HK Stock Connect Weekly: HSI Slips 0.10% for the Week as the Semiconductor Chain Rebounds on Friday-20261016

I. Weekly Market Overview

In the week from October 12 to October 16, 2026, the three major Hong Kong indices moved lower. The Hang Seng Index fell 0.10% for the week to close at 24,186.83; the Hang Seng TECH Index fell 2.13%; and the Hang Seng China Enterprises Index fell 0.24%. Average daily turnover for the week was approximately HK$189.2 billion, indicating active trading.

Southbound capital showed a pattern of initial inflow followed by sustained outflows. Net buying was HK$2.603 billion on Monday, while net selling reached HK$457 million on Tuesday, HK$135 million on Wednesday, HK$5.080 billion on Thursday and HK$3.568 billion on Friday. Southbound capital recorded a net outflow of approximately HK$6.637 billion for the week, a relatively pronounced weekly outflow.

II. Review of Hot Sectors This Week

1. Semiconductor and AI Hardware Chain: Two Sharp Sell-offs Midweek, a Broad Rebound on Friday

NewTimeSpace weekly data show that this sector had the widest swings of the week. On Tuesday, global semiconductor stocks saw panic selling, with the Hang Seng TECH Index falling as much as 2.85% intraday, YOFC (06869.HK) down 4.32% and SMIC (00981.HK) down 1.16%. On Thursday, the Nasdaq fell 1.88%, the Philadelphia Semiconductor Index 4.3% and Japan’s Nikkei 225 4.90% overnight, pressuring Hong Kong AI hardware across the board: ILUVATAR COREX (09903.HK) fell 13.64%, BIRENTECH (06082.HK) 11.86%, MONTAGETECH (06809.HK) 11.09% and LENOVO GROUP (00992.HK) 14.54%. On Friday the sector rebounded together, with LENOVO GROUP (00992.HK) up 8.01%, SHANGHAI FUDAN (01385.HK) up 13.11% and MONTAGETECH halting a seven-session decline. Key catalysts were memory demand spilling over from HBM to DDR5 and enterprise SSDs, and Nvidia’s chief executive singling out Lenovo Group in an interview. Among active names, YOFC saw HK$3.034 billion of southbound turnover on Thursday and SMIC HK$2.744 billion.

2. Pharmaceuticals and Biotech: CRO and Innovative Drug Names Fell First, Then Diverged

NewTimeSpace has compiled several important events this week. On Tuesday, Hong Kong CRO concept stocks fell across the board, with GENSCRIPT BIO (01548.HK) down 15.61%, the largest decline among Stock Connect stocks that day. On Wednesday, innovative drug names extended their correction, with Huatai-PB Hang Seng Innovative Drugs ETF(QDII) (520500) down 3.24%. On Thursday, HENGRUI PHARMA (01276.HK) rose 3.23% after its in-house Alzheimer’s therapy SHR-3201 injection was approved to begin clinical trials. On Friday, MICOT PHARMA-B (02335.HK) rose 64.05% to lead the week, while DUALITYBIO-B (09606.HK) gained 10.89%.

3. New Consumption and Small-cap Recent Listings: Sharp Swings Alternated Day by Day

Names in this space are small in size with high turnover, producing pronounced single-day swings. On Tuesday, YUNJI (02670.HK) rose 18.56%, the top Stock Connect gainer that day. On Wednesday, HIPINE (02583.HK) led with a 17.08% gain while LIULIUMEI (06658.HK) fell 27.46%. On Thursday, LIULIUMEI (06658.HK) led with a 21.84% gain and PATEO (02889.HK) rose 14.48%. On Friday, LIULIUMEI added 10.86% while YUNJI (02670.HK) fell 25.13%, ranking last.

4. Shipping and Tankers: Sanctions Expectations Triggered a Sharp Sell-off on Thursday

On Thursday, COSCO SHIP ENGY (01138.HK) fell 15.64%, the largest decline among Stock Connect stocks that day, as Hong Kong shipping names sold off broadly and peers generally dropped more than 4%. The core catalyst was that the US government is considering easing sanctions on shadow fleet tankers to relieve record-high tanker freight rates; if those vessels return to legitimate oil transport, available capacity would rise directly and weigh on freight rate expectations.

