Hang Seng Tumbles Below 23,000 as Red Rainstorm Halts Afternoon Classes; Macro Gardens Hearing Reveals ‘Zero-Time Escape’

Markets in Freefall: HSI Extends Losing Streak

Hong Kong stocks extended their relentless decline on Friday, with the Hang Seng Index breaching the 23,000-point level as selling pressure intensified across the board. The index opened 124 points lower at 22,952, marking its ninth consecutive day of losses, before accelerating its slide to sink more than 500 points at one stage, hitting an intraday low of 22,518.

By midday, the HSI was trading at 22,644, down 432 points or 1.9 percent, with market turnover exceeding HK$183 billion. The Hang Seng China Enterprises Index fell 2.08 percent to 7,450, while the Hang Seng TECH Index tumbled 3.31 percent to 4,259. Heavyweight technology stocks bore the brunt of the sell-off. Alibaba (9988) plunged 5 percent to HK$90.25, Tencent (0700) dropped 2.2 percent to HK$412.2, and SMIC (0981) cratered 5.5 percent to HK$81.3.

The bloodbath came as U.S. inflation data reinforced expectations of further interest rate hikes. The U.S. Personal Consumption Expenditures (PCE) price index rose 4.1 percent year-on-year in May, the largest increase since April 2023, accelerating from April’s 3.8 percent reading. Asian markets followed suit, with South Korea’s KOSPI plunging 8 percent while Japan and Taiwan dropped more than 3 percent.

‘Catching a Falling Knife’: Analysts Warn Against Bargain Hunting

Market commentators offered little comfort to investors. Ming Pao columnist Liu Siming warned that despite the Hang Seng Index having fallen to support levels, bargain hunting in beaten-down stocks at this stage was akin to “catching a falling knife” and should be attempted only with extreme caution. “Memory chip giant Micron’s latest earnings and guidance exceeded expectations, dispelling concerns about slowing AI infrastructure growth and rekindling enthusiasm for AI concepts in the Asia-Pacific region,” Liu wrote. “Yet Hong Kong stocks remain persistently weak, with the Hang Seng Index continuing to search for a bottom.”

The underperformance has been stark. While the Hang Seng Index rallied nearly 28 percent last year to snap a four-year losing streak, it has lagged behind regional peers in the first half of 2026. Japanese, South Korean and Taiwanese markets have been hitting record highs, while Hong Kong has been drifting lower, making it the worst-performing market in the region.

Alibaba Hit as Anthropic Alleges Illegal AI ‘Distillation’

Adding to the pressure on tech names, Alibaba came under fire after U.S. artificial intelligence company Anthropic accused the Chinese e-commerce giant of illegally “distilling” its AI models, sending the stock down 4 percent on Friday. The allegations, reported by Oriental Daily, added to a growing list of headwinds facing Hong Kong’s technology sector.

Bank of China (Hong Kong) also flagged concerns over rising non-performing loan ratios and has set aside provisions accordingly, the newspaper reported. Meanwhile, the Hong Kong Exchanges and Clearing Limited (HKEX) is studying the launch of a broader-based Hong Kong stock index, though details remain scarce.

Red Rainstorm Warning: Afternoon Classes Suspended

As markets tumbled, so did the skies over Hong Kong. The Hong Kong Observatory issued a Yellow Rainstorm Warning at 11:50 a.m. before upgrading to a Red Rainstorm Warning at 12:15 p.m., indicating that heavy rain exceeding 50 millimetres per hour had fallen or was expected to fall across widespread areas of the territory, with the rain set to persist.

The Education Bureau announced that students of afternoon schools would not be required to attend classes in the afternoon. “Schools must keep their premises open and make contingency arrangements to take care of students who have already arrived,” the bureau said in a statement. “Schools that are already in session should continue classes until dismissal time and may allow students to go home only when it is safe to do so.”

The Observatory warned of intense gusts continuing to lash the territory, with winds of up to 80 kilometres per hour recorded at Green Island around noon. The thunderstorm warning was extended until 2:30 p.m..

Policy Address Consultation to Begin Monday; First Five-Year Plan in the Works

On the political front, Chief Executive John Lee announced that public consultation for this year’s Policy Address will officially commence on Monday, June 29. In a significant shift, the government will simultaneously collect public views on Hong Kong’s first-ever five-year development plan, a move that reflects a fundamental change in governance philosophy.

Lee described the five-year plan and the Policy Address as “interlinked governing documents” that are part of a coherent strategy. “The Policy Address will respond to the direction set by the five-year plan,” he said. Since the five-year plan consultation began last week, the government has held over a dozen consultation sessions and received nearly 1,000 written submissions. Lee has personally chaired three of these sessions, covering topics including Hong Kong deputies to the National People’s Congress, members of the Chinese People’s Political Consultative Conference, and the Northern Metropolis university town development.

The Wen Wei Po editorial praised the approach, noting that Hong Kong is moving away from passive “annual fine-tuning” governance toward a new model combining “five-year plan as strategic guidance, Policy Address as annual deployment, and Budget as resource guarantee.” The editorial argued this represents a “profound change in governance philosophy” that will help Hong Kong align with national development strategies and address deep-seated contradictions.

The Ta Kung Pao editorial echoed these sentiments, describing the five-year plan as a “strategic blueprint” answering where Hong Kong is heading over the next five years, while the Policy Address serves as a “tactical checklist” addressing annual priorities and pressing public concerns.

