Hong Kong stocks' three major indices closed the morning session mixed. As of midday, the Hang Seng Index rose 0.17% to 24,253.70, the Hang Seng Tech Index fell 0.55%, and the State-Owned Enterprises Index gained 0.03%.

On the board, tech internet stocks traded mixed, with Xiaomi dropping over 4% and NetEase rising over 2%; mainland bank stocks were active, with China Merchants Bank up more than 2%; the optical communication sector led the declines, with Zhongji Innolight falling over 4%; airline stocks weakened, with Air China down more than 2%.

Mainland bank stocks were active, with China Merchants Bank rising over 2%. Guosen Securities released a research report stating that the banking sector still holds allocation value in the fourth quarter, and stock selection should balance dividend returns with earnings elasticity. In a low interest rate environment, high dividend banks possess long-term allocation value, and for core holdings, priority should be given to banks with stable dividends, sound asset quality, and attractive dividend yields; meanwhile, attention should be paid to changes in policy expectations, and if the trend of banking earnings recovery becomes more evident, then on the basis of retaining high dividend core holdings, additional allocation should be made to stocks with high earnings elasticity.

The optical communication sector led the declines, with Zhongji Innolight falling over 4%. Foxconn Industrial Internet was subjected to a Section 337 patent investigation initiated by the US ITC, triggering a reassessment of risks across the entire supply chain. Vicor filed a lawsuit over vertical power supply patent infringement; although the products involved have not yet entered mass production, the market has begun to re-examine the intellectual property risks across the entire AI hardware overseas chain. Optical modules and optical components are indispensable parts of AI servers, and concerns over overseas supply chains, patents, and trade restrictions are rapidly spreading.

Airline stocks weakened, with Air China falling over 2%. A JPMorgan research report pointed out that air passenger performance during the Mid-Autumn Festival and National Day consecutive holidays was below expectations, and airlines continued to lose market share to railways. According to data from the Ministry of Transport, from October 1 to 6, airlines transported 14 million passengers, a year-on-year decline of 1%; while railways transported 128 million passengers, a year-on-year increase of 12%. JPMorgan believes that demand is entering the off-season, and an increase in fuel surcharges may further suppress demand, while high fuel costs also continue to put pressure on profitability.