HK Stock Connect Weekly Report: HSTECH Falls 3.10% for the Week, AI Computing Hardware Momentum Keeps Being Validated, Large Model Sector Retreats After Spiking - 20260814

I. Weekly Market Overview

During the week (10-14 August), Hong Kong's three major indices fluctuated lower. The Hang Seng Index fell 2.15% cumulatively for the week, the Hang Seng TECH Index fell 3.10%, and the Hang Seng China Enterprises Index fell 2.24%. Average daily turnover for the week was about HKD 237.2 billion, with active market trading.

Southbound capital alternated between inflows and outflows during the week: net buying of HKD 2.021 billion on Monday, net selling of HKD 1.376 billion on Tuesday, net selling of HKD 2.906 billion on Wednesday, net buying of HKD 3.667 billion on Thursday, and net selling of HKD 1.316 billion on Friday. For the full week, southbound capital posted a modest net inflow of about HKD 90 million in aggregate.

II. Review of Hot Sectors This Week

1. AI Server Concept - Lenovo's Better-than-Expected Results Ignite the Sector, the Entire Supply Chain Rallies

The AI server concept was the strongest theme this week. On Thursday, LENOVO GROUP (00992.HK) reported first fiscal quarter results, with adjusted net profit up 176% year on year to USD 1.075 billion and AI server order backlog reaching USD 54 billion. Its share price surged 20.18% on turnover of HKD 11.848 billion, leading blue chips and Stock Connect eligible stocks. LEGENDHOLDING (03396.HK) rose 16.12% in tandem.

The entire AI server supply chain rallied: optical communication concepts extended gains early in the week, with CREALIGHTS (01191.HK) up 7.91% on Wednesday and ZJ INNOLIGHT (03308.HK) up 2.89%, buoyed by better-than-expected Coherent Corp results. In PCB concepts, KB LAMINATES (01888.HK) rose 10.70% on Tuesday with southbound turnover of HKD 4.11 billion. The hardware-side momentum of AI computing infrastructure keeps being validated, making it the most certain theme among technology stocks this week.

2. Large Model Sector - Spiked Then Fell, the "Twin Giants" of Large Models Stay in Focus

The large model sector moved in a "spike then pullback" pattern this week. On Monday, MINIMAX-W (00100.HK) fell 1.23% while Z.AI (02513.HK) rose 0.48%. On Tuesday, MINIMAX-W rose 1.74% against the trend while Z.AI fell 4.79%. On Wednesday, MINIMAX-W surged 8.96% against the trend while Z.AI rose 1.34%. On Thursday, the "twin giants" strengthened together, with Z.AI surging 9.02% and MINIMAX-W rising 5.43%. On Friday, the sector took a heavy hit: MINIMAX-W plunged 12.69% on turnover of HKD 11.458 billion with southbound net buying of HKD 1.364 billion, while Z.AI fell 3.57% with southbound turnover of HKD 12.421 billion, the highest across the market.

Index-level catalysts kept coming: on Tuesday, Hang Seng Indexes Company issued a consultation paper proposing the largest-ever revision to the Hang Seng TECH Index - expanding constituents from 30 to 50, adding an independent "Artificial Intelligence" theme (with AI-related constituents proposed to increase from 3 to 6), and adding "Frontier Technology" as a new theme (covering aerospace and satellite technology, quantum computing, brain-computer interfaces, etc.), with results expected to be announced at end-September. On the same day, HKEX announced that MiniMax would be included in the HKEX Tech 100 Index with effect from 13 August. On Wednesday, MSCI announced that Z.AI would be added to the MSCI China Index with effect from after the market close on 31 August, making Z.AI one of only two Hong Kong stocks added to the MSCI China Index this time. The NewTimeSpace weekly report noted that the dense index inclusions of large model names are expected to bring sustained passive fund allocation, though short-term high volatility remains pronounced.

3. Semiconductor Sector - Sharp Divergence, SMIC Surges After Results While HUA HONG GRACE Plunges

The semiconductor sector diverged sharply this week. On Monday, memory and optical communication concepts were active, with MONTAGE TECH (06809) up 7.60%. On Tuesday, the semiconductor sector pulled back overall, with HUA HONG GRACE (01347) down 3.05% and SMIC (00981) down 1.36%. On Wednesday, memory chip concepts were active, with MONTAGE TECH up 7.60%, HUA HONG GRACE up 7.13% and SMIC up 3.22%. On Thursday, the semiconductor supply chain rallied broadly, with HUA HONG GRACE up 3.08% and SMIC up 0.22%. On Friday, the sector diverged sharply - SMIC reported Q2 net profit up 261.7% year on year and surged 4.81% after results with southbound turnover of HKD 10.262 billion; HUA HONG GRACE plunged 11.55% on turnover of HKD 10.107 billion after its Q3 revenue guidance missed expectations. Memory concepts rose against the trend, with GIGADEVICE (03986) up 2%. The NewTimeSpace weekly report believes that earnings divergence within the semiconductor sector is intensifying, and investors should be wary of short-term shocks from guidance shortfalls.

