Hong Kong stocks opened sharply lower on Tuesday but gradually pared losses as a hawkish Federal Reserve rate hike dampened risk appetite. Tech, precious metals, and oil stocks weakened, while pharmaceutical and automotive sectors showed relative strength. The Hang Seng Index closed 0.44% lower at 24,604.29 points, with total turnover reaching HK$185.586 billion, while the Hang Seng Tech Index retreated 0.34% to 4,310.74 points.
Among the top Hong Kong ETFs by assets under management, Tracker Fund of Hong Kong (02800) slipped 0.47% to HK$25.22, Southern Dongying SK Hynix Daily Leverage (2x) Product (07709) gained 0.97% to HK$39.50, and Hang Seng China Enterprises (02828) declined 0.42% to HK$84.44.
Where the market moved
With the Fed's hawkish hike now a reality, gold's pricing paradigm has shifted back to being driven by real interest rates, triggering a broad decline across gold-related ETFs. By the close, Gold Stock ETF Yongying (517520.SH) fell 4.45% to 2.040 yuan, Gold Stock ETF Guotai (517400.SH) dropped 4.28% to 1.610 yuan, and Gold Stock ETF Huaxia (159562.SH) slipped 4.23% to 2.220 yuan.
In the early hours of September 17 Beijing time, the Federal Reserve raised its federal funds rate target range by 25 basis points to 3.75%-4.00%, the first increase since July 2023. The latest dot plot shows 16 of 18 participants expect at least one more hike this year, with Fed Chair Warsh noting that inflation remains elevated and there is little evidence the trend is being tested. According to Industrial Securities Global Asset Management, gold is traditionally a dollar-denominated, non-yielding asset priced by real dollar interest rates. This year, geopolitical tensions pushed up oil prices, requiring more dollars for the same volume of oil imports, which strengthened the dollar and returned gold's pricing paradigm to real-rate dynamics. Consequently, expectations of one or more Fed hikes naturally pressure gold prices.
AI drug development strengthens
AI-driven pharmaceutical strategies gained momentum as numerous innovative drug pipelines entered data catalyst phases, pushing healthcare ETFs higher against the broader market. By the close, Hong Kong Healthcare ETF Yongying (159366.SZ) rose 3.12% to 1.456 yuan, HK Connect Innovative Drug Medical ETF Fuguo (159506.SZ) advanced 2.04% to 1.250 yuan, and Hang Seng HK Biotech Index ETF (03069) added 1.63% to HK$15.58.
On the news front, Novo Nordisk announced a strategic partnership with Anthropic to test Claude Science across certain research workflows and leverage Anthropic's frontier models to enhance AI-driven software development. Several drugmakers also forged collaborations with Eli Lilly's AI drug discovery platform Lilly TuneLab for protein expression, purification, and characterization services. Meanwhile, Anew Labs, an AI drug development platform incubated by ByteDance, closed a US$290 million first-round external financing, valuing the company at approximately US$1.5 billion. Analysts at China Securities highlight that AI drug development is undergoing rapid iteration and transformation, with algorithm advancements and computing power laying a strong foundation. AIDD is expected to reshape early drug discovery processes, dramatically accelerating screening efficiency and success rates, while increased dry-lab investment and sustained demand for wet-lab services will continue to drive growth across the downstream supply chain.
Institutional outlook
According to Tao Chuan, chief economist at Guolian Minsheng Securities, the negative shock from external liquidity tightening is essentially a deep stress test of domestic versus external fundamentals. However, even with a September Fed hike, this does not mark the beginning of a new sustained tightening cycle, meaning the spillover pressure remains relatively manageable. With domestic macro policies being rolled out intensively and providing support, combined with the deep resonance between A-share technology growth sectors and the global cycle, the medium-to-long-term allocation value and cost-effectiveness of RMB assets are increasingly coming to the fore.
New ETF listings
Several new ETFs debuted on their first trading day. N Power Grid Equipment ETF Southern (515940.SH) closed 0.1% lower at 1.007 yuan on turnover of 125 million yuan, tracking the Hang Seng A-Share Power Grid Equipment Index. N STAR Market New Materials ETF E Fund (589510.SH) fell 1.66% to 1.007 yuan with turnover of 132 million yuan, tracking the STAR Market New Materials Index. ChiNext Computing Power ETF Huaxia (158041.SZ) rose 0.97% to 1.041 yuan on turnover of 267 million yuan, tracking the ChiNext Data Infrastructure Index, which covers data center (AIDC) construction and operation, computing power leasing, and liquid-cooled servers.