HK Stocks Close (Oct 22) | Hang Seng Index Falls 3.03%, Breaking Below 23,000; Blue Chips Nearly All Decline; Tech and Pharma Stocks Lead Losses

Zhitong Finance APP learned that Hong Kong's three major indices declined throughout the day. The Hang Seng Index fell over 3%, breaking below the critical 23,000 level, while the Hang Seng Tech Index dropped more than 5%, continuing to hit new lows since "924". At close, the Hang Seng Index fell 3.03% or 717.19 points to 22,934.68, with full-day turnover reaching HK$256.051 billion; the Hang Seng China Enterprises Index dropped 3.20% to 7,689.19; and the Hang Seng Tech Index fell 5.03% to 3,793.93.

Guoyuan International believes that the short-term baseline scenario for Hong Kong stocks remains "index volatility with internal market differentiation and rotation." As the marginal momentum of southbound funds weakens, sustained future rises in Hong Kong stocks will rely more heavily on upward revisions to corporate earnings and improvements in domestic fundamentals. CMBI points out that maintaining a barbell allocation structure is advisable: using high-dividend assets such as banks, telecommunications, and utilities as the stable core, while focusing on AI hardware companies for elasticity, though the pace of allocation should be slowed.

Blue Chip Performance

CATL (03750) suffered two consecutive days of declines following its earnings release. At close, it fell 7.24% to HK$338.4, with turnover of HK$3.275 billion. UOB Kay Hian noted that CATL's third-quarter net profit missed expectations as the company absorbed increases in export VAT and a 2% consumption tax without passing them on to customers. The bank expects some tax costs to be passed on through higher battery prices in the fourth quarter, which may help margins recover, but further phasing out of tax incentives by 2027 will continue to weigh on profitability.

Blue chips were nearly universally down, with only Midea Group (00300) rising 0.54% against the trend. Among decliners, Hua Hong Semiconductor (01347) fell 9.46% to HK$66.55; Innovent Biologics (01801) dropped 8.42% to HK$81.6.

Hot Sectors

In terms of market performance, internet stocks faced collective pressure, with Alibaba falling 6.12% and Tencent Holdings dropping 2.89%. AI hardware also collapsed, with PCB and optical communication stocks hit hardest; Yangtze Optical Fibre and Cable fell 11.79%. Lithium battery stocks continued their downward trend, with CATL falling another 7.24%. Amid escalating tensions in the Middle East and high oil prices, gold stocks retreated along with gold prices, with Zijin Gold International falling 7.96%. Innovative drug stocks saw significant pullbacks, with Innovent Biologics dropping 8.42%. Midea Group was the only blue chip to rise during the day.

Optical communication, PCB, and other computing power hardware stocks led the decline. At close, Yangtze Optical Fibre and Cable (06869) fell 11.79% to HK$110.7; Cambridge Industries (06166) dropped 11.28% to HK$72.75; Huiju Technology (01729) fell 7.67% to HK$12.15; and Zhongji Innolight (03308) dropped 7.30% to HK$724.

The market is beginning to worry about slowing growth among top manufacturers and whether future returns can cover current massive investments. The market expects the year-on-year growth rate of capital expenditure by the US AI giants to drop from about 90% in 2026 to 36% in 2027, with uncertainty regarding investment returns exacerbating volatility in AI assets. Notably, NVIDIA announced at the GTC Berlin conference yesterday that it would jointly expand production significantly with six major supply chain partners. Some views suggest that the absence of mainland Chinese manufacturers in NVIDIA's official announcement of CPO expansion may signal a "divergence" between existing routes and next-generation routes. Meanwhile, news that public mutual funds significantly reduced their holdings in Zhongji Innolight and Eoptolink in the third quarter has spread, further amplifying selling pressure due to fears of "unraveling herd behavior."

Star internet stocks faced collective pressure. At close, Alibaba-W (09988) fell 6.12% to HK$97.35; Tencent (00700) dropped 2.89% to HK$382.4.

The 90-day transition period for individual income tax declarations on offshore trusts expired today. Announcement No. 21 of 2026, issued by the Ministry of Finance and the State Taxation Administration on July 24, stipulates a 20% tax rate on income derived by resident individuals from offshore trusts, requiring declaration regardless of whether profits are actually distributed. On October 19, the State Taxation Administration issued another reminder urging relevant taxpayers to complete declarations and tax payments within the transition period. Additionally, continuous net outflows of southbound funds have recently increased pressure. From October 14 to 21, southbound funds recorded a combined net outflow of HK$14.94 billion over six trading days, with a single-day net outflow of HK$4.43 billion on October 21 alone.

