[ET Net News Agency, 12 August 2026] Tech firms are entering earnings season, and lead-off Tencent Music (01698) delivered a lacklustre performance that dragged down tech stocks. The HSI closed the half-day session at 25,352, down 300 points or 1.2%, falling below the 20-day moving average (around 25,445) to a low of 25,445, marking a new low since August. The Hang Seng China Enterprises Index stood at 8,420, down 108 points or 1.3%. The Hang Seng TECH Index stood at 4,767, down 56 points or 1.2%. With investors awaiting corporate results and US CPI data, the half-day main board turnover of the Hong Kong stock market exceeded HKD 117 billion, and the full-day turnover is expected to remain at a relatively low level of about HKD 200 billion.
"Ng Lai Yin: Market refocuses on AI concepts"
Ahead of the release of US inflation data, global capital held its breath and US stocks edged lower overnight. Amid shrinking turnover for consecutive days, the Hong Kong stock market shifted from a wait-and-see sentiment to a gradual decline. The HSI extended its downward trend this morning, falling another 300 points or so to probe the threshold of the HSI heavy bull zone. Ng Lai Yin, a securities strategist at Everbright Securities, told ET Net News Agency that ahead of the earnings releases of key tech stocks such as Tencent (00700), market wait-and-see sentiment is strong. Coupled with the recent renewed market focus on new tech stocks such as large language models, traditional tech stocks have weakened. With low appetite to enter the market, Hong Kong stocks may need to adjust downwards towards the 25,000 psychological level.
However, Ng expects Tencent's results may not be too poor, anticipating stable growth or even eye-catching performance in the company's main businesses, especially its core gaming business where some first-quarter revenue was deferred and will be reflected in the second-quarter performance. Yet, definitions of bad and good vary among individuals, and he added that under different expectations there will always be beats and misses. Attention should be paid to whether AI capital expenditure will bring extra burdens to earnings and prospects, while other aspects are less worrisome.
Ng emphasised that 25,000 is already a relatively strong support for the HSI recently. It is temporarily impossible to estimate the impact on the broader market after the remaining heavyweight earnings are released, especially Meituan (03690), which will report towards the end of the month, and time is still needed to observe the situation.
"Tencent Music's M&A synergy with Ximalaya falls short"
Tencent Music acted as the vanguard for its parent company by releasing its results first. Second-quarter revenue rose 6% year-on-year to RMB 8.9 billion, beating expectations, but basic earnings per share of RMB 0.79 was slightly below expectations. In addition, management expects the gross profit margin to continue to decline slightly year-on-year in the second half of this year. Its ADR plunged nearly 12% overnight, and Hong Kong shares similarly dropped over 13% this morning.
Ng pointed out that Tencent Music's results were not too bad, but the decline in gross profit and gross profit margin clearly received more market attention. He explained that this was the first time Tencent Music announced its results after consolidating Ximalaya's accounts following the acquisition. The market had anticipated a greater potential revenue contribution, but upon revelation, Ximalaya's revenue contribution was not obvious, and the group's capital expenditure rose as a result. This impact is expected to spill over into the second half of the year, leaving the market somewhat disappointed.
However, Ng noted that the synergy from acquiring Ximalaya has not dissipated, but it certainly still requires more time and capital investment to catalyse obvious synergy benefits. He expects the market will need time to digest ahead-of-time expectations for business prospects, and there will be room for share prices to pull back in the short term. Attention must also be paid to the AI shocks facing the company's business, which may test the June low of HKD 31.16 in the short term, though whether it will break below the HKD 30 integer mark remains to be seen.
"Ng Lai Yin: Market refocuses on AI concepts"
Ahead of the release of US inflation data, global capital held its breath and US stocks edged lower overnight. Amid shrinking turnover for consecutive days, the Hong Kong stock market shifted from a wait-and-see sentiment to a gradual decline. The HSI extended its downward trend this morning, falling another 300 points or so to probe the threshold of the HSI heavy bull zone. Ng Lai Yin, a securities strategist at Everbright Securities, told ET Net News Agency that ahead of the earnings releases of key tech stocks such as Tencent (00700), market wait-and-see sentiment is strong. Coupled with the recent renewed market focus on new tech stocks such as large language models, traditional tech stocks have weakened. With low appetite to enter the market, Hong Kong stocks may need to adjust downwards towards the 25,000 psychological level.
However, Ng expects Tencent's results may not be too poor, anticipating stable growth or even eye-catching performance in the company's main businesses, especially its core gaming business where some first-quarter revenue was deferred and will be reflected in the second-quarter performance. Yet, definitions of bad and good vary among individuals, and he added that under different expectations there will always be beats and misses. Attention should be paid to whether AI capital expenditure will bring extra burdens to earnings and prospects, while other aspects are less worrisome.
Ng emphasised that 25,000 is already a relatively strong support for the HSI recently. It is temporarily impossible to estimate the impact on the broader market after the remaining heavyweight earnings are released, especially Meituan (03690), which will report towards the end of the month, and time is still needed to observe the situation.
"Tencent Music's M&A synergy with Ximalaya falls short"
Tencent Music acted as the vanguard for its parent company by releasing its results first. Second-quarter revenue rose 6% year-on-year to RMB 8.9 billion, beating expectations, but basic earnings per share of RMB 0.79 was slightly below expectations. In addition, management expects the gross profit margin to continue to decline slightly year-on-year in the second half of this year. Its ADR plunged nearly 12% overnight, and Hong Kong shares similarly dropped over 13% this morning.
Ng pointed out that Tencent Music's results were not too bad, but the decline in gross profit and gross profit margin clearly received more market attention. He explained that this was the first time Tencent Music announced its results after consolidating Ximalaya's accounts following the acquisition. The market had anticipated a greater potential revenue contribution, but upon revelation, Ximalaya's revenue contribution was not obvious, and the group's capital expenditure rose as a result. This impact is expected to spill over into the second half of the year, leaving the market somewhat disappointed.
However, Ng noted that the synergy from acquiring Ximalaya has not dissipated, but it certainly still requires more time and capital investment to catalyse obvious synergy benefits. He expects the market will need time to digest ahead-of-time expectations for business prospects, and there will be room for share prices to pull back in the short term. Attention must also be paid to the AI shocks facing the company's business, which may test the June low of HKD 31.16 in the short term, though whether it will break below the HKD 30 integer mark remains to be seen.
