Hong Kong's Hang Seng Index fell 205 points, or 0.83%, to 24,352 in Wednesday morning trade, The Standard reported, after a hotter-than-expected U.S. inflation reading pushed traders to price in a Federal Reserve rate increase next month. Meituan was the worst performer among index members, down 3.5%.

The drop erased a day of gains built on AI supply-chain stocks and cheaper oil. For investors in Asia, it is a reminder that Hong Kong's currency peg ties local borrowing costs to U.S. policy: a faster Fed means higher Hong Kong interbank rates and tighter money for a market that has leaned heavily on new listings this year.

U.S. prices and a hawkish Fed set the tone

The U.S. Labor Department said consumer prices rose 0.4% in October, the third straight monthly gain of 0.4% or more, according to Reuters as carried by RTHK. Economists polled by Reuters had expected 0.3%. Prices rose 0.6% in September.

The data followed remarks from Fed Governor Christopher Waller, who said the central bank should raise rates in December even if inflation cooled and should consider a half-point move if the picture worsened. After the release, CME FedWatch showed markets fully pricing at least a quarter-point hike in December, up from 84% on Monday. Bets on a 50 basis point increase rose to 11.8%, from zero a session earlier.

The two-year Treasury yield jumped almost 19 basis points to 4.736%, on course for its biggest daily rise since April 2025. On Wall Street, the S&P 500 lost 0.4% to 7,520 and the Nasdaq Composite slid 0.7% to 25,065 on Tuesday. Nvidia fell 5.4%, extending a two-session drop to 9.6%, as the company's board probes claims involving its chief executive.

Global bonds tumbled and the dollar held firm in Asian hours, RTHK reported. Hong Kong opened 202 points lower at 24,354 and stayed near that level into the midday break. WuXi AppTec, a big gainer a day earlier, fell 3.44%, according to The Standard.

Mainland markets held up better. The Shanghai Composite slipped 0.24% to 3,654 in the morning, while the Shenzhen Composite rose 0.11%. In Tokyo, the Nikkei 225 climbed 0.8% to 60,942 by midday, its third straight gain, and Seoul's Kospi added 0.4%.

Tuesday's rally and two chip debuts

The setback came after a firm Tuesday. The Hang Seng closed 108 points, or 0.4%, higher at 24,557 on Nov. 10, on turnover of HK$178.17 billion, RTHK reported. The Hang Seng Tech Index gained 1.1% to 4,084. Optical-module maker Zhongji Innolight jumped 9%, and WuXi AppTec rose as much as 5% after the Pentagon removed the drugmaker services company from its list of Chinese military companies.

Lower oil helped. Brent crude was trading near US$91.56 a barrel on Tuesday morning, around its lowest level since early September, as investors looked to possible talks between the United States and Iran. The CSI Energy Index fell 2.6% on the mainland, with PetroChina down 6.3%.

The same session brought two semiconductor listings that together raised HK$2.36 billion. They went in opposite directions. AI chip designer Suzhou Denglin Technology closed at HK$213, down HK$18 or 7.79% from its offer price. Chip packaging and testing firm Jiangsu Xinde Semiconductor Technology ended at HK$11.40, up 28%. Capital Times reported on Denglin's offering when it was launched.

The split fits a pattern. Investors have grown pickier about AI-linked offerings, questioning whether the spending on computing power, land and energy will pay off, Reuters reported on Wednesday.

Fundraising still running well ahead of 2025

The listing pipeline remains deep. Companies raised HK$753.8 billion through share sales, including IPOs, in the first 10 months of 2026, up 47.5% from a year earlier, according to data from Hong Kong Exchanges and Clearing cited by Reuters. Capital Times has tracked the record pace of IPO fundraising this year.

That volume is pulling banks back. Nomura is holding early internal talks about hiring equity capital markets bankers in Hong Kong, two people familiar with the matter told Reuters, which would reverse cuts the Japanese bank made in 2023. A Nomura spokesperson said the bank explores opportunities in light of client needs and market conditions and did not comment on specific matters. Nomura ranked 12th among bookrunners for Asia-Pacific and Japan equity deals this year through Nov. 9, with US$9 billion of proceeds, according to LSEG data.

The Fed's next policy meeting is in December. Until then, Hong Kong traders have Nvidia's results, due next week, and the expected pricing of Anthropic's U.S. initial public offering later this month, which Reuters said could raise as much as US$64.4 billion, as the next tests of appetite for AI shares.