Hong Kong chip ETFs plunge 26% after SK Hynix warning

The Hang Seng Index edged down 26 points to 24,148 at midday as a profit warning from SK Hynix triggered a selloff in semiconductor stocks and related leveraged products.

"SK Hynix's second-quarter operating profit will likely miss consensus because its high HBM revenue share dragged down average selling price growth," Korea Investment & Securities said in a report, maintaining its buy rating and 3.8 million won target price. The brokerage forecasts operating profit of about 60.4 trillion won, roughly 8% below the market consensus of 65 trillion won.

The Hang Seng Tech Index fell 0.81% to 4,683, with semiconductor names bearing the brunt. The 2x Long SK Hynix leveraged ETF (07709.HK) tumbled 26.55%, while the 2x Long Samsung Electronics ETF (07747.HK) dropped 15.93%. Hua Hong Grace (01347.HK) slipped 6.09%, Montage Technology (06809.HK) lost 5.14%, and SMIC (00981.HK) edged down 0.25%. Half-day turnover reached HKD 177.3 billion.

The selloff spread beyond semiconductors. China Life (02628.HK) fell 5.07% to HKD 26.98, while Geely Auto (00175.HK) dropped 2.9% and Sunny Optical (02382.HK) lost 2.68%. On the upside, China Hongqiao (01378.HK) gained 3.28% and CATL (03750.HK) rose 2.56%. Among internet names, Alibaba (09988.HK) added 0.91% and JD.com (09618.HK) rose 1.54%, while Meituan (03690.HK) slid 2.03%.

SK Hynix's decline — a 33% correction from its June 25 peak — reflects a structural shift in how the market values memory makers. As long-term agreements lock in HBM prices for 3 to 5 years, the focus is moving from single-quarter ASP growth to earnings sustainability. KIS expects SK Hynix's operating profit margin to reach a record 74.6% by the second quarter of 2026, suggesting the selloff may be overdone for investors with a longer horizon.

This article is for informational purposes only and does not constitute investment advice.