Hong Kong stocks tumble 1.8% as global chip rout deepens

The Hang Seng Index fell 1.8% to 24,562, its lowest close in three weeks, as a global rout in chipmakers triggered broad-based selling across Asian equity markets.

"The unwinding of leveraged positions will definitely exaggerate the decline," said Fabien Yip, a market analyst at IG. "If the sell-off continues into the U.S. session, Korea when it reopens is going to be quite disastrous."

The Hang Seng Tech Index plunged 4.4% to 4,623, its sharpest drop since April 2025, as every major tech heavyweight declined. Tencent Holdings (0700.HK) fell 4.6% to HK$461.6, Meituan (03690.HK) dropped 4.1% to HK$83.65, and Alibaba Group (9988.HK) lost 3.7% to HK$112.6. Semiconductor Manufacturing International Corp. (0981.HK) tumbled 10% to HK$67.7, while Hua Hong Semiconductor (1347.HK) sank 11.9%. Turnover surged to HK$347.3 billion, well above the 20-day average, as short-selling ratios climbed — Baidu (9888.HK) saw 45.7% of its trading volume in short sales, while Geely Auto (0175.HK) recorded a 36.2% short ratio.

The selloff erased gains from the previous two sessions and pushed the HSI back toward its June lows, with traders watching for potential support at 24,000. The decline coincided with a 6% plunge in Taiwan's Taiex — its worst session since President Donald Trump's Liberation Day tariffs — and a 5% drop in Japan's Nikkei 225, which has now fallen more than 13% from its recent peak.

The rout began after U.S. chip stocks slumped in overnight trading, with Nasdaq 100 futures sliding another 1.6% in Asian afternoon trading. The selling spread despite positive earnings from Taiwan Semiconductor Manufacturing Co., which reported second-quarter profit that beat analyst estimates, and ASML Holding NV, which raised its 2026 sales forecasts earlier this week.

"The index has decoupled from all of Korea's historical drivers," said Alexander Redman, chief equity strategist at CLSA, referring to the KOSPI's 20% decline in July after doubling in the first half of 2026. South Korean authorities this week moved to curb volatility by banning new listings of single-stock leveraged ETFs and tripling the minimum cash balance required to trade such products to 30 million won ($20,300).

Biotech and auto stocks lead broader declines

Beyond technology, healthcare and auto stocks suffered heavy losses. Akeso (9926.HK) plunged 13.2% to HK$88.35, while Wuxi Biologics (2269.HK) fell 6% and Innovent Biologics (1801.HK) dropped 5.6%. XPeng (9868.HK) slid 8.7% to HK$51.65, and Geely Auto lost 4.7%. Power Assets (0006.HK) was among the few gainers, rising 3%, as investors rotated into defensive utility stocks.

The MSCI Asia-Pacific index excluding Japan fell 2.7%, while China's CSI 300 index dropped 4%. The offshore yuan weakened past 7.25 per dollar, adding pressure on Hong Kong-listed Chinese companies. In Europe, EUROSTOXX 50 futures slid 1%, and U.S. crude oil futures rose 0.3% to $79.16 a barrel as geopolitical tensions between the U.S. and Iran escalated.

This article is for informational purposes only and does not constitute investment advice.