《Intelligent Insight》Recently, the Hong Kong stock market has displayed an eerie stalemate. The Hang Seng Index has long remained in a range-bound oscillation, lacking both sustained rebound momentum and significant downside space. The market exhibits a mixed picture of bullish and bearish forces tugging against each other, forming a typical weak equilibrium pattern of "strange and unpredictable, neither rising nor falling." Unlike the trending markets of the U.S. and Japan, Hong Kong's year-to-date gains have been extremely modest, resulting from the confluence of macro liquidity, market structure, and investor sentiment.
From an external macro perspective, persistently high U.S. Treasury yields and expectations of interest rates remaining above 5%, continue to suppress Hong Kong's valuation recovery. In September 2026, global inflation remains volatile, with oil prices staying above USD 90 per barrel. Market expectations for the U.S. Federal Reserve to maintain a tight monetary policy have intensified, pushing 30-year U.S. Treasury yields higher. As a highly outward-looking capital market priced in U.S. dollars, the high-interest-rate environment directly compresses the risk premium of risk assets, causing foreign investors to remain cautious and unwilling to significantly increase positions, completely blocking any substantial market upside. At the same time, recurring global geopolitical risks and heightened volatility in overseas markets, coupled with potential U.S.-Iran peace negotiations and possible pro-market moves by the White House ahead of midterm elections, have created a foundation for this sideways movement—"unable to rise, yet unable to fall."
Internal market structural imbalances are the core reason behind Hong Kong's erratic performance. Currently, the Hong Kong market faces a severe "liquidity mismatch" issue. The primary market faces enormous financing and share unlocking pressure. In 2026, Hong Kong's IPO and follow-on financing volumes are at historical highs, compounded by a massive volume of restricted shares being unlocked, continuously draining liquidity from the secondary market. In contrast, daily trading volumes in the secondary market remain depressed, far insufficient to absorb the heavy financing and selling pressure. With a lack of incremental capital, only existing funds are left to trade, resulting in a narrowed market index fluctuation, extreme stock divergence, rapid sector rotation, and a market that alternates erratically without any continuous trend.
Ambiguous investor sentiment and expectations further reinforce this stalemate. Currently, China's economic recovery proceeds at a moderate pace, and policy stimulus shows diminishing marginal effects. After various market-stabilizing policies are introduced, market reactions have become increasingly muted, reflecting persistent lack of confidence. Institutional investors generally adopt light positions and defensive, short-term trading strategies, avoiding chasing rallies or panic selling, leaving the market directionless. The market frequently exhibits bizarre patterns such as no rise on good news, no fall on bad news, quick pullbacks after gains, and rapid recoveries after declines, with neither bulls nor bears strong enough to control the rhythm.
On individual stocks, Jiangxi Copper (00358) recently bottomed at HKD 31.46 and rebounded. AI continues to generate certain rigid demand for copper, and with LME copper prices remaining stable above USD 14,000 per ton, the stock price may test the HKD 35 level in the future.
Overall, the current oscillation in Hong Kong stocks is not meaningless volatility, but rather a state of weak equilibrium under high external pressure, weak internal liquidity, and unclear policy expectations. In the short term, unless U.S. Treasury yields and market trading volumes show a substantial turning point, the market will likely remain in this strange and unpredictable oscillating pattern, making it difficult to establish a clear directional trend.
《Peter Cheung, Associate Director and Responsible Officer, Sun Hung Kai Financial》
*The author does not hold the aforementioned stocks
*Articles signed and/or unsigned published in Economic Times represent the personal opinions of the authors and do not necessarily reflect the stand of Economic Times, which serves as a platform providing free expression of views.
From an external macro perspective, persistently high U.S. Treasury yields and expectations of interest rates remaining above 5%, continue to suppress Hong Kong's valuation recovery. In September 2026, global inflation remains volatile, with oil prices staying above USD 90 per barrel. Market expectations for the U.S. Federal Reserve to maintain a tight monetary policy have intensified, pushing 30-year U.S. Treasury yields higher. As a highly outward-looking capital market priced in U.S. dollars, the high-interest-rate environment directly compresses the risk premium of risk assets, causing foreign investors to remain cautious and unwilling to significantly increase positions, completely blocking any substantial market upside. At the same time, recurring global geopolitical risks and heightened volatility in overseas markets, coupled with potential U.S.-Iran peace negotiations and possible pro-market moves by the White House ahead of midterm elections, have created a foundation for this sideways movement—"unable to rise, yet unable to fall."
Internal market structural imbalances are the core reason behind Hong Kong's erratic performance. Currently, the Hong Kong market faces a severe "liquidity mismatch" issue. The primary market faces enormous financing and share unlocking pressure. In 2026, Hong Kong's IPO and follow-on financing volumes are at historical highs, compounded by a massive volume of restricted shares being unlocked, continuously draining liquidity from the secondary market. In contrast, daily trading volumes in the secondary market remain depressed, far insufficient to absorb the heavy financing and selling pressure. With a lack of incremental capital, only existing funds are left to trade, resulting in a narrowed market index fluctuation, extreme stock divergence, rapid sector rotation, and a market that alternates erratically without any continuous trend.
Ambiguous investor sentiment and expectations further reinforce this stalemate. Currently, China's economic recovery proceeds at a moderate pace, and policy stimulus shows diminishing marginal effects. After various market-stabilizing policies are introduced, market reactions have become increasingly muted, reflecting persistent lack of confidence. Institutional investors generally adopt light positions and defensive, short-term trading strategies, avoiding chasing rallies or panic selling, leaving the market directionless. The market frequently exhibits bizarre patterns such as no rise on good news, no fall on bad news, quick pullbacks after gains, and rapid recoveries after declines, with neither bulls nor bears strong enough to control the rhythm.
On individual stocks, Jiangxi Copper (00358) recently bottomed at HKD 31.46 and rebounded. AI continues to generate certain rigid demand for copper, and with LME copper prices remaining stable above USD 14,000 per ton, the stock price may test the HKD 35 level in the future.
Overall, the current oscillation in Hong Kong stocks is not meaningless volatility, but rather a state of weak equilibrium under high external pressure, weak internal liquidity, and unclear policy expectations. In the short term, unless U.S. Treasury yields and market trading volumes show a substantial turning point, the market will likely remain in this strange and unpredictable oscillating pattern, making it difficult to establish a clear directional trend.
《Peter Cheung, Associate Director and Responsible Officer, Sun Hung Kai Financial》
*The author does not hold the aforementioned stocks
*Articles signed and/or unsigned published in Economic Times represent the personal opinions of the authors and do not necessarily reflect the stand of Economic Times, which serves as a platform providing free expression of views.