Trade Surges on AI Demand; Exports Up 40.8% in May

Hong Kong’s external trade continued its remarkable run, with overall exports and imports soaring 40.8 percent and 42.0 percent year-on-year respectively in May. The government attributed the sustained strong export growth to robust global demand for AI-related electronic products, with exports to Asia and North America surging. Exports to the United States jumped 55.7 percent, marking the 10th consecutive month of growth.

Hong Kong Shippers’ Council Chairman Peter Hui expressed optimism about the outlook, saying demand driven by artificial intelligence and related electronics products remained robust and he expected strong export performance in the coming months. Economists project Hong Kong’s full-year exports to grow by at least 30 percent, though they cautioned that geopolitical risks and the high base effect in the second half of the year could pose headwinds. Experts from the Hong Kong Trade Development Council and Dah Sing Financial Group also pointed to U.S.-China high-level interactions and easing Middle East tensions as positive factors for trade sentiment in the second half.

Macro Gardens Hearing: Residents Allege ‘Zero-Time Escape’

In a separate development, a public hearing regarding the Macro Gardens housing estate took a dramatic turn as residents testified that they had been given “zero time” to evacuate during a recent emergency. According to reports, the hearing examined allegations that fire safety protocols at the estate were dangerously inadequate.

Fire Training Deficiencies Exposed; Experts Slam ‘Unprecedented’ Negligence

Oriental Daily reported that fire services training has been excessively focused on indoor scenarios while neglecting external fire response. Experts reportedly described the severity of the fire risk as “unprecedented” and accused the relevant department of ignoring the problem. The report also noted that two buildings had mysteriously had their lights turned on, sparking burglary suspicions.

In positive housing news, the second phase of the Kai Tak Simplified Housing project was completed, providing more than 7,000 units.

Deadly Industrial Accident at Kowloon Bay Sports Ground

A fatal industrial accident occurred at the Kowloon Bay Sports Ground on Friday morning when a male worker was struck by machinery. Police received a report at around 9 a.m. that a male colleague had suffered a head injury and lost consciousness. The worker was pronounced dead at the scene. Police are treating the case as an industrial accident.

Crocodile Case Expands: 63 More Animals Seized

The investigation into the crocodile discovered earlier at a Tai Po Road residence in Sham Shui Po has expanded significantly. Following a joint raid by police and the Agriculture, Fisheries and Conservation Department, authorities seized an additional 63 animals, 29 of which are listed as endangered species. The department previously confirmed that the crocodile initially found was a Siamese crocodile and was being housed at an animal management centre in stable condition.

Drug Busts and Gambling Raids

In other crime news, police arrested two men and one woman in a Yau Ma Tei drug bust, seizing narcotics worth approximately HK$1.59 million. A 62-year-old local man, a 46-year-old local man and a 42-year-old local woman were arrested on suspicion of trafficking in dangerous drugs and are being detained for investigation.

Separately, authorities raided an illegal gambling den in a Tai Po residential unit, arresting two operators and 16 gamblers. The two suspects, aged 62 and 55, have been charged with operating a gambling establishment, while 12 others face charges of gambling in a gambling establishment. The case was scheduled to appear at Fanling Magistrates’ Courts on Friday. Police seized three mahjong tables, six sets of mahjong tiles and HK$840 in cash.

Education and Health

The “Learning and Teaching Expo 2026” opened at the Convention and Exhibition Centre, running from June 25 to 27 under the theme “Reimagining Education: People-Centred, Future-Ready.” The expo features more than 600 exhibition booths from local and international participants and invites over 300 international scholars and experts to share insights. The event aims to drive Hong Kong’s digital education transformation in line with the government’s “Digital Education Development Blueprint for Primary and Secondary Schools.”

The Department of Health announced it would begin issuing the 2025/26 “School Health Report and Recommendations” to schools participating in the “Whole School Health Programme.” The reports are tailored to each school’s student health profile, providing customised and targeted school-based health promotion measures.

Meanwhile, the Labour Department issued a Yellow Work Heat Stress Warning at 10:20 a.m., indicating that heat stress levels in some work environments were relatively high. Employers were reminded to refer to the department’s “Guidance Notes on Prevention of Heat Stroke at Work” and take practicable heat prevention measures, including rescheduling work periods and providing adequate rest breaks. The Centre for Health Protection also warned that summer influenza risks were rising, with both Influenza A and B cases increasing.

Editorial: Targeted Poverty Alleviation Shows Results

The Hong Kong Commercial Daily published an editorial on Friday commending the government’s targeted poverty alleviation efforts. The editorial noted that the Poverty Commission’s recently released “Hong Kong Targeted Poverty Alleviation Results Report” summarized the government’s poverty alleviation work over the past four years. Unlike traditional poverty policies, targeted poverty alleviation emphasises a people-centred approach that proactively identifies, intervenes early and provides sustained support to those most in need. “Early intervention is key,” the editorial argued. “Many families’ difficulties are not formed overnight but are the result of long-term accumulation. If problems are allowed to worsen before being addressed, it increases both the burden on recipients and social costs.”

Outlook

As Hong Kong navigates a turbulent market environment, a red rainstorm and a raft of political and social developments, the coming week promises to be pivotal. The launch of the Policy Address consultation and the parallel five-year planning process will set the tone for the territory’s long-term direction, while investors remain braced for further volatility amid global economic headwinds.