4. Innovative Drug Sector - Rose First Then Fell, WUXI APPTEC Wins Preliminary Injunction from US Court

The innovative drug sector moved in a "rise first, fall later" pattern this week. On Monday, pharmaceutical stocks strengthened again, with BIOCYTOGEN-B (02315) up 11.08% and XTALPI (02228) up 7.68%. WUXI APPTEC (02359.HK) announced that the US District Court for the District of Columbia had granted its motion for a preliminary injunction, shielding the company from immediate adverse effects of the 1260H designation while its legal challenge is pending. WUXI APPTEC filed suit against the US Department of Defense on 11 June 2026, moved for a preliminary injunction on 29 June, held a hearing on 22 July, and obtained the court's approval on 9 August.

On Tuesday, the innovative drug sector stayed active, with JACOBIO-B (01167) up 11.53% after a profit alert and ZAI LAB (09688) up 5.28%. On Wednesday, the innovative drug concept remained active, with ZAI LAB up 4.73% and GENSCRIPT BIO (01548) up 4.51%. On Friday, most pharmaceutical stocks fell, with innovative drug ETFs declining collectively: Invesco Great Wall CSI HK Equities Innovative Drugs ETF (513780) fell 2.64% and China Universal CNI HK Equities Innovative Drugs ETF (159570) fell 2.51%. The NewTimeSpace weekly report believes that the granted preliminary injunction for WUXI APPTEC is a phased positive for the sector, but uncertainty remains over the subsequent litigation progress.

5. Gold Sector - Spiked Then Fell, Gold Prices Kept Fluctuating

The gold sector moved in a "spike then pullback" pattern this week. On Monday, gold and gold-jewellery stocks led gains, with LAOPU GOLD (06181) up 12.39% and CHOW TAI FOOK (01929) up 6.63%, after international gold prices surged more than 7% last week, the largest weekly gain this year. On Tuesday, gold stocks pulled back from highs, with CHIFENG GOLD (06693) down 6.01% and ZIJIN MINING (02899) down 5.8%. On Wednesday, gold stocks fell collectively, with LINGBAO GOLD (03330) down 9.43%, as US July CPI came in moderate and gold lost the USD 4,400 level. On Friday, some gold stocks turned positive: CHINAGOLDINTL (02099) rose 14.64% and LINGBAO GOLD rose 4.18%, with the company's interim results at an all-time best. LINGBAO GOLD issued a profit alert, expecting H1 net profit of about RMB 950 million to 1.05 billion, up 42% to 57% year on year, with gold resources in Xinjiang leaping from 13.20 tonnes to 53.94 tonnes.

6. Other Sector Highlights

Property stocks: rebounded on Monday, with COUNTRY GARDEN (02007) up 8.99% as Beijing's major housing market policy landed; on Tuesday, CHINA JINMAO (00817) rose 13.92% and YUEXIU PROPERTY (00123) rose 9.99%.

Oil stocks: strengthened against the trend on Tuesday, with CNOOC (00883) up 3.59% as US-Iran talks hit an impasse and international oil prices surged more than 5%, with Brent approaching USD 90.

MLCC concept: strengthened on Tuesday, with CCTC (06951) up 9.62% as AI demand boosted the passive components market.

Memory chips: active on Wednesday, with MONTAGE TECH (06809) up 7.60% as Temasek plans its first direct investment in Korean stocks, targeting Samsung Electronics and SK Hynix.

Container shipping stocks: gained broadly on Friday, with COSCO SHIP HOLD (01919) up 1.71% as Maersk raised its full-year guidance.

Internet and technology stocks: TENCENT (00700) fell 4.46% after results on Thursday, as surging Q2 capital expenditure turned free cash flow negative; JD LOGISTICS (02618) fell 13.7% on Friday and JD-SW (09618) fell 10.4%.

Commercial aerospace: came under pressure on Tuesday, with GOLDWIND (02208) down 7.99%, affected by the delayed Zhuque-3 launch and the failed Zhongxing-4B satellite launch.