5. Mainland Banks and Dividend Themes: Defensive Attributes Came to the Fore

On Thursday, Hong Kong-listed mainland bank stocks extended gains late in the session and underpinned the broader market, with ABC (01288.HK) rising 3.50% to a record high while ICBC (01398.HK) and CCB (00939.HK) also hit new highs. On Tuesday, ChinaAMC CSI HK Equities Central Enterprise Dividends ETF (513910) rose 1.31% and GF CSI Guoxin HK Equities Central Enterprise Dividends ETF (520900) rose 1.10%, showing a substitution allocation pattern during the technology pullback.

6. Other Sector Highlights

Oil and gas: Fullgoal S&P Oil & Gas Exploration and Production Selected Industry ETF(QDII) (513350) rose 1.82% on Tuesday and 3.64% on Wednesday. Lithium batteries: GANFENGLITHIUM (01772.HK) fell 6.41% on Friday. Autos: SERES (09927.HK) rose 15.22% on Monday. Building materials: CR BLDG MAT TEC (01313.HK) rose 7.81% on Wednesday. Apparel and education: CHINA EAST EDU (00667.HK) rose 9.84% on Tuesday and YUE YUEN IND (00551.HK) rose 6.93%.

III. Key Stock Connect Events

1. Southbound Capital Posted a Net Outflow of HK$6.637 Billion, Including HK$5.080 Billion on Thursday

Southbound capital recorded net selling on four of the five trading days, amounting to a net outflow of approximately HK$6.637 billion for the week. Thursday alone saw HK$5.080 billion of net selling, the largest single-day outflow of the week, comprising HK$615 million via Stock Connect (Shanghai) and HK$4.415 billion via Stock Connect (Shenzhen); Friday added another HK$3.568 billion of net selling. Monday was the only net buying day, at HK$2.603 billion.

2. MICOT PHARMA-B Rose 64.05% to Lead the Week on a Proposed H-share Incentive Plan and Buyback Mandate

On Friday, MICOT PHARMA-B (02335.HK) closed up 64.05% at HKD 24.000, having traded as high as HKD 39.160 intraday, with turnover of HK$421 million. The company said its board proposed adopting an H-share incentive plan with a term of ten years from the date of adoption, subject to shareholder approval at an extraordinary general meeting, and is also seeking a general mandate to repurchase up to one tenth of its issued H shares.

3. PATEO Shareholders Voluntarily Extended Lock-up Periods

On Wednesday, PATEO (02889.HK) closed up 14.48%. The company announced on Tuesday that shareholder Guangzhou Ping An Consumer Equity Investment Partnership extended its lock-up from 12 months to 18 months from the listing date, while Sanfeng Holdings Management undertook a six-month lock-up from the date of signing, with the two together holding 6,159,817 shares, about 3.69% of total issued shares.

4. SERES and CATL Signed a Deepened Long-term Strategic Cooperation Agreement

On Monday, SERES (09927.HK) closed up 15.22%. The two companies signed the deepened agreement in Chongqing on October 10 to accelerate the second phase of the in-factory plant at the SERES super factory, which has planned annual capacity of 10GWh to 12GWh and will lift combined phase-one and phase-two capacity to more than 20GWh; they will also jointly expand into overseas markets including Europe, the Middle East and Central Asia.

5. CIG Plans to Raise More Than HK$6.5 Billion via an H-share Placement and Convertible Bonds

On Monday, CIG (06166.HK) fell 11.44%, among the weakest performers on the Stock Connect active list that day. The company earlier announced a plan to place new H shares and issue convertible bonds, raising more than HK$6.5 billion in net proceeds, of which about 55% will fund expanded optical module capacity and about 30% will be used for strategic investment in upstream companies.

