HK Stock Market Move | Fiber-optic concept stocks led the declines. Hengtong Optic-Electric's 6.6 billion yuan private placement to step up investment in optical communications raises market concerns that a wave of capacity expansion could lead to overcapacity.

Fiber-optic concept stocks led the declines. As of press time, YOFC (06869) fell 11.37% to HK$165.3; TRIGIANT (01300) fell 8.84% to HK$3.145; TIME INTERCON (01729) fell 3.41% to HK$16.73. On the news front, on the evening of September 24, fiber-optic leader Hengtong Optic-Electric disclosed a private placement plan, proposing to issue no more than 740 million A-shares and raise total proceeds of no more than 6.636 billion yuan, to be invested in nine projects including optical communications. Specifically, 758 million yuan is planned for the "Next-Generation Optical Fiber R&D and Production Project," and 862 million yuan for the "Inner Mongolia High-End Optical New Materials Construction Project," with the two forming the core of capacity expansion for optical fiber preforms and specialty optical fibers. UBS recently released a research report initiating coverage of China's optical fiber and cable industry, arguing that investors' concerns about overcapacity and peak earnings in 2027 are significantly overestimated. UBS noted that since its share price peaked in June, YOFC has fallen 37%, due to investors' worries that optical fiber capacity expansions announced by peers and new companies could cause the company's earnings to peak in 2027. However, UBS believes the overcapacity risk is limited.