HK stocks slump in afternoon; HSI breaches 25,000
On July 29, 2026, all three major Hong Kong stock indexes fell. The Hang Seng Index extended afternoon losses to close at 24,980, down 458 points or 1.8%, breaching the 25,000-point mark. The H-shares Index fell 1.5%, and the Hang Seng Tech Index edged down 0.3%. Trading volume expanded to HK$128 billion, indicating heavier selling pressure.
In terms of sector performance, financial and property stocks were the main drags. HSBC fell 2.3%, AIA fell 1.9%, leading blue-chip declines. Among property stocks, Sun Hung Kai Properties fell 3.1%, CK Asset fell 2.7%. Market participants noted that stronger-than-expected US inflation data combined with renewed tensions in the Middle East quickly boosted risk aversion, with capital flowing out of cyclical stocks into safe-haven assets like gold.
Gold sector bucks trend; Zhaojin Mining surges over 5%
Against the overall sluggish market, the gold sector stood out. Zhaojin Mining jumped 5.2%, Zijin Mining rose 4.1%, and Shandong Gold climbed 3.6%. International gold prices broke through US$2,000 per ounce overnight, hitting a near three-month high, boosting all Hong Kong-listed gold stocks. Additionally, China Silver Group gained 6.8%, and precious metal-related stocks generally saw strong buying.
Senior analyst Li Wei said: "The US core PCE price index rose 3.2% year-on-year in June, above the expected 3.0%, strengthening expectations that the Fed will maintain high interest rates. At the same time, the Middle East conflict shows signs of escalation, and gold as a safe-haven asset is favored by funds. Gold prices are expected to have further upside in the short term, and related stocks can continue to be watched."
Capital flows: Southbound net buys HK$2.5 billion, chasing Tencent and Meituan
Despite the weak market, southbound capital maintained net buying. Today, southbound trading via Stock Connect saw net buying of HK$2.5 billion, with Tencent net bought HK$820 million and Meituan HK$560 million. Mainland capital interest in tech stocks remained strong; Tencent bucked the market to close up 0.8% and Meituan rose 1.1%.
However, bank stocks saw southbound net selling, with Industrial and Commercial Bank of China and China Construction Bank recording net outflows of HK$350 million and HK$280 million respectively. Analysts noted that under uncertain interest rate conditions, high-valuation tech stocks may prove more resilient than financial stocks.
Macro analysis: inflation pressure and geopolitical risk double drag
The direct trigger for today's Hong Kong stock decline was US inflation data. Data released by the US Commerce Department on July 28 showed the core PCE price index rose 3.2% year-on-year in June, above previous readings and expectations, raising market expectations for a Fed rate hike in September. This means global liquidity will continue to tighten, weighing on Hong Kong stocks.
In addition, escalating clashes between Israel and Hezbollah in the Middle East pushed international oil prices higher, with Brent crude rising to US$82/barrel, further boosting global inflation expectations. The Hong Kong market is highly sensitive to geopolitical risks, and foreign capital risk aversion spread.
Looking ahead, whether the Hang Seng Index can hold above 25,000 will be key. In the short term, without major positives, the market may test support at 24,800. However, gold stocks and some defensive sectors are expected to continue outperforming.
Outlook: Institutions recommend focusing on gold and high-dividend stocks
Facing the current market environment, multiple institutions advise investors to reduce positions and shift to defense. CICC said Hong Kong stocks face internal and external pressures in the short term, recommending allocations to gold stocks, utilities, and other high-dividend stocks. Goldman Sachs noted that tech leaders' valuations are attractive, and long-term investors can buy Tencent and Alibaba on dips.
In terms of individual stocks, gold stocks like Zhaojin Mining and Zijin Mining are expected to continue benefiting from rising gold prices. Meanwhile, high-dividend stocks such as China Mobile and China Shenhua deserve attention in a risk-off environment due to their stable cash flows.
Overall, today's adjustment in Hong Kong stocks reflects market concerns about inflation and geopolitical risks. Investors should closely monitor upcoming US economic data and changes in the Middle East situation, and adjust positions flexibly.