III. Key Stock Connect Events

1. Hang Seng TECH Index May See Its Largest-Ever Revision: Constituents Proposed to Expand to 50, New Independent AI Theme

On 10 August (Monday), Hang Seng Indexes Company issued a consultation paper seeking market views on a possible revision to the Hang Seng TECH Index. This would be the largest methodology change since the index was launched in 2020. Key elements include: expanding constituents from 30 to 50; upgrading "Artificial Intelligence" from a sub-theme to an independent theme, with AI-related constituents proposed to increase from 3 to 6; adding "Frontier Technology" as a new theme, covering aerospace and satellite technology, quantum computing, brain-computer interfaces and other areas; and, in stock selection, proposing "revenue growth" as a supplementary inclusion mechanism alongside market-capitalisation selection, with 40 slots allocated by market capitalisation. As of June 2026, assets under management tracking the index stood at about USD 40.4 billion. The revision results are expected to be announced at end-September 2026, with constituent changes taking effect at the December 2026 index adjustment.

2. MiniMax Added to HKEX Tech 100 Index, Effective 13 August

On 10 August (Monday), HKEX announced that MiniMax (00100.HK) had met the fast-entry rules for the HKEX Tech 100 Index and would be included in the HKEX Tech 100 Index and the HKEX Tech & US Tech 100 Index after the market close on 12 August 2026, taking effect on 13 August 2026. MiniMax was officially included in the Stock Connect eligible securities list under Shenzhen Connect and Shanghai Connect on 6 August. The fast inclusion in the Tech 100 Index marks another liquidity boost at the index level for MiniMax after its Stock Connect inclusion.

3. Z.AI Added to MSCI China Index, Effective After Market Close on 31 August

On 12 August (Tuesday) local time, MSCI announced the results of its August 2026 quarterly index review. The MSCI China Index added 33 stocks including Z.AI (02513.HK), with the changes taking effect after the market close on 31 August. Z.AI is one of only two Hong Kong stocks added to the MSCI China Index this time. Following its inclusion, Z.AI will enter the MSCI Global Standard Index series and is expected to attract substantial passive fund tracking and allocation.

4. GUOTAI JUNAN I Plans Privatization Delisting, Full Offer at 44.2% Premium

On the evening of 7 August, GUOTAI JUNAN I (01788.HK) announced that Guotai Haitong Financial Holdings proposed to acquire, by way of a scheme of arrangement, all ordinary shares of GUOTAI JUNAN I other than those it already holds, at HKD 3 per share, to achieve privatization delisting. The offer price represents a premium of about 44.2% over the closing price of HKD 2.08 per share on the last trading day (22 July). GUOTAI JUNAN I currently has a total share capital of 9.53 billion shares, with Guotai Haitong Financial Holdings holding about 73.9%; the consideration required for the remaining equity is about HKD 7.5 billion. The privatization is a move to address the horizontal competition issue of overseas subsidiaries following the merger of Guotai Junan and Haitong Securities. GUOTAI JUNAN I resumed trading on Monday, up 36.78%.

5. WUXI APPTEC Wins Preliminary Injunction from US Court, 1260H Designation Suspended During Litigation

On the evening of 9 August, WUXI APPTEC (02359.HK) announced that the US District Court for the District of Columbia had ruled on its motion for a preliminary injunction and granted the injunction sought. The ruling shields the company from immediate adverse effects of the 1260H designation while the judicial proceedings challenging the designation are pending. WUXI APPTEC filed suit against the US Department of Defense on 11 June 2026, moved for a preliminary injunction on 29 June, and the court held a hearing on 22 July.

6. Eligible Securities List Adjustment - HESAI-W (Old) Removed

On 14 August (Friday), the Stock Connect eligible securities list was adjusted, with HESAI-W (Old) (02983.HK) removed with effect from 14 August 2026. Hesai had just been included in Stock Connect on 24 July and was removed in less than a month, mainly because the company completed the cancellation of its "old" shares and the issuance of new shares, resulting in a change of stock code. No new securities were added this week.

7. Tencent Reported to Join Sequoia China and Others in Acquiring Manus Shares from Meta, Becoming the Largest Shareholder

According to market sources, TENCENT (00700.HK) will join Sequoia China and ZhenFund in buying back Manus shares from Meta (META.US), with the total consideration expected to be broadly in line with the price Meta paid, at approximately USD 2 billion. In a separate market report, Tencent has acquired the Manus shares held by US venture capital firm Benchmark, replacing it as Manus's largest shareholder.

