The three major U.S. stock indices all closed higher, with the telecommunications industry facing the test of tax policy adjustments
Hong Kong Stock Market Trends and Analysis
U.S. stocks rebounded sharply on Monday, with the latest U.S. economic data showing positive performance. The market initially fell but stabilized later, with all three major indices closing higher. The U.S. dollar strengthened, and the 10-year Treasury yield rose to 4.28%. Gold prices fluctuated downward, while oil prices also declined. Hong Kong's pre-market securities were generally positive, and the market is expected to open higher in early trading. Mainland stocks fell yesterday, with the Shanghai Composite Index opening lower and closing down 2.5%. Trading volume in both Shanghai and Shenzhen markets also shrank significantly. Hong Kong stocks followed the downward trend in overseas markets, with the index opening lower and continuing to decline, hitting a low of 26,500 points before narrowing the loss slightly by the close. Overall trading remained active. Blue-chip stocks generally fell, with tech and telecom stocks declining notably, and resource stocks also under pressure. The stabilization in overseas markets may help slow the decline in Hong Kong. The market is expected to enter a consolidation phase in the short term, with the index fluctuating between 26,200 and 27,200 points.
Industry News
Recently, China's Ministry of Finance and the State Taxation Administration issued the "Announcement on Matters Related to the Specific Scope of Value-Added Tax (VAT) Collection," stipulating that from January 1 this year, within China, business activities involving mobile data services, SMS and MMS services, and internet broadband access services provided via fixed-line, mobile, satellite, or internet networks will be reclassified from value-added telecom services to basic telecom services, with the corresponding VAT rate adjusted from 6% to 9%. Several telecom companies stated that this adjustment in tax scope will impact their revenue and profits. They will continue to focus on their core responsibilities, striving to strengthen and expand communication services, computing power services, and smart services. They will also adhere to network infrastructure enhancement, promote full-stack innovation, and deepen lean management and efficiency improvements. The companies will fully implement the "Cloud Reform, Digital Transformation, and Smart Benefits" strategy, accelerate the development of tech-oriented enterprises, advance the "AI+" initiative, and continuously build an integrated intelligent cloud service combining "computing power + platform + data + models + applications." They will also accelerate the cultivation of new growth drivers, improve quality and cost efficiency, and promote high-quality corporate development. However, the new tax policy will negatively affect telecom stocks' profitability and dividends in the short term, putting pressure on valuations, which will take time to reflect.
Daily Hong Kong Stock Market Analysis
Business Development Director, Harbor Family Office
Guo Jia Yao, CFA
Date: Tuesday, February 3, 2026
(The author is a licensed person of the SFC and does not hold the aforementioned shares.)
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