According to reports, rising concerns over AI capital expenditure and a sharp sell-off in South Korean stocks weighed on Hong Kong technology shares today, with the Hang Seng Index barely closing in positive territory thanks to heavyweight sectors. At the close, the Hang Seng Index rose 0.30% to 24,345.22 points, with total daily turnover of HK$187.566 billion; the Hang Seng Tech Index fell 0.79% to 4,136.63 points.

Among Hong Kong ETFs ranked by size, Tracker Fund of Hong Kong (02800) rose 0.48% to HK$25.02; CSOP SK hynix Daily Leveraged 2x Product (07709) plunged 17.98% to HK$26.10; and Hang Seng China Enterprises Index ETF (02828) gained 0.29% to HK$84.

Sector Performance

Buyback support funds exited early, with storage and South Korea-tracking ETFs leading the decline. At the close, CSOP SK hynix Daily Leveraged 2X Product (07709) fell 17.98% to HK$26.10; CSOP Samsung Electronics Daily Leveraged 2x Product (07747) dropped 13.64% to HK$57.60; and CSOP Hong Kong-Korea Tech ETF (03431) declined 3.08% to HK$9.43.

South Korea's two major memory chip giants' combined buyback program worth approximately 55 trillion Korean won, or about US$40 billion, ended several weeks ahead of schedule, with one leading company's buyback effectively terminating on October 6. With the supporting bids gone, the Korea Composite Stock Price Index has fallen about 8% cumulatively over the three trading days since the buyback ended. Foreign investors have been net sellers of Korean stocks for a fifth consecutive trading day, with the technology sector seeing approximately US$1.3 billion in net selling on a single day.

Meanwhile, CEOs of two major overseas chip giants publicly warned that while demand for computing infrastructure will continue to exceed supply, the ability to secure funding could become a major constraint on the AI boom. Federal Reserve voting member and Cleveland Fed President Hammack also stated that monetary policy is not restrictive enough and expressed a preference for more frequent rate hikes of smaller magnitude, further weighing on global technology stock risk appetite.

Goldman Sachs EMEA head of trading Rich Privorotsky summarized the situation as "storage remains the epicenter."

The export tax rebate reduction landed as a "bearish catalyst fulfilled," and the new energy vehicle sector broadly retreated, with related ETFs falling collectively. At the close, China AMC New Energy Vehicle ETF (515030.SH) fell 2.70% to 1.405 yuan; Ping An New Energy Vehicle ETF (515700.SH) dropped 2.69% to 1.881 yuan; and Guotai New Energy Vehicle ETF (159806.SZ) declined 2.68% to 0.617 yuan.

On October 12, the Ministry of Finance and the State Taxation Administration issued an announcement on adjusting export tax rebate policies for certain products, specifying that starting April 1, 2027, the value-added tax export rebate rate for new energy vehicles will be reduced from 13% to 9%. The market had already anticipated this policy, and after the announcement was made, the sector experienced a "bearish news realized" type of pullback.

CITIC Securities noted that the new energy vehicle VAT export rebate rate will be lowered from 13% to 9% starting April 1, 2027, which the market had already expected. Drawing on experience from the solar and battery sectors, leading companies' share prices generally pulled back over 90 trading days after rebate rate reductions. While this may disturb sentiment in the short term, top automakers are expected to offset the impact through terminal price increases, dealer cost-sharing, and overseas factory construction. In the long term, tax policy changes will not alter the global competitiveness of high-quality independent automakers.

China Galaxy Securities noted that new energy continues to contribute core momentum to export growth, the commercial vehicle domestic market has performed relatively steadily, new energy penetration has risen to nearly 50%, and surging truck exports have driven continued high prosperity in commercial vehicle exports. The market has entered the "Golden September and Silver October" and year-end consumption peak season. New energy is expected to continue serving as the core driver of domestic auto market recovery and high export growth, with vehicle sales expected to rise month-over-month.

Institutional Views

The strategy team at East Money Securities believes that A-share market risk appetite may have been excessively downgraded, and a short-term stabilization and rebound is likely. The Shanghai Composite Index has recently stabilized, trading congestion has been released, and the CSRC symposium also helps boost risk appetite. Before year-end, dual-innovation sectors are still expected to see notable rebounds. Going forward, attention should be paid to third-quarter earnings and AI commercialization progress, as well as changes in oil prices and US Treasury yields; if the Fed keeps rates unchanged in October, that would also be a positive change compared to previous rate hike concerns.

Continued attention should be paid to marginal changes in A-share market micro-liquidity, including IPO financing and ETF inflows. Currently, insurance funds remain the most likely source of incremental capital, and their allocation demand is not limited to OCI accounts. Therefore, continued focus should be placed on dividend assets and quality blue chips that align with insurance fund preferences, including high-quality assets that may benefit from stake acquisitions. In terms of allocation, key focus areas include banking, coal, electronics, non-bank financials, oil shipping, non-ferrous metals, pharmaceuticals, and new energy vehicles.

ETF Developments

ICBC Engineering Machinery ETF (561070.SH) debuted on its first trading day, closing down 0.1% at 0.991 yuan with a turnover of 46.3548 million yuan. The fund tracks the CSI Engineering Machinery Thematic Index, with holdings covering excavators, cranes, hydraulic components, engines, and other core segments of the engineering machinery industry chain.