Closing Notes: Hang Seng Index rises for three consecutive days, Northbound capital makes a day trip, Baidu plunges 11%

Hello everyone, this is Uncle Xin.
It's Wednesday market close. Let me update you all on the market:
Hang Seng Index closed at 25,495.07, up 23.92 (+0.09%).
Hang Seng Tech Index at 4,682.05, down 57.13 (-1.21%).
H-share Index at 8,471.21, up 18.01 (+0.21%).
Total turnover was HK$253.175bn, marking the 13th consecutive day below the HK$300bn mark.
After opening 124 points lower, the HSI dipped 155 points early to a low of 25,315. It then slowly recovered, closing up 23 points and securing a three-day winning streak with a cumulative gain of 378 points over three days. However, the tech index lagged the broader market, falling 1.21% for its second consecutive day.
Here are the key takeaways from today's session:
1. Northbound capital flipped sentiment faster than the weather.
Yesterday saw net inflows of HK$14bn, a recent record; today it reversed course with net outflows of HK$10.621bn—the largest single-day outflow since July 9.
Specific trades:
Net buy Tencent (00700) HK$321m, closing at 447.2 (+1.1%)
Net buy GigaDevice (03986) HK$138m
Net sell Hua Hong Semiconductor (01347) HK$2.969bn, which plunged 11.8%
Net sell FTSE Harbin ETF (02800) HK$1.79bn
Net sell Xiaomi (01810) HK$1.51bn — despite Xiaomi rising 4.8%, northbound funds took profits at highs
Net sell SMIC (00981) HK$512m, down 3.76%
Uncle Xin's honest take: Northbound funds swept up shares yesterday but dumped them today. This rhythm shows weak confidence in holding above 26,000, with a strong desire to reduce positions on rallies. Chasing northbound flows can leave you bagholding as they exit.
2. Baidu (09888) plunged 11% after earnings, becoming the worst-performing blue chip today.
Baidu's Q2 revenue was RMB 31.3bn, slightly missing estimates; non-GAAP net profit plummeted 46%. Morgan Stanley slashed its price target from $130 to $80 and downgraded the rating to 'Underweight'. Baidu closed at 89.95, down 11%.
As I mentioned yesterday, Baidu US ADR dropped over 5% pre-market, dragging the Hong Kong listing lower—a classic 'missed earnings leads to selloff' script.
3. Xiaomi (01810) surged 4.8% against the trend, closing at 27.44.
Group President Lu Weibing stated that the 'most difficult phase for the mobile phone business is ending,' and combined with market enthusiasm for humanoid robots, the stock pushed higher. However, a word of caution: northbound funds sold HK$1.5bn worth of Xiaomi today. This signal warrants attention—not necessarily bearish on Xiaomi, but indicates some capital choosing to lock in gains at these levels.
4. Alibaba (09988) faced pressure ahead of results, dropping 2% to close at 124.2.
Investors are eyeing tomorrow's post-close earnings release, prompting some to exit early for profits. HKEX (00388) rallied over 2% in the afternoon, reporting H1 attributable profit of HK$10.568bn, up 24% YoY.
5. China Gas (00003) spiked 7.4% to 7.285 after results, the top performer among blue chips.
Multiple major brokerages praised the beat expectations and upgraded ratings.
6. The semiconductor sector fell across the board.
Hua Hong Semiconductor (01347) dropped 11.8%, and SMIC (00981) fell 3.76%. Weakness was driven by slowing revenue growth for OpenAI in Q2 and profit-taking in US storage chips and AI upstream sectors overnight, dragging related HK stocks.
Uncle Xin's Operations Today
Despite the three-day winning streak, northbound funds suddenly turned to net outflows of HK$1.06bn. I did not add positions nor sell holdings today, maintaining a 55% portfolio weight.
The shift in northbound flows is a warning sign, indicating growing caution among domestic capital at these levels. However, turnover didn't spike abnormally, and the HSI stabilized above 25,400, suggesting normal consolidation. Alibaba's earnings tomorrow are the main event; we'll decide next steps once those results are digested.
I'm holding Tencent. With northbound net buying of HK$321m today, my stop-loss remains at 435. For Alibaba, facing pressure before earnings released tomorrow, there's no need to panic-sell on a 2% drop today.
Three Things to Watch Tomorrow
1. Alibaba (09988) Earnings: Released after close, this is the week's biggest focus. Markets will scrutinize cloud business growth and AI-related revenue. This report will dictate the broader market's direction—whether it continues to rally or pulls back.
2. Northbound Flows: If the HK$10.6bn outflow persists tomorrow, it signals domestic capital hasn't returned yet. A reversal to inflows would be a sign of market breathing room.
3. Support at 25,400: Closing at 25,495 marks three consecutive days stabilizing above 25,400. Holding this level could extend the rebound trend.
Summary
Today's landscape: 'Indices slightly up, tech under pressure, northbound capital flips.' While the HSI has three green days, the swing from HK$14bn inflows yesterday to HK$10.6bn outflows today is a signal to stay alert. Baidu's 11% drop, Alibaba's pre-earnings pressure, and the broad semiconductor pullback highlight tech weakness.
Advice: The northbound shift is a warning; Alibaba's results are key. Wait for the market to digest the news before deciding moves on Thursday.
Northbound flows move fast; don't chase too closely. Trade steadily for long-term gains.
See you tomorrow.