US Tech Earnings and Geopolitics to Drive Hang Seng Tech This Week

The convergence of US technology earnings and the US–Iran geopolitical dynamic will jointly shape Hang Seng Tech’s trajectory this week. With US equities having staged a forceful rebound to record highs and consensus EPS forecasts for the tech sector not yet adjusted for geopolitical risk, the critical determinant of whether Hang Seng Tech can extend its rally will be whether corporate results exceed expectations.

Dongwu Securities’ Chen Meng team reported on April 27 that Hang Seng Tech led major markets lower last week with a 2.79% decline, while the Hang Seng Index and the Hang Seng China Enterprises Index fell 0.7% and 0.78% respectively. Geopolitically, disappointment in US–Iran negotiation prospects and heightened uncertainty around the Strait of Hormuz suppressed risk appetite early in the week; after both sides later signalled de‑escalation, the technology sector exhibited a sequence of initial strength, mid‑week weakness and subsequent partial repair.

This week’s calendar is heavy with US tech earnings from Microsoft, Amazon, Meta, Alphabet and Apple, alongside significant macro releases such as the US preliminary Q1 GDP and core PCE. The simultaneous arrival of corporate fundamentals and macro data will produce concurrent validation and volatility. Brent crude’s sustained trading near USD 100 per barrel means that any progress in US–Iran talks that improves global risk appetite would be an additional factor influencing the pace of overseas capital flows into Hong Kong equities.

For portfolio positioning in Hong Kong, Dongwu recommends prioritising value‑oriented exposures, treating upstream AI hardware as a value anchor whose performance will likely track the rhythm of US tech earnings. The firm also highlights China’s globally scarce assets — notably new energy and innovative pharmaceuticals — as areas warranting continued attention.

Last week’s market divergence saw the Korea Composite Index, Nikkei 225 and Nasdaq among the relative outperformers, while France’s CAC40, the Euro STOXX and Hang Seng Tech underperformed. Hong Kong’s three major indices closed lower across the board, with Hang Seng Tech down 2.79%, the Hang Seng Index down 0.7% and the Hang Seng China Enterprises Index down 0.78%. Sector performance was bifurcated: energy and utilities led gains, while healthcare, consumer discretionary and materials lagged.

Dongwu interprets this as a market driven by both geopolitical repricing and sector fundamentals. Early‑week escalation at sea and setbacks in negotiation expectations raised Strait of Hormuz uncertainty and reduced risk appetite. Subsequent easing signals — including Iran’s denial of internal splits and a shift in negotiation focus toward ceasefire arrangements — helped restore some sentiment. In energy, as geopolitical risk premia receded, spot fundamentals strengthened, spot prices rose and the futures curve lifted, allowing the sector to continue leading. Technology’s pattern of “first strong, then weak, then repair” reflected early optimism from AI financing and semiconductor chain momentum, followed by mid‑week risk‑off pressure. New energy vehicles weakened later in the week as investors began to scrutinise whether sales can sustain growth, signalling that certain high‑growth segments are entering an earnings verification phase.

On flows, southbound net inflows narrowed to HKD 16.8 billion last week, down HKD 9.0 billion from the prior period, while Stock Connect turnover’s share of total Hong Kong turnover rose from 43% to 46%, indicating rising mainland participation. Sector‑level southbound flows favoured financials, energy and telecommunications, with outflows from materials. At the stock level, China Mobile, China Construction Bank, Industrial and Commercial Bank of China and CNOOC recorded net inflows, while Tencent Holdings, Geely Automobile, Xiaomi Group‑W and Aluminum Corporation of China saw net outflows.

Mainland allocations to Hong Kong ETFs (Stock Connect plus QDII) recorded net inflows during the same period, lifting total assets to HKD 431.385 billion, an increase of HKD 1.361 billion. Within that aggregate, Stock Connect ETFs saw net inflows of HKD 54.6 million and QDII ETFs saw net outflows of HKD 17.7 million, with net inflows concentrated in healthcare and TMT themes and broad Hong Kong equity ETFs experiencing net outflows of HKD 20.7 million. Corporate actions this week included HKD 2.8 billion in buybacks (down HKD 0.3 billion week‑on‑week), HKD 27.7 billion in IPO proceeds (up HKD 19.3 billion) and HKD 8.2 billion in share unlocks (down HKD 5.9 billion).

Dongwu identifies two principal variables that will determine whether Hang Seng Tech can sustain a rebound. The first is whether US tech giants’ earnings beat expectations. Given the sharp rebound in US equities and the absence of a material downward revision to tech EPS forecasts for geopolitical risk since the start of the year, earnings season will be pivotal: only a set of results that outperforms consensus would justify further upside for the sector; results that merely meet or miss expectations would prompt a reassessment of the tech narrative and could slow Hang Seng Tech’s recovery. The concentrated reporting schedule from Microsoft, Amazon, Meta, Alphabet and Apple — with AMD reporting early on April 28 — provides a focused window for market validation.

The second variable is whether US–Iran negotiations achieve substantive progress. Recent signals have included cancelled trips and ceasefire extensions that were not fully implemented, and disruptions to Strait of Hormuz shipping have tightened supply and kept Brent around USD 100 per barrel. Dongwu cautions that current US equity levels have not fully priced in potential fundamental shocks from geopolitical conflict; an unexpected short‑term deterioration in the US–Iran situation would disrupt market rhythm, depress global risk appetite and alter the timing of overseas capital allocation to Hong Kong equities.

In this environment Dongwu recommends anchoring allocations in value, with upstream AI hardware serving as a value anchor while acknowledging that performance will likely ebb and flow with US tech earnings. The firm also advises continued focus on China’s scarce global assets, including new energy and innovative pharmaceuticals.

Macro releases this week that could further influence market views on growth and inflation include the US preliminary Q1 GDP (April 29), China official PMI (April 29), US core PCE (April 30), and US ISM manufacturing PMI and China Caixin manufacturing PMI (May 1).