Hong Kong Stocks Drop 0.78% at Midday as AI IPO Lock-Up Expirations Trigger Divergence
Taylor Wilson
The Hang Seng Index dropped 0.78% to 24,011 at midday on July 9 as AI IPO lock-up expiries split the sector — Zhipu AI surged over 10% while MiniMax plunged nearly 14% — and foreign funds unwound short positions in Chinese equities.
Why did the Hang Seng fall at midday?
The Hang Seng closed the morning session at 24,011, down 0.78%, as its recent rally was interrupted by volatility across Asian tech stocks.
The Hang Seng Tech Index dipped just 0.06%. This means → the drag on the broader index came not from heavyweight tech names but from a wider pullback in market sentiment.
AI lock-up expiries — why did two stocks go in opposite directions on the same day?
Zhipu AI (Knowledge Graph Technology) saw its IPO lock-up expire and rallied more than 10% as post-expiry trading volatility settled down.
MiniMax hit its first major lock-up expiry date on the same day and plunged nearly 14%.
In plain terms = a lock-up expiry — the end of a period when early IPO shareholders are barred from selling — is like a floodgate opening. If the market believes no one is rushing to sell, the stock can actually rise; if it fears a wave of selling, the price drops pre-emptively. Two companies, same day, opposite outcomes — the market's confidence in their fundamentals is clearly very different.
Any standout moves in semiconductors?
Chip design firm Smart-Core Holdings surged more than 23% in a single session, leading the entire semiconductor sector against the broader decline.
This reflects capital concentrating into specific names within niche segments rather than a sector-wide bid.
What are foreign investors doing?
Market observers noted that foreign institutions are actively unwinding "financing shorts" in Chinese equities.
In plain terms = global investors had been shorting Chinese stocks not because they were bearish on China, but as a funding tool — selling Chinese shares short to free up cash for trades in Korea, Japan, and other Asian markets. Now that those markets have pulled back sharply, the borrowed money needs to be returned, so they are buying back Chinese stocks to close the positions.
This means → the buying is not a sudden vote of confidence in China. It is a mechanical, technical unwind, and its staying power depends on when the selloff in other Asian markets stabilizes.
How are the rest of Asia's markets doing?
South Korea's KOSPI edged up 0.3% on Thursday, but it had already fallen more than 20% from its June high, officially entering a technical bear market (defined as a 20%-plus decline from a recent peak).
Japan's Nikkei 225 posted a modest ~2% rebound after consecutive sharp losses.
This reflects a broader "bounce after a deep drop" phase across Asia — and the foreign short-covering flow into Hong Kong stocks is a direct consequence of this regional linkage.
What to watch next?
Two near-term variables matter most: whether the market can digest the wave of AI lock-up expiries smoothly, and whether the pace of foreign short-covering can keep offsetting selling pressure in tech.
This means → if lock-up shares hit the market in size and the short-covering fades, Hong Kong stocks face further downside in the near term. If the lock-up impact proves limited and covering continues, the market has a path to stabilize.
Content is for reference only, not financial advice.