On August 4, 2026, the Hong Kong stock market experienced a rare and significant rally. The Hang Seng Index opened higher and continued to climb, ultimately closing above the 22,000-point psychological level with a daily gain of 1.85% at 22,150 points; the Hang Seng Tech Index also performed impressively, surging 2.1%. Market trading was active, with total daily turnover exceeding HK$150 billion, indicating a clear recovery in market sentiment.
Fed Sends Dovish Signal, Inflection Point in Macro Liquidity Expectations Emerges
The core driver behind this surge in Hong Kong stocks was the overnight transmission from US markets and a major shift in macro liquidity expectations. In its latest policy statement, the Federal Reserve maintained the benchmark interest rate but removed the previously hawkish language about being "highly attentive" to inflation risks, hinting that with the core PCE price index declining for three consecutive months, the necessity for further rate hikes this year is diminishing.
This stance was widely interpreted by the market as a strong dovish signal. Global capital's concerns about liquidity tightening eased substantially, and risk appetite rapidly recovered. For the Hong Kong stock market, which is highly dependent on foreign capital liquidity, this means the biggest factor suppressing capital flows is fading. After a prolonged period of valuation compression, the marginal improvement in macro expectations acted like timely rain, directly catalyzing today's retaliatory rebound.
Gold and Mainland Property Stocks Drive Dual-Engine Rally, Clear Sector Rotation
From a sectoral perspective, today's market showed broad-based gains, with gold and precious metals, and mainland property sectors acting as the twin engines leading the rally.
Dual Logic of Safe Haven and Easing Resonates, Gold Sector Shines
Core Hong Kong-listed gold stocks such as Zijin Mining, Shandong Gold, and Zhaojin Mining generally recorded gains of over 5% today. On one hand, expectations of a Fed pause led to a sharp drop in the US Dollar Index, pushing international gold prices denominated in US dollars to break through recent highs and triggering a revaluation of gold stocks. On the other hand, although global inflation data has eased, long-term geopolitical uncertainties and the ongoing trend of central banks increasing gold reserves remain unchanged, creating a resonance between gold's safe-haven and inflation-hedging properties at this juncture. After confirming expectations of loose liquidity, capital rushed into the gold sector, which offers clear prospects for earnings improvement.
Substantive Policy Tailwinds Spark Mainland Property Stocks' Counterattack
The explosion in the real estate sector today was equally eye-catching. Market rumors suggest regulators are brewing a new round of substantive support policies for the real estate market, including possible further reductions in existing mortgage rates and optimization of purchase restrictions in core cities. Catalyzed by this news, leading developers like China Overseas Land & Investment and China Resources Land led the gains, with some mainland property stocks surging over 15% in a single day.
As a pillar of the national economy, the stabilization of the real estate sector is decisive for the overall macroeconomy. Valuations of mainland property stocks remain in historically low territory, meaning any policy easing that exceeds expectations can trigger a sharp, elastic recovery in stock prices. However, regarding the rebound in mainland property stocks, investors must still distinguish between the fundamentals of financially sound state-owned enterprises and highly leveraged private firms to avoid blindly chasing rallies.
Southbound Funds Continue Buying, Early Signs of Foreign Capital Return
In terms of fund flows, the bullish momentum today was characterized by a resonance between domestic and foreign capital. According to Wind data, Southbound Stock Connect net purchases exceeded HK$8 billion today, marking the fourth consecutive trading day of net inflows. Looking at the allocation direction, Southbound funds not only continued to bottom-fish high-dividend utilities and energy stocks for stable returns but also began to flow heavily into internet technology and pharmaceutical/biotech sectors, indicating domestic capital's recognition of the medium-to-long-term investment value of core Hong Kong-listed assets.
Simultaneously, there were clear signs of returning foreign capital. Today's trading data showed frequent large-block purchases in the financial and China-concept internet sectors, with significantly amplified turnover. This suggests that against the backdrop of shifting Fed policy expectations, some foreign capital that had previously flowed out of emerging markets is reallocating to the Hong Kong stock market, where valuations are at a global low. The combined push from domestic and foreign capital was key to the market's turnover exceeding the hundred-billion mark today.
Outlook: Can the Rebound Sustain? Focus on Structural Opportunities and Earnings Delivery
After today's sharp rally, the Hang Seng Index has reclaimed the 22,000-point level, greatly boosting market confidence. However, investors should remain rational amid the optimism. While the Fed's dovish signal has eased liquidity pressures, fluctuations in global macroeconomic data and potential geopolitical variables still exist. For Hong Kong stocks to stage a unilateral reversal, further confirmation from domestic economic fundamentals is needed.
In terms of strategy, investors are advised to avoid blindly chasing thematic stocks with excessive short-term gains and instead focus on structural main themes supported by strong fundamentals and earnings certainty:
- High-Dividend Yield Assets: As the interim reporting season approaches, utilities, telecommunications, and energy sectors with abundant cash flow and stable dividends remain the top choice for core portfolio allocation, offering good defensiveness.
- Tech and Internet Leaders: With the acceleration of AI application deployment, some internet giants are showing new growth momentum in advertising revenue and cloud services, leaving considerable room for valuation repair.
- Gold and Non-Ferrous Resource Stocks: Supported by the dual drivers of global central bank gold purchases and rate cut expectations, the medium-term logic for the gold sector remains solid, presenting opportunities to accumulate on dips.
Overall, today's Hong Kong stock market performance marks a phased inflection point in market sentiment. Being excessively bearish at this level is no longer advisable. Closely following policy expectations and fund flows to seek certainty amid sector rotation will be the key to winning in Hong Kong stock investment in the next phase.
