HK Stocks Plunge 385 Points on August 6, Breaching 25600 Level: AI Newcomer Rallies 17% Against Trend, Insurance Tax Rumors Disrupt Market

On August 6, Hong Kong stocks deviated from the bullish momentum seen at the beginning of the month, with the three major indices opening lower and declining, and trading in a low range throughout the day. By the close, the Hang Seng Index fell by 385.54 points, a decrease of 1.49%, closing at 25,530.28 points, failing to hold the psychological level of 25,600; the Hang Seng Tech Index experienced a deeper decline, closing down 2.28% at 4,820.78 points; and the Hang Seng China Enterprises Index also fell by 1.22%, closing at 8,498.73 points. The total main board turnover for the day reached HKD 255.227 billion, with volume showing some increase compared to previous periods, indicating a clear intensification of divergence between bulls and bears. Why the Market Hit the Brakes? A Breakdown of Three Disturbance Factors Based on comprehensive market data and the views of multiple institutions, this adjustment was primarily driven by three factors, resulting from profit-taking after continuous rebounds and the accumulation of external negative factors. Firstly: Rumors of Hong Kong insurance income taxation impacted insurance-weighted stocks Reports indicated that some Hong Kong insurance policyholders had received notifications regarding taxation on overseas income, with Hong Kong insurance returns being included in the 20% personal income tax scope. Related taxation cases have appeared in places like Beijing and Hangzhou, Zhejiang. Affected by this news, the Hong Kong insurance sector was sluggish all day. AIA Insurance, a heavyweight blue-chip stock, briefly dropped by over 9% during trading, closing down 5.92% at HKD 73.15, dragging the Hang Seng Index by about 73.9 points and becoming a leading decliner. Prudential also closed down 4.57%. Citigroup believes the market's reaction was excessive, as the structural demand for Hong Kong insurance remains solid, and its advantages such as offshore asset allocation and multi-currency flexibility have not changed; however, regulatory uncertainty will continue to cast a shadow over the sector in the short term. Secondly: High-level profit-taking in tech stocks led to dispersed market attention The performance of internet leaders, which had been rebounding continuously, was lackluster today. Alibaba and Xiaomi fell by over 3%, while Tencent and Kuaishou fell by over 2%, and Meituan and Bilibili fell by over 1%. Dongwu Securities analysts pointed out that the AI hardware market showed signs of a rebound this week, meaning that short-term capital might not significantly shift away from tech hardware, but it might disperse attention from the Hong Kong internet sector. If performance from downstream and midstream US AI companies is good and leads to a widespread rally, it could instead benefit a linked recovery in the Hang Seng Tech Index—the valuation advantages and policy support for Hong Kong in AI applications, internet platforms, and domestic computing power chains may attract some capital inflow. Thirdly: Concerns over the performance of growth sectors like lithium batteries began to ferment The lithium battery sector experienced a significant decline today, with CATL closing down 5.05%, and Ganfeng Lithium, Zhongxin Aerospace, and BYD Co. also under pressure. A report from Leeon indicated that CATL's second-quarter gross margin was below market expectations, triggering a new round of profit concerns. Furthermore, as the company has just begun mass production of sodium-ion batteries, it makes it difficult for investors to judge whether profitability can rebound in the second half of the year. The pressure of performance verification for growth sectors is concentrated during earnings season, becoming an important factor suppressing market risk appetite. Bright Spots Against the Trend: AI newcomers surged by 17%, while gold and coal defense stocks led the rise Despite the adjustment, there were structural highlights in the market, with capital rapidly switching between defensive sectors and industry trend stocks.

