On July 28, the Hang Seng Index opened lower and closed higher, falling over 0.8% at one point during the session, before closing up 0.75% at 22,086 points amid a strong rebound in tech stocks, with turnover of about HK$150 billion. The Hang Seng Tech Index surged 2.3%, with major heavyweight stocks such as Tencent, Meituan, and Alibaba recording significant gains. Market sentiment improved, with investors focusing on the Fed's interest rate decision and tech earnings this week.
Tech sector leads the rebound
The main reason for today's low opening of the Hang Seng Index was the pullback in US tech stocks overnight, but soon after Hong Kong stocks opened, bargain-hunting funds poured into the tech sector. Tencent Holdings closed up 3.2% at HK$420; Meituan rose 4.5%, benefiting from expectations of a recovery in its local services business; Alibaba gained 2.8%, with the market optimistic about the progress of its cloud computing business spin-off. The semiconductor sector also performed strongly, with SMIC rising over 5%, helping the Hang Seng Index stabilize and rebound.
Analysts believe that tech stocks' valuations have returned to reasonable ranges, coupled with policy support for the healthy development of the digital economy and platform economy, funds are favoring the tech sector again. In addition, expectations that the Fed's rate hike cycle is nearing its end have strengthened, the US dollar has weakened, and the RMB exchange rate has stabilized, all of which are positive for Hong Kong stock liquidity.
Fed decision impacts global markets
This Thursday (July 30), the Fed will announce its interest rate decision. The market generally expects rates to remain unchanged, but attention should be paid to the dot plot and Powell's comments for hints on the future policy path. Recent US inflation data has continued to decline, and the job market has cooled somewhat, leading to market expectations that rate cuts may begin in September. If the Fed releases dovish signals, it will further boost risk assets.
As an offshore market, Hong Kong stocks are sensitive to interest rate changes. Analysts at DBS Bank said: "If the Fed confirms a pause in rate hikes, Hong Kong stocks may see a medium-term recovery rally, and the Hang Seng Index may challenge the resistance level of 22,500 points." However, geopolitical risks and global economic slowdown remain concerns.
Sector fund flows and stock highlights
Sector rotation was evident today, with funds flowing into real estate and consumer sectors besides tech. The Hang Seng Property Index closed up 1.2%, with Sun Hung Kai Properties and CK Asset Holdings leading the gains. In consumer stocks, Li Ning and Anta Sports both rose over 3%, benefiting from expectations of domestic consumption stimulus policies.
Notably, the new energy vehicle sector showed divergence, with BYD up 1.5%, while NIO and XPeng edged lower as the market awaits July sales data. The pharmaceutical and biotech sector was lackluster, with CXO concept stocks continuing to adjust.
Hang Seng technical outlook
From a technical perspective, the Hang Seng Index found support around 22,000 points, with the MACD indicator showing signs of a golden cross, indicating strengthening short-term rebound momentum. The upside resistance is in the 22,200-22,300 range; if it can break through effectively, it may open upward space. The downside support is at 21,800 points, and investors should watch changes in trading volume.
In terms of strategy, investors are advised to focus on tech leaders with strong earnings visibility and high-dividend defensive targets, such as utilities and telecom sectors. At the same time, they can position in real estate REITs and Hong Kong local bank stocks that benefit from rate cut expectations.
Outlook
Overall, the Hang Seng Index is significantly affected by external news in the short term, but valuation advantages and policy support provide a safety margin. If Fed policy becomes clear and tech earnings exceed expectations, Hong Kong stocks may regain upward momentum. Investors need to closely track Sino-US trade relations, China's economic growth data, and corporate earnings.
