The Hong Kong market was closed Thursday for the Dragon Boat holiday. China markets were closed on Friday as well. Elsewhere in Asia, major benchmarks posted modest gains.

But Linus Yip, chief strategist at First Shanghai Securities, says Hong Kong investor confidence this month has been mixed.

The beginning of July will see some gains after so-called “window dressing” – when fund managers often rotate out of weak stocks into winners so their portfolios look better – in June, he said. But he expects volatile next month.

Select new economy stocks fell, including Tencent, the social media and gaming giant, which fell 1 per cent. Alibaba, the e-commerce titan and owner of the South China Morning Post, dropped 3.1 per cent, which was its biggest drop in more than a month. Delivery giant Meituan Dianping slid by 2.6 per cent.

Investors have been betting that such stocks will thrive in an “after-the-coronavirus” world, and they have seen spectacular runs since has resulted in jaw-dropping gains mid-March. Take Meituan Dianping, China’s delivery service giant, for example. It has shot up 140 per cent since then, as of Friday’s close.

Other new economy stocks, however, rose, with Ping An Good Doctor soaring as much as 8.5 per cent, as investors continued to pile into China’s largest online health care platform.

Meanwhile, smartphone lens maker Sunny Optical Technology shot up 5.3 per cent after Citigroup upgraded it to buy, and Daiwa Capital Markets reaffirmed its buy rating and boosted its target price by 18.5 per cent to HK$142 from HK$119.80.

“Due to a likely muted 2020 on COVID-19, we see some share price volatility, but view pull-backs, if any, as good opportunities for investors to accumulate shares on solid-long term trends,” Daiwa Capital Markets analysts Kylie Huang and Steven Tsai wrote in new note about why Sunny Optical remains a top sector pick.

Trading sentiment in Hong Kong continued to be weak, and US futures pointed down, despite a late rally overnight in US markets.

“Barriers still exist for the stock benchmark to break 24,700,” said Kingston Lin, director of AMTD securities brokerage. Traders are taking a “wait and see” approach, given the mainland markets remain closed on top of concerns about the virus and US-China tensions, he said.

Traders are closely watching China’s success in controlling a recent outbreak in the capital city of Beijing, after authorities brought the coronavirus under control across the country through lockdowns and other measures.

In the US, sunbelt states from California to Florida have been seeing a surge in cases, most notably among younger people. The death toll in the US is the highest in the world, at 122,238 people, and Texas and Florida have scaled back the next phase of reopening due to surging infections.

YTO Express International soared nearly 40 per cent HK$2.28 at the lunch break – the highest since early August of last year – as the freight service provider said its net profit is expected to surge about 1,000 per cent in the first half of the year, much more than market expectations. YTO closed 19.6 per cent higher.

Meanwhile, Singapore stocks ticked up 0.5 per cent, Korea’s Kospi rose 1.1 per cent, Japan’s Nikkei 225 rose 1.1 per cent, and Australia's S&P/ASX 200 index gained 1.5 per cent.

Additional reporting by Deb Price