IV. HK Connect-related A-share ETF Rankings (Weekly Focus)

This week, HK Connect-related A-share ETFs showed a pattern of "innovative drugs staying active, information technology spiking, and internet coming under pressure".

In innovative drug ETFs, China Universal CNI HK Equities Innovative Drugs ETF (159570) ranked top by turnover for five consecutive days, with RMB 2.918 billion on Wednesday, the highest across the market, at a turnover rate of 11.30%; on Friday it traded RMB 2.09 billion, down 2.51%. E Fund Hang Seng HK Innovative Drugs ETF (159316) traded RMB 1.422 billion on Wednesday, up 0.95%, and RMB 790 million on Friday, down 2.22%. Yinhua CNI HK Equities Innovative Drugs ETF (159567) traded RMB 925 million on Friday, down 2.38%. Invesco Great Wall CSI HK Equities Innovative Drugs ETF (513780) traded RMB 681 million on Friday, down 2.64%. Innovative drug ETFs overall moved in a "up on Wednesday, pullback on Friday" pattern this week, highly correlated with the performance of innovative drug stocks.

In information technology ETFs, driven by LENOVO GROUP's better-than-expected results and the AI server concept surge, IT ETFs rallied collectively on Thursday - ChinaAMC CSI HK Equities Information Technology Integration ETF (526000) rose 3.44% on turnover of RMB 614 million; Hwabao CSI HK Equities Information Technology Integration ETF (159131) rose 2.99% on turnover of RMB 2.332 billion at a turnover rate as high as 94.55%. On Friday, Hwabao CSI HK Equities Information Technology Integration ETF traded RMB 2.058 billion at a turnover rate of 84.31%. E Fund CSI HK Equities Information Technology Integration ETF (159196) fell 0.24% on Friday on turnover of RMB 291 million.

In internet ETFs, dragged by TENCENT's post-results decline, internet ETFs came under pressure overall this week. On Thursday, Fullgoal CSI HK Equities Internet ETF (159792) fell 1.82% on turnover of RMB 1.723 billion; ChinaAMC Hang Seng Internet Technology Industry ETF(QDII) (513330) fell 1.77% on turnover of RMB 1.443 billion. On Friday, Fullgoal CSI HK Equities Internet ETF traded RMB 1.792 billion, down 1.18%; E Fund CSI HK Equities Internet ETF (513040) traded RMB 655 million, down 1.04%; Hwabao CSI HK Equities Internet ETF (513770) traded RMB 428 million, down 1.10%.

Overall, the fund flow logic in the ETF market this week was clear - a three-tier heat structure of AI server supply chain (information technology ETFs) > innovative drug ETFs > internet ETFs ran through the week. The AI server concept surge drove IT ETFs higher, innovative drug ETFs stayed active after WUXI APPTEC's preliminary injunction was granted, and internet ETFs came under overall pressure on Tencent's results. This structure largely matches the three-track advance of AI servers, innovative drugs and large models at the individual Stock Connect stock level.

V. Market Notes

Eligible securities list adjustment: 0 securities added and 1 removed this week - HESAI-W (Old) (02983.HK) (effective 14 August). Hesai was just included in Stock Connect on 24 July and was removed in less than a month, mainly because the company completed the cancellation of its "old" shares and the issuance of new shares, resulting in a change of stock code.

Trading calendar: no upcoming market closure.

VI. Weekly Summary

Hong Kong stocks fluctuated lower this week. The core market theme revolved around the momentum of AI computing hardware: LENOVO GROUP's better-than-expected results and AI server order backlog of USD 54 billion ignited Thursday's rally, with hardware names such as optical communication and PCB strengthening in tandem. The large model sector moved in a spike-then-pullback pattern under multiple catalysts including MiniMax's Stock Connect inclusion and index inclusions (HKEX Tech 100, MSCI China), with MINIMAX plunging nearly 13% on Friday, underscoring its high volatility. The semiconductor sector diverged sharply, with SMIC surging 4.81% after results and HUA HONG GRACE plunging 11.55% on guidance shortfalls. The innovative drug sector rose first and fell later; sector sentiment warmed after WUXI APPTEC's preliminary injunction was granted by a US court, then pulled back with the market on Friday.

On the interconnect mechanism front, several important developments arrived this week: Hang Seng Indexes Company issued a consultation paper proposing the largest-ever revision to the Hang Seng TECH Index; MiniMax was added to the HKEX Tech 100 Index; Z.AI was added to the MSCI China Index; and HESAI-W (Old) was removed from the Stock Connect list. These events show Hong Kong's market continuing to deepen in index construction and connectivity, with the weight of technology attributes and AI themes steadily rising.

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