• AI Large Model "Two Giants" Rise Against the Trend: MINIMAX-W was officially included in the Stock Connect program for Hong Kong stocks starting today, surging 17.1% to 297.2 HKD at closing, while Zhipu also rose by 4.42%. LiveReport estimates that MiniMax's debut in the Stock Connect may attract at least 1 billion HKD in investment funds; if its holding ratio in the Stock Connect reaches 20% to 25% in the future, the potential incremental capital could exceed 10 billion HKD. Notably, DeepSeek announced an increase in API service pricing on the same day. Analysis points out that this is an important signal for the commercialization of domestic large models, suggesting that industry competition is shifting from "price wars for market share" to comprehensive competition based on "capabilities, scenarios, costs, and monetization efficiency."
• Gold Stocks Maintain Strength: Overnight, physical gold briefly surpassed the $4300/ounce mark, setting a new phase high. US ADP employment figures for July showed only 44,000 new jobs, far below the market expectation of 75,000. This cooling in the job market has eased the pressure for the Federal Reserve to raise interest rates, boosting expectations of monetary easing. Positive signals from negotiations between Iran and the US regarding the Strait of Hormuz have weakened concerns about energy-driven inflation, providing macro support for gold prices. As of closing, Tongguan Gold rose by 8.58%, Lingbao Gold rose by 4.82%, and Chifeng Gold rose by 3.7%.
• Coal Stocks Strengthen Against the Trend: The power coal price index was adjusted upward across the board on August 5th, with 5500 kcal coal trading at 839 RMB/ton. Tight supply combined with the deepening "anti-involution" policy has led to gains. Yangtze Securities forecasts a 1.9% year-on-year decrease in the effective supply of power coal by 2026. Mongol Energy rose by 6.48%, Yancheng Energy rose by 6.12%, and Zhongmei Energy rose by 2.97%.
• High-Quality Blue Chips Attract Investment: Jiulongchangzi surged by 13.72% after its earnings release. The company significantly narrowed its net loss and announced an increase in its dividend payout ratio from 65% to 90%, increasing the base dividend by 38%, revalidating the high-dividend logic.

Southbound Capital Shifts: Net Selling of 1.46 Billion HKD, Internal Rebalancing Hides the Main Trend

In terms of capital flows, Southbound funds recorded a net selling of approximately 1.461 billion HKD today, halting the previous trend of continuous net inflows. However, the internal rebalancing characteristics are extremely clear: a significant net purchase of MINIMAX worth about 2.697 billion HKD, Jianteo Laminates worth 753 million HKD, and Changfei Optical Fiber Cable worth 593 million HKD, while simultaneously recording net sales of Tencent worth 2 billion HKD, Alibaba worth 1.627 billion HKD, and SMIC worth 1.076 billion HKD. This indicates that mainland capital is shifting from previously high-performing internet heavyweight stocks toward targets in the AI new economy and computing power industry chain, with "technological content" and "industry trends" becoming the core weights in this new round of Southbound capital allocation.

Institutional View: Hong Kong Stocks are at a "Triple Bottom," and a Long Bull Market Still Requires Two Thresholds

CICC points out that Hong Kong stocks are emerging from multiple pressures, but to move towards a truly sustained bull market, they must cross two thresholds: corporate earnings improvement and easing US dollar liquidity—the former determines the bull market trend, and the latter determines the magnitude and resilience of the bull market; before this, the market is closer to oversold valuation recovery after the peak pressure period. Shenwan Hongyuan believes that with the triple factors of declining institutional allocation, bottoming and stabilizing fundamentals, and a deep correction in technology growth valuations, Hong Kong stocks are in a "triple bottom" zone, possessing the fundamental conditions for a rebound. Under a neutral scenario, the Hang Seng Index has a potential annual return of about 15.4%. Data also supports the valuation attractiveness: as of the end of July, the Internet Index PE (TTM) for Hong Kong stocks was about 20.47 times, which is at a historical low corresponding to the 8.94th percentile in the last five years, and it remains a "valuation trough" compared to US, South Korean, and A-share technology sectors.

Implications for Vietnamese Investors: Allocation Strategy in a Volatile Market

For Vietnamese investors and regional funds focusing on the Hong Kong market, this pullback offers a window to observe market structure. On one hand, Hong Kong stock valuations are still in the historical low range, supported by a clear logic for medium-to-long-term allocation, driven by the acceleration of AI large model commercialization, continuous activity from Southbound funds, and improved dividend returns. On the other hand, external variables such as rumors of Hong Kong insurance taxation, the Federal Reserve's policy path, the tightness of US dollar liquidity, and geopolitical situations may still trigger short-term fluctuations, and the risk of chasing highs cannot be ignored.

The industry generally believes that the short-term adjustment of Hong Kong stocks does not change the medium-term repair logic. Investors should maintain position discipline, focusing on a dumbbell-style pairing of technology leaders with strong earnings realization and high-dividend defensive stocks, making phased layouts and dynamic balancing during volatility to seize structural opportunities resulting from the synergy between valuation recovery and AI industry transformation. Next, the disclosure of interim earnings, US inflation and employment data, the flow of Southbound funds, and the commercialization progress of the AI industry chain will be key indicators determining whether the market can continue to rebound.