Hang Seng Index fluctuated and closed lower, shipping sector strengthened against the trend, BDI Index hit a new high for the year

On July 25, 2026, Hong Kong's three major indices fluctuated and closed lower. The Hang Seng Index once dipped to around 18,750 points during the session, then rebounded slightly at the end, finally closing at 18,862.31 points, down 0.33%. The Hang Seng China Enterprises Index fell 0.41%, and the Hang Seng Tech Index fell 0.67%. Market turnover increased slightly from the previous day to HK$142 billion, with southbound net buying of about HK$2.8 billion. However, the shipping sector performed strongly, becoming the biggest highlight of the day.

Shipping stocks surge against trend, BDI Index hits new high for the year

By the close, COSCO Shipping Holdings (01919.HK) surged 5.62% to HK$14.68; OOCL (00316.HK) rose 4.89% to HK$218.6; Pacific Basin Shipping (02343.HK) gained 3.48%; and SITC International (01308.HK) rose 2.95%. The shipping sector overall rose over 4%, leading all Hong Kong stock industry indices.

On the news front, the Baltic Dry Index (BDI) rose to 2,267 points on July 24, hitting a new high since 2026, up about 42% from the beginning of the year. Among them, the Capesize Index BCI surged 8.7%, and the Panamax Index BPI rose 3.2%. Analysts pointed out that benefiting from the recovery in global bulk commodity trade demand for iron ore, coal, and grain, coupled with the arrival of the traditional peak season in the second half of the year, shipping freight rates continue to climb.

Improved supply-demand structure, institutions bullish on H2 market

HSBC Global Research said in its latest report that the global shipping market is entering a phase of "dual supply-demand benefits." On the supply side, the pace of new ship deliveries has slowed, scrapping of old vessels has increased, and effective capacity has shrunk; on the demand side, China's infrastructure stabilization policies are driving iron ore imports, coal demand in Southeast Asia and India is strong, and the grain export peak season is coming. The BDI is expected to break 2,500 points in Q3 and remain high in Q4.

• Supply contraction: Global new ship deliveries fell 15% YoY in H1 2026, while scrapping increased 30%;
• Demand recovery: China's iron ore imports grew 4.8% YoY in Jan-Jun, coal imports grew 12%;
• Geopolitical factors: Red Sea detour effect persists, lengthening some routes and increasing ton-mile demand.

Citibank also upgraded the shipping sector rating, believing current valuations remain attractive. COSCO Shipping Holdings currently has a P/E ratio of only 6.5x and a dividend yield of about 4.8%, providing a margin of safety.

Hang Seng under pressure, tech stocks weaken dragging the market

On the other hand, the broader Hong Kong market was weak overall. Among Hang Seng Tech Index constituents, Tencent Holdings (00700.HK) fell 0.92%, Alibaba (09988.HK) fell 1.24%, and Meituan (03690.HK) fell 0.78%. Weighted financial stocks were mixed, with HSBC Holdings (00005.HK) up 0.15% and AIA (01299.HK) down 0.60%.

Market analysts noted that today's Hong Kong market pressure was mainly due to the overnight decline in US stocks. The US Markit Manufacturing PMI for July was 49.8, below the boom-bust line, raising concerns about an economic slowdown. Additionally, investor sentiment turned cautious ahead of the Federal Reserve's next meeting. However, southbound capital has recorded net inflows for 12 consecutive trading days, indicating mainland funds' continued confidence in Hong Kong stocks.

Short-term fluctuations do not change medium-term bullish outlook

China International Capital Corporation's strategy team believes that Hong Kong stocks are currently at historically low valuations, with the Hang Seng Index P/E ratio at about 9.5x, below the 10-year average. Since June, supportive policies have been introduced, including optimization of the Cross-Boundary Wealth Management Connect and expansion of the Stock Connect, all favorable for attracting incremental capital. The strong performance of the shipping sector may signal a recovery in cyclical stocks.

Looking ahead, investors can focus on the following aspects:

• The Fed's July interest rate decision and its impact on the RMB exchange rate;
• The interim reporting season for Hong Kong stocks, focusing on companies with earnings surprises;
• Whether shipping prices can continue to rise, driving earnings improvements for related companies.

As of press time, Hang Seng Index futures edged higher, with the market awaiting more economic data guidance tomorrow.