[ET Net News Agency, 11 June 2026] The US Consumer Price Index (CPI) for May rose 4.2% year-on-year, marking the highest increase in three years. Interest rate futures markets indicate that a rate hike by the Federal Reserve before the end of the year is a foregone conclusion, and coupled with escalating US-Iran conflicts pushing up market panic, global markets fell. Hong Kong stocks opened steady and even reversed gains intraday, but Alibaba (09988) subsequently led the sell-off, dragging Hong Kong stocks down again, even dipping below the 24,000 level to hit a new low since July last year. Based on yesterday's Callable Bull/Bear Contract (CBBC) positions, there were over 3,200 bull contracts held above the 24,000 level. The HSI closed the midday session at 24,136, down 271 points or 1.1%. The HSI China Enterprises Index stood at 8,205, down 113 points or 1.4%. The HSI Tech Index stood at 4,630, down 94 points or 2%. Main board turnover approached HKD 156 billion, and southbound capital lacked confidence in entering the market, with a midday net inflow of only around HKD 300 million.
"Kwok Ka Yiu: HSI short-term outlook remains weak; further test of one-year low not ruled out"
As US inflation in May rose to its highest increase in over three years, pressure on the Federal Reserve to raise interest rates has gradually grown. Coupled with the deterioration of geopolitics and tense US-Iran relations, overseas stock markets were under pressure. However, the HSI rose by dozens of points at one stage this morning. Kwok Ka Yiu, the Director of Business Development at Harbour Family Office, told ET Net News Agency that Mainland China's crackdown on illegal cross-border investment continues to affect market sentiment. Hong Kong stocks had previously fallen for six consecutive days and saw a technical rebound this morning, but selling pressure subsequently emerged, and the HSI quickly reversed into a decline.
Following recent rumours that Mainland China plans to invest RMB 2 trillion within five years to build data centres, the market might worry that the government-planned data centres will affect the pricing and future investment returns of private hyperscale enterprises. Alibaba (09988) plummeted by 5% intraday, becoming the main driver of the market decline. Kwok noted that the construction of national data centres may not directly impact Alibaba. However, Alibaba itself has invested massive capital into AI, which was previously backed by profit contributions from its e-commerce segment. Nevertheless, shrinking e-commerce profits have amplified market concerns over excessive AI investment, thereby putting pressure on its share price.
Kwok stated that the HSI fell below the late-March low of 24,203 today and further tested the 24,000-point mark. Even if it can defend the 24,000 threshold at today's close, the outlook for the market remains weak. However, Kwok believes that occasional rebounds driven by favourable news cannot be ruled out during a market downturn, just as the HSI briefly rose to 26,000 points last week before correcting again. But judging from the current trend of the HSI, a rebound to 25,000 points would already be decent, and he suggested that short-term investors with profits should take profit once it rises to that level. He expects that it will be difficult for the HSI to reverse its disadvantageous position in the short term, and in the worst-case scenario, a further drop to test last mid-year's low of 23,200 points cannot be ruled out.
"Huge demand for data centres in Mainland China; no harm to private data centre operations"
According to earlier reports by Bloomberg, China plans to spend RMB 2 trillion to build data centres across the country over the next five years, aiming to establish a nationwide computing power network. The plan will allocate state funds intended for strategic industry investments and raise capital through sovereign debt, such as issuing ultra-long-term government bonds. The report also pointed out that 80% of the technology for the initiative, such as AI chips, will be provided by Mainland China suppliers like Huawei to replace US companies like Nvidia. Meanwhile, state-owned enterprises such as China Mobile (00941) and China Telecom (00728) will be responsible for operating most of the data centre services.
Following the news, the share prices of the three major telecom operators reacted differently yesterday (10 May). China Mobile rose 1.6% intraday but closed only 0.2% higher; China Unicom (00762) and China Telecom both surged over 6% intraday and closed up over 3% each. Kwok pointed out that even if the policy is eventually implemented, because data centre construction takes a long time and returns are slower, the impact on enterprises will take a long period to be reflected. Even if the news is favourable, its impact and sensitivity vary across the three major telecom operators. Since China Mobile already has a massive revenue base, the expected future data centre business will account for a relatively small proportion. Furthermore, after rumours of the value-added tax policy emerged earlier, its share price did not fall as much as its two peers, resulting in a weaker share price rebound yesterday.
Kwok said that the rumours regarding the national data centre construction have not yet been confirmed, and details have not been announced. If the plan is ultimately implemented, there is a high probability that the three major telecom operators will have to invest their own funds to participate in the construction, just as they did during the country's past development of 4G and 5G infrastructure. However, the three major telecom operators are financially strong, and future expenditures are not expected to pose too much pressure on the companies. Although the market worries about whether there will be an oversupply of data centres, Kwok believes that AI development in Mainland China is experiencing explosive growth. Coupled with the fact that it takes time for data centres to progress from planning to construction and then to operation, the market is expected to have sufficient demand to absorb the capacity. Therefore, the impact on private data centre operators like GDS (09698) is already insignificant.
GDS's share price tumbled over 8% at one point today. Kwok noted that this might not be due to competition from national data centres suppressing fundamentals, but is more likely caused by rising expectations of a Federal Reserve rate hike. Since data centres require massive capital investment, incur large depreciation, have long payback periods, and possess high interest rate sensitivity, the rate hike expectations have put certain pressure on the share price.