Gold stocks declined collectively. At close, Zijin Gold International (02259) fell 7.96% to HK$122.6; Shandong Gold (01787) dropped 6.57% to HK$17.21; Chifeng Gold (06693) fell 6.12% to HK$30.7.

On October 22, spot gold broke below the $4,100 mark, falling more than 1% during the day. With the sudden escalation of tensions in the Middle East, Brent crude oil stood above the $110 high. It was reported that the US military had formulated a new round of strike plans against Iran, while Israel signaled an escalation in warfare. CITIC Futures believes that gold will maintain volatile movement in the short term. While the slight decline in the US dollar and US Treasury yields has marginally eased adjustment pressure on gold, energy inflation risks and market bets on further interest rate hikes by the US, Europe, and Japan have not significantly receded, limiting the space for a rebound in gold prices. In the long term, US fiscal credit risks, central bank gold purchases, and allocation demand continue to support gold.

Gaming stocks showed weak performance. At close, Galaxy Entertainment (00027) fell 4.55% to HK$31.5; Sands China (01928) dropped 4.49% to HK$10.86; Melco International Development (00200) fell 3.95% to HK$2.43; and SJM Holdings (00880) dropped 2.89% to HK$1.175.

Sands China announced that its total net revenue for the third quarter of 2026 was $1.93 billion, a year-on-year increase of 1.4%; net income was $191 million, a year-on-year decrease of 29.8%; and adjusted property EBITDA was $529 million, down 12% from the same period last year. Citigroup estimates that Macau's gaming revenue for the first 19 days of October was approximately MOP 14.1 billion, with average daily gaming revenue from October 12 to 19 at about MOP 613 million, 16% lower than the daily average of approximately MOP 729 million for the week of October 5. The bank maintains its forecast of MOP 23 billion for October's gaming revenue, implying a 5% year-on-year decline.

Notable Movers

Zhaowei Machinery & Electronics (02692) surged against the trend. At close, it rose 21.29% to HK$34.18.

Tesla stated in its latest earnings report that Optimus has begun production on the high-volume production line at the Fremont factory. The robots rolling off this line are the first batch manufactured with mass-production quality. Although we will continue to iterate on hardware and manufacturing processes, we have proven that Optimus's current manufacturing process is suitable for commercial products.

Duiba (01753) continued to climb. At close, it rose 5.71% to HK$1.11.

Duiba entered the AI short drama sector at the beginning of this year, demonstrating outstanding ability to produce hits. The company recently disclosed that its AI short drama business recorded net profits for three consecutive months in July, August, and September. Total new playback volume across the network in the third quarter exceeded 45.8 billion, more than nine times the cumulative 5 billion in the first half of the year. The company's current positioning has shifted to an AI-Native content platform, transforming production from individual talent to systematic replication.

Bloks (00325) shares plunged. At close, it fell 21.38% to HK$54.6.

Bloks announced that SmartBloks Limited, a member of the controlling shareholder group, sold 3.849 million shares via block trade on October 22 at HK$65.28 per share, accounting for approximately 1.56% of issued shares, cashing out approximately HK$251 million. Its shareholding decreased from approximately 3.57% to approximately 2.01%. SmartBloks is wholly owned by Zhu Weisong.

Jingwei Tiandi (02477) continued its downward trend. At close, it fell 17.19% to HK$0.106.

Jingwei Tiandi announced that major shareholder Hengfeng sold 716 million shares in the open market on October 21, accounting for approximately 14.93% of issued share capital, for a total consideration of approximately HK$107 million, at an average selling price of approximately HK$0.1494 per share. After the sale, Hengfeng's shareholding decreased from 24.94% to approximately 10.01%, remaining a major shareholder of the company.

China State Construction International (03311) fell after earnings. At close, it dropped 4.69% to HK$8.12.

China State Construction International announced that for the nine months ended September 30, the group's turnover and attributable turnover of joint ventures were approximately RMB 59.114 billion and RMB 1.674 billion respectively, representing year-on-year decreases of 23.92% and 37.75% respectively. During the period, the group's operating profit and attributable profit of joint ventures totaled approximately RMB 9.863 billion, a year-on-year decrease of 17.26%.