology and internet stocks broadly retreated, cryptocurrency concept stocks moved lower, Chinese brokerages pulled back, while some biotechnology stocks gained. InnoCare Pharma surged more than 285% on its debut. The Hang Seng Tech Index ETF (513180), which has a leading scale in the same track as A-shares, followed the index slightly downward. Among its holdings, JD.com, Horizon Robotics, Sunny Optical, Meituan, Alibaba, and Li Auto led the declines, while JD Health once surged over 16% after earnings.

On the news side, the latest data showed that the U.S. July Producer Price Index (PPI) rose 3.3% year-on-year, far exceeding market expectations of 2.5% and hitting its highest level since February. The monthly PPI came in at 0.9%, the largest increase since June 2022, compared with a forecast of 0.2%. Following the release, traders scaled back bets on a Federal Reserve rate cut in September. As of publication, CME FedWatch Tool data indicated that the probability of a 50bp rate cut at the September FOMC meeting fell to 0%, while the probability of no rate cut rose to 7.9%. Nevertheless, the probability of a 25bp rate cut in September still stood at 92.1%.

Guohai Securities noted in a recent research report that Hong Kong equities may exhibit greater elasticity than U.S. equities. Specifically, the institution believes that before U.S. inflation concerns ease, the market will mainly trade under a stagflation scenario, with periodic shifts toward easing scenario 1 (a moderate easing driven by “expectation correction”) and recession scenario 1 (a lagged shift in monetary policy). Combining historical reviews with the current market environment, the institution remains optimistic on U.S. equities, particularly TMT, energy, materials, and industrial sectors that benefit from fiscal and tariff negotiations. Meanwhile, Hong Kong equities may demonstrate stronger flexibility, with TMT, energy, and telecommunications sectors leading the way. The safe-haven attributes of U.S. Treasuries have diminished compared with previous cycles, and the 10-year U.S. Treasury yield is expected to fluctuate repeatedly within the 4.2%–4.5% range.

Recently, multiple domestic and overseas institutions have forecast that the Federal Reserve may begin cutting rates in September, with overseas liquidity likely to continue improving. Against this backdrop, Hong Kong equities, particularly the technology sector, are expected to benefit significantly. At present, the Hang Seng Tech Index remains in a relatively undervalued historical range and is more sensitive to shifts in the China–U.S. interest rate spread, thereby being better positioned to benefit from a looser overseas liquidity environment. With high elasticity and strong growth as its core characteristics, the Hang Seng Tech Index is poised for more robust upward momentum once market conditions improve. For investors without access to Stock Connect, the Hang Seng Tech Index ETF (513180) may serve as a convenient one-stop vehicle for exposure to China’s core AI assets.