6. Corporate and Industry Developments at a Glance

Grouped by main industry, in the hardware supply chain LENOVO GROUP (00992.HK) was publicly named by Nvidia’s chief executive, MONTAGETECH (06809.HK) saw revenue from new interconnect chip products climb significantly, and SHANGHAI FUDAN (01385.HK) rose sharply as its A-share entity tracked a recovery in the memory chain; in healthcare, HENGRUI PHARMA (01276.HK) won clinical trial approval for its SHR-3201 injection while MICOT PHARMA-B (02335.HK) advanced incentive and buyback arrangements, showing innovative drug companies pushing on both R&D and shareholder returns.

Grouped by type of activity, on the financing side CIG (06166.HK) planned an H-share placement and convertible bonds raising more than HK$6.5 billion in net proceeds, and PATEO (02889.HK) obtained voluntary lock-up extensions from shareholders, reflecting refinancing and stake stability advancing together; on the earnings side, GON TECHNOLOGY (02768.HK) guided first-three-quarter net profit attributable to shareholders up as much as 78.84% year on year, the only recent listing to disclose high growth this week.

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

HK Stock Connect-related A-share ETFs this week showed a three-tier structure: semiconductor themes first, innovative drug themes second, and Hang Seng TECH and internet-related products trailing.

Huatai-PB China Securities Han Stock Exchange China Korea Semiconductor ETF(QDII) (513310) recorded turnover of RMB 7.445 billion, RMB 12.880 billion, RMB 8.871 billion, RMB 10.514 billion and RMB 10.214 billion over the five sessions, holding first place throughout the week; its 3.86% drop on Wednesday was the largest single-day decline of the week, and it reversed to a 0.62% gain on Friday. GF CSI HK Innovative Drugs Industry ETF(QDII) (513120) recorded turnover of RMB 4.734 billion, RMB 6.153 billion, RMB 4.936 billion, RMB 7.808 billion and RMB 8.616 billion, ranking second on every day except Monday, and rose 0.16% on Friday. The third tier comprised Hang Seng TECH, Hang Seng Internet, China internet and Nasdaq-related QDII products, mostly with turnover between RMB 1.4 billion and RMB 5.1 billion; ChinaAMC Hang Seng Technology ETF(QDII) (513180) and Huatai-PB CSOP Hang Seng Technology Index ETF(QDII) (513130) appeared on the list on all five sessions.

In sum, the capital flow through the ETF market this week was clear: a three-tier heat structure of semiconductors above innovative drugs above Hang Seng TECH and internet products ran through the whole week. High turnover in semiconductor themes came with high turnover rates, reflecting rapid positioning between the sell-off and the rebound; innovative drug turnover rose day by day, corroborating the sharp single-day gains in Hong Kong innovative drug stocks on Friday; and Hang Seng TECH and internet products absorbed index-level liquidity.

V. Weekly Wrap-up

Hong Kong’s three major indices moved lower this week, with the Hang Seng Index down 0.10%, the Hang Seng TECH Index down 2.13% and the Hang Seng China Enterprises Index down 0.24%, on average daily turnover of about HK$189.2 billion. The core theme was the sharp sell-off and subsequent repair in the semiconductor chain, hit twice midweek by concerns over AI investment risk overseas and rebounding together on Friday on memory demand spillover and industry catalysts. Pharmaceuticals and biotech diverged sharply internally, with CRO and innovative drug names under pressure earlier in the week before sentiment was repaired by MICOT PHARMA-B’s single-day surge on Friday; shipping, mainland banks, new consumption and dividend themes rotated, shaping a structural market beneath narrow index moves.

On the connectivity front, several important developments occurred this week: on October 15, China Investment Information Services issued a notice adding DEEPZERO (02947.HK) to Stock Connect and removing its former code (02723.HK), effective from the next Stock Connect trading day as a code substitution for the same company; in addition, the Shenzhen Stock Exchange had already added YUNJI (02670.HK) and LONGSYS (09976.HK) to the Stock Connect eligible list on October 8. These events show that the Hong Kong market continues to deepen in index compilation and connectivity, with the weighting of technology attributes and AI themes rising steadily.