Market Performance - Japanese and South Korean stock markets experienced significant rebounds, with the Nikkei index rising by 2.43% and the KOSPI increasing by 3.78% [2] - The Nikkei index opened at 54,003.57 and reached a high of 53,980.85, reflecting a 2.52% increase [3] Semiconductor Sector - SK Hynix saw a nearly 6% increase, leading the rebound in South Korean chip stocks after a previous day of sell-off [4] - The U.S. storage sector showed strength, with notable gains from companies such as SanDisk (over 15%), Western Digital (nearly 8%), Seagate Technology (over 6%), and Micron Technology (over 5%) [4] NAND Flash Market - Major NAND flash manufacturers SK Hynix and SanDisk reported a more than 30% increase in average selling prices (ASP) in their Q4 2025 financial reports [5] - According to Mizuho Securities' technology industry expert Jordan Klein, "hot money" moving out of precious metals and cryptocurrencies is seeking new investment narratives, with memory stocks supported by strong fundamentals potentially attracting this capital [5]

Core Viewpoint - Hong Kong may intervene in the currency market to raise the Hong Kong dollar's exchange rate, which could lead to volatility in the capital market [1][2]. Market Dynamics - From May to the present, the Hang Seng Index rose from 22,600 points to a peak of 24,300 points, primarily driven by increased liquidity rather than fundamental improvements [3][4]. - The significant increase in Hong Kong dollar liquidity began in May when the exchange rate reached a high of 7.75, prompting the Monetary Authority to release liquidity to prevent the currency from appreciating further [5][7][11]. Interest Rate Changes - Following the liquidity increase, the Hong Kong Interbank Offered Rate (HIBOR) for one month dropped from 3.98% to a low of 0.52%, representing a reduction of over 4% in just one month [13][14]. Future Expectations - As the Hong Kong dollar approaches the lower limit of the peg (7.85), the Monetary Authority may withdraw liquidity, which could pressure the stock market if hot money flows out [15][21]. - The current strategy may depend on the future performance of the US dollar; if it continues to weaken, funds may flow into Hong Kong, supporting the local market [18][20]. Investment Outlook - Despite potential short-term adjustments, the overall outlook for the Hong Kong capital market remains positive due to continued inflows of hot money [22][23]. - The market's performance is influenced more by liquidity and capital flows than by economic fundamentals or valuations [24][25]. Capital Inflows - Three main types of capital are expected to flow into the Hong Kong market: local funds, southbound funds, and foreign investments [26]. - Southbound funds are anticipated to increase due to quality companies seeking to list in Hong Kong and the expectation of a bull market in mainland China [27][28]. - Foreign capital is likely to flow into Hong Kong as geopolitical uncertainties persist, providing opportunities for the local market [29][30]. Sector Focus - Key sectors to watch in the second half of the year include finance, consumption, technology, and healthcare, with strategies to enter during corrections or to consider stable income-generating assets [31][32].