On July 27, 2026, Hong Kong's semiconductor sector saw a collective surge, with the Hang Seng Tech Index rising 2.5% and the semiconductor index soaring 4.7%, leading the entire market. SMIC (00981.HK) jumped 8.2% to close at HKD 45.6, a three-year high; Hua Hong Semiconductor (01347.HK) rose 6.9%, and Shanghai Fudan (01385.HK) gained 5.3%, with over 20 stocks in the sector up more than 4%.
Policy and Demand Dual Drivers
On the news front, Phase II of the National Integrated Circuit Industry Investment Fund (Big Fund) recently increased its stake in SMIC by 120 million shares in the secondary market, raising its holding to 5.8%, sending a strong policy signal. Meanwhile, global AI chip demand continues to explode, with TSMC's (TSM.US) latest quarterly report showing capacity utilization for advanced processes below 7nm remains full, driving surging orders for upstream materials and equipment.
Lin Zhihao, an analyst at Everbright Securities covering Hong Kong stocks, commented: 'This semiconductor rally has fundamental support. Mainland China's policy focus on semiconductor self-sufficiency remains strong, and with the global semiconductor cycle entering an upswing, valuations of related HK-listed stocks are still attractive.' He expects the sector to remain strong in the short term, but warns of profit-taking pressure.
Capital Flows and Market Sentiment
In terms of fund flows, southbound capital net bought HKD 8 billion in Hong Kong stocks today, with net buying of the semiconductor sector reaching HKD 2.3 billion, the highest in nearly a month. Meanwhile, the Hang Seng Index found support around 27,000 points, dipping to 26,800 points in early trading before quickly rebounding on tech stocks, finally closing at 27,150 points, up 0.8%.
Notably, the strength of the semiconductor sector also boosted activity in Stock Connect ETFs. The ChinaAMC Hang Seng Tech ETF (03033.HK) saw volume swell to HKD 1.5 billion, with its intraday premium once exceeding 1%. Retail investor Mr. Zhang said: 'I've been watching semiconductors recently. When I saw the Big Fund's stake increase news today, I decisively added to my position. I feel there's still a lot of room ahead.'
Industry Analysis and Outlook
From an industry cycle perspective, global semiconductor sales have grown year-on-year for five consecutive months, with China's region leading the pace. According to SEMI, global semiconductor equipment shipments grew 12% year-on-year in the first half of 2026, with China's market share rising to 32%. Analysts point out that AI large model training and edge computing demand are core drivers, while chip usage in new energy vehicles is also growing rapidly.
However, market risks exist. SMIC's H-share currently has a P/E ratio of about 35x, above its historical median, with short-term overbought signals appearing. Additionally, uncertainties in the US-China technology rivalry remain a potential disruption. Morgan Stanley in its latest report maintained a 'neutral' rating on the semiconductor industry, advising investors to focus on subsector leaders with reasonable valuations.
Looking ahead, the sustainability of tech stocks will be crucial for the Hang Seng Index to break through the 27,500-point resistance. If semiconductor sector rotation continues, it may drive the overall tech stock rally. Investors can watch the upcoming China PMI data and the Fed rate meeting to gauge the macro pace.
- Key Stocks to Watch: SMIC (00981.HK), Hua Hong Semiconductor (01347.HK), ASM Pacific (00522.HK)
- Related ETFs: ChinaAMC Hang Seng Tech ETF (03033.HK), China Southern CSI Chip ETF (03189.HK)
- Risk Warning: Sector short-term overheating, manage positions carefully
At market close, Hong Kong stock market turnover expanded to HKD 135 billion, with the semiconductor sector accounting for about 18%, indicating significantly heightened market attention. Going forward, focus on individual stock annual reports and industry summit developments to seize structural opportunities.