Overnight, US-listed Oracle's share price plummeted by 10% at one point, though the decline narrowed by the close. The market was mainly concerned that its full-year capital expenditure would exceed the company's expected USD 50 billion. Kwok stated that even if the data centre initiative is eventually implemented, the risks regarding capital investment for the telecom operators are expected to be controllable, and the central government will also provide financial support. Currently, the share prices of the three major telecom operators still possess a certain level of attractiveness, among which China Telecom has a better outlook. Kwok pointed out that China Telecom has performed excellently in its cloud business. The company has introduced a token-based billing model for both enterprises and individuals, and its cloud business is expected to achieve decent growth this year. China Telecom's current price is around HKD 5, offering a yield of approximately 6%. Kwok believes that amid market volatility, the current price is relatively attractive, and he expects the share price to potentially rise to HKD 5.50.
"Kwok Ka Yiu: HSI short-term outlook remains weak; further test of one-year low not ruled out"
As US inflation in May rose to its highest increase in over three years, pressure on the Federal Reserve to raise interest rates has gradually grown. Coupled with the deterioration of geopolitics and tense US-Iran relations, overseas stock markets were under pressure. However, the HSI rose by dozens of points at one stage this morning. Kwok Ka Yiu, the Director of Business Development at Harbour Family Office, told ET Net News Agency that Mainland China's crackdown on illegal cross-border investment continues to affect market sentiment. Hong Kong stocks had previously fallen for six consecutive days and saw a technical rebound this morning, but selling pressure subsequently emerged, and the HSI quickly reversed into a decline.
Following recent rumours that Mainland China plans to invest RMB 2 trillion within five years to build data centres, the market might worry that the government-planned data centres will affect the pricing and future investment returns of private hyperscale enterprises. Alibaba (09988) plummeted by 5% intraday, becoming the main driver of the market decline. Kwok noted that the construction of national data centres may not directly impact Alibaba. However, Alibaba itself has invested massive capital into AI, which was previously backed by profit contributions from its e-commerce segment. Nevertheless, shrinking e-commerce profits have amplified market concerns over excessive AI investment, thereby putting pressure on its share price.
Kwok stated that the HSI fell below the late-March low of 24,203 today and further tested the 24,000-point mark. Even if it can defend the 24,000 threshold at today's close, the outlook for the market remains weak. However, Kwok believes that occasional rebounds driven by favourable news cannot be ruled out during a market downturn, just as the HSI briefly rose to 26,000 points last week before correcting again. But judging from the current trend of the HSI, a rebound to 25,000 points would already be decent, and he suggested that short-term investors with profits should take profit once it rises to that level. He expects that it will be difficult for the HSI to reverse its disadvantageous position in the short term, and in the worst-case scenario, a further drop to test last mid-year's low of 23,200 points cannot be ruled out.
"Huge demand for data centres in Mainland China; no harm to private data centre operations"
According to earlier reports by Bloomberg, China plans to spend RMB 2 trillion to build data centres across the country over the next five years, aiming to establish a nationwide computing power network. The plan will allocate state funds intended for strategic industry investments and raise capital through sovereign debt, such as issuing ultra-long-term government bonds. The report also pointed out that 80% of the technology for the initiative, such as AI chips, will be provided by Mainland China suppliers like Huawei to replace US companies like Nvidia. Meanwhile, state-owned enterprises such as China Mobile (00941) and China Telecom (00728) will be responsible for operating most of the data centre services.
Following the news, the share prices of the three major telecom operators reacted differently yesterday (10 May). China Mobile rose 1.6% intraday but closed only 0.2% higher; China Unicom (00762) and China Telecom both surged over 6% intraday and closed up over 3% each. Kwok pointed out that even if the policy is eventually implemented, because data centre construction takes a long time and returns are slower, the impact on enterprises will take a long period to be reflected. Even if the news is favourable, its impact and sensitivity vary across the three major telecom operators. Since China Mobile already has a massive revenue base, the expected future data centre business will account for a relatively small proportion. Furthermore, after rumours of the value-added tax policy emerged earlier, its share price did not fall as much as its two peers, resulting in a weaker share price rebound yesterday.
Kwok said that the rumours regarding the national data centre construction have not yet been confirmed, and details have not been announced. If the plan is ultimately implemented, there is a high probability that the three major telecom operators will have to invest their own funds to participate in the construction, just as they did during the country's past development of 4G and 5G infrastructure. However, the three major telecom operators are financially strong, and future expenditures are not expected to pose too much pressure on the companies. Although the market worries about whether there will be an oversupply of data centres, Kwok believes that AI development in Mainland China is experiencing explosive growth. Coupled with the fact that it takes time for data centres to progress from planning to construction and then to operation, the market is expected to have sufficient demand to absorb the capacity. Therefore, the impact on private data centre operators like GDS (09698) is already insignificant.
GDS's share price tumbled over 8% at one point today. Kwok noted that this might not be due to competition from national data centres suppressing fundamentals, but is more likely caused by rising expectations of a Federal Reserve rate hike. Since data centres require massive capital investment, incur large depreciation, have long payback periods, and possess high interest rate sensitivity, the rate hike expectations have put certain pressure on the share price.
Overnight, US-listed Oracle's share price plummeted by 10% at one point, though the decline narrowed by the close. The market was mainly concerned that its full-year capital expenditure would exceed the company's expected USD 50 billion. Kwok stated that even if the data centre initiative is eventually implemented, the risks regarding capital investment for the telecom operators are expected to be controllable, and the central government will also provide financial support. Currently, the share prices of the three major telecom operators still possess a certain level of attractiveness, among which China Telecom has a better outlook. Kwok pointed out that China Telecom has performed excellently in its cloud business. The company has introduced a token-based billing model for both enterprises and individuals, and its cloud business is expected to achieve decent growth this year. China Telecom's current price is around HKD 5, offering a yield of approximately 6%. Kwok believes that amid market volatility, the current price is relatively attractive, and he expects the share price to potentially rise to HKD 5.50.
