[ET Net News Agency, 04 February 2026] The US House of Representatives has narrowly passed a government funding bill, bringing an end to the three-day partial federal shutdown. However, escalating tensions in the Middle East have unsettled investors, US officials confirmed the military shot down an Iranian drone that approached the USS Lincoln aircraft carrier in the Arabian Sea. The combination of geopolitical risks and continued losses in heavyweight tech names pulled all three major US indices lower overnight. In Hong Kong, the Hang Seng Index (HSI) opened 37 points down and managed an early rebound. Yet, as soon as the index approached the 27,000 mark, selling pressure re-emerged, and the HSI has since struggled to hold above its 20-day moving average (about 26,850). By midday, the HSI was down 110 points, or 0.4%, at 26,724, with main board turnover exceeding HKD 151.4 billion. The Hang Seng China Enterprises Index was down 48 points, or 0.5%, at 9,004, and the Hang Seng Tech Index fell 120 points, or 2.2%, to 5,347.
"Nip Chun Pong: HSI Likely range-bound between 26,500 and 27,000 as early-year rally stays intact"
All three major US indices ended lower overnight. After a brief recovery in early trade, the HSI quickly slipped back. Nip Chun Pong, the Chief Strategist at Solo Securities, told ET Net News Agency that while the HSI was lifted earlier by renminbi appreciation, surging more than 1,200 points between 27 and 29 January, that driver has faded and the index has returned to previous levels. Still, Nip Chun Pong noted that this retracement merely brings the HSI back to where it was before the late-January surge, the market's upward trend from early January remains intact.
Nip Chun Pong said the dollar's direction is still unclear and there is currently a lack of positive trading themes for both mainland and Hong Kong markets, resulting in cautious sentiment. He expects the HSI to trade within a narrow range between 26,500 and 27,000 in the near term. The index found support at around 26,500 in recent sessions, similar to the trough seen around 20-21 January, which could serve as a base for another rebound.
"Tech stock drop not mainly due to tax rumours, Kuaishou's technology potential remains attractive"
There were market rumours yesterday suggesting a VAT hike on sectors including gaming and financial services, causing a sharp drop in tech stocks, Tencent (00700) fell as much as 6% and Alibaba (09988) nearly 5% at one point. However, Xinhua News Agency cited experts and industry insiders to stress that specific VAT rates for gaming and financial sectors are clear and unchanged, making the rumours unfounded. Despite this clarification, leading tech stocks failed to rebound; in fact, the sell-off continued today, with Tencent dropping as much as 4% and Alibaba over 2%.
Nip Chun Pong explained that Tencent's weakness is mostly related to the "red packet war" with Alibaba. According to reports, WeChat has blocked links related to Yuanbao red packets within its app, citing excessive marketing and disruptive user activity around Spring Festival campaigns. Tencent's share price had held support at the HKD 590 level since mid-August last year, but recently broke below that level. Nip Chun Pong advised investors to watch for fresh support around the HKD 550 mark, given the deteriorating price action.
Despite the recent deep declines in tech leaders, Nip Chun Pong cautioned investors to be selective when bargain hunting. He suggested waiting to see if the HSI can stabilise above 26,500. Also, continued weakness in Wall Street tech is tempering sentiment for the sector in Hong Kong. If support is confirmed, Kuaishou (01024) could be considered; Nip Chun Pong pointed out that Kuaishou's "Kling" AI product is seeing solid market reaction and competes mainly against Doubao, whose parent ByteDance is not listed. Kuaishou's strong image and video generation capabilities, along with a focus on micro-drama content, should continue attracting active users. Nip Chun Pong believes the stock is attractive around the HKD 68-70 range.
Elsewhere, US firm Anthropic's launch of automated AI tools sparked renewed concerns that traditional software companies could face destructive competition, driving US and Hong Kong software stocks sharply lower. Nip Chun Pong argued that if such AI tools are fully integrated into content creation and software applications, allowing users to bypass paid SaaS platforms entirely, the threat to existing business models is real. He expects further pressure on the sector in the short term.
"Nip Chun Pong: HSI Likely range-bound between 26,500 and 27,000 as early-year rally stays intact"
All three major US indices ended lower overnight. After a brief recovery in early trade, the HSI quickly slipped back. Nip Chun Pong, the Chief Strategist at Solo Securities, told ET Net News Agency that while the HSI was lifted earlier by renminbi appreciation, surging more than 1,200 points between 27 and 29 January, that driver has faded and the index has returned to previous levels. Still, Nip Chun Pong noted that this retracement merely brings the HSI back to where it was before the late-January surge, the market's upward trend from early January remains intact.
Nip Chun Pong said the dollar's direction is still unclear and there is currently a lack of positive trading themes for both mainland and Hong Kong markets, resulting in cautious sentiment. He expects the HSI to trade within a narrow range between 26,500 and 27,000 in the near term. The index found support at around 26,500 in recent sessions, similar to the trough seen around 20-21 January, which could serve as a base for another rebound.
"Tech stock drop not mainly due to tax rumours, Kuaishou's technology potential remains attractive"
There were market rumours yesterday suggesting a VAT hike on sectors including gaming and financial services, causing a sharp drop in tech stocks, Tencent (00700) fell as much as 6% and Alibaba (09988) nearly 5% at one point. However, Xinhua News Agency cited experts and industry insiders to stress that specific VAT rates for gaming and financial sectors are clear and unchanged, making the rumours unfounded. Despite this clarification, leading tech stocks failed to rebound; in fact, the sell-off continued today, with Tencent dropping as much as 4% and Alibaba over 2%.
Nip Chun Pong explained that Tencent's weakness is mostly related to the "red packet war" with Alibaba. According to reports, WeChat has blocked links related to Yuanbao red packets within its app, citing excessive marketing and disruptive user activity around Spring Festival campaigns. Tencent's share price had held support at the HKD 590 level since mid-August last year, but recently broke below that level. Nip Chun Pong advised investors to watch for fresh support around the HKD 550 mark, given the deteriorating price action.
Despite the recent deep declines in tech leaders, Nip Chun Pong cautioned investors to be selective when bargain hunting. He suggested waiting to see if the HSI can stabilise above 26,500. Also, continued weakness in Wall Street tech is tempering sentiment for the sector in Hong Kong. If support is confirmed, Kuaishou (01024) could be considered; Nip Chun Pong pointed out that Kuaishou's "Kling" AI product is seeing solid market reaction and competes mainly against Doubao, whose parent ByteDance is not listed. Kuaishou's strong image and video generation capabilities, along with a focus on micro-drama content, should continue attracting active users. Nip Chun Pong believes the stock is attractive around the HKD 68-70 range.
Elsewhere, US firm Anthropic's launch of automated AI tools sparked renewed concerns that traditional software companies could face destructive competition, driving US and Hong Kong software stocks sharply lower. Nip Chun Pong argued that if such AI tools are fully integrated into content creation and software applications, allowing users to bypass paid SaaS platforms entirely, the threat to existing business models is real. He expects further pressure on the sector in the short term.