2023.12.04 09:10
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"Daily Market Review" Hang Seng Index hits new low for the year, Fosun Pharma under pressure, NetEase declines by half

The Hang Seng Index hit a near one-year low today, dragged down by weakness in technology and healthcare stocks. Federal Reserve Chairman Powell stated that future monetary policy decisions will be cautious. The Dow Jones and Nasdaq both rose last Friday, with the US Dollar Index reaching 103.4. The total turnover of the Shanghai and Shenzhen stock markets amounted to RMB 851.2 billion. The Hang Seng Index closed at 16,646 points, down 184 points or 1.1%, while the H-share index fell 58 points or 1%. Gold prices reached a new high, with Zijin Mining shares rising 3.8%. Stocks related to the WuXi AppTec group declined, with WuXi Biologics' stock price falling 23.8%. The company expects challenging gross profit margins and growth rates this year. The broader market in Hong Kong turned weak, with 1,187 stocks falling.

Dragged down by the weakness in the technology and healthcare sectors, the Hang Seng Index (HSI) rose initially but then fell, hitting a nearly one-year low. Federal Reserve Chairman Powell stated that future monetary policy decisions will be made cautiously. The Dow Jones Industrial Average (DJIA) and the Nasdaq Composite both rose 0.8% and 0.55% respectively on Friday (8th), while the yield on the 10-year U.S. Treasury bond fell to 4.236 basis points. The U.S. Dollar Index rose to 103.4. At the time of writing, DJIA futures were down 44 points or 0.12%, and Nasdaq futures were down 0.2%. The Shanghai Composite Index fell 8 points or 0.29% to close at 3,022 points, while the Shenzhen Component Index fell 0.6%. The total trading volume on the Shanghai and Shenzhen stock exchanges was RMB 851.2 billion. The HSI opened higher by 88 points today (4th), but then fluctuated and fell. In the afternoon, it even fell as low as 16,617 points, hitting a one-year low. It closed at 16,646 points, down 184 points or 1.1% for the day. The Hang Seng China Enterprises Index fell 58 points or 1% to close at 5,703 points, and the Hang Seng Tech Index fell 71 points or 1.9% to close at 3,759 points. The total trading volume for the day was HKD 106.385 billion. The southbound trading under the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect saw a net inflow of RMB 721 million and RMB 303 million respectively. Gold prices hit a new high, and Zijin Mining (02899.HK) rose 3.8%. The HSI quarterly review took effect today, and Li Xiang (02015.HK) and WuXi AppTec (02359.HK) both turned blue on their first day, with both falling 3.3% and 8.8% respectively for the day. WuXi Biologics (02268.HK) fell 10.9%. WuXi Biologics (02269.HK) fell 23.8% and was suspended midway. The company held a conference today to disclose the unexpected impact on revenue and profit from the drug development and production segments, and it is expected that the gross profit margin and growth rate will face challenges this year. In the briefing, WuXi Biologics stated that the company expects the most challenging period to be this year and the first half of next year, with a gradual recovery expected in the second half of next year. Among them, the gross profit margin and growth rate this year are the most challenging, but it is expected that the gross profit margin and growth rate will gradually recover in the next few years: stable growth in 2024, and strong growth expected from 2025 onwards. In the main board of the Hong Kong stock market today, the market breadth turned weak, with a ratio of 14 gainers to 28 losers (compared to 15 gainers to 25 losers the previous day), and 1,187 stocks fell (a decline of 3.3%). Among the HSI constituents, 29 stocks rose and 50 stocks fell, with a ratio of 35 gainers to 61 losers (compared to 14 gainers to 81 losers the previous day). The short selling turnover in the market today was HKD 16.516 billion, accounting for 17.899% of the total turnover of short selling stocks of HKD 92.271 billion (compared to 23.443% the previous day). Alibaba (09988.HK) fell 1.5% as the Alibaba Group restructured Alibaba Network, with Hangzhou Haoyue taking over the listed company's equity. Tencent (00700.HK) fell 0.7% for the day. NetEase (09999.HK) fell 5.2%. Goldman Sachs pointed out that Tencent will launch the highly anticipated new game "Dream Star" next Friday (15th). The bank noted that Tencent has confirmed a significant investment in the game, including Tencent Interactive Entertainment Group (IEG)/Tencent Games Studio Group. In the first phase, an investment of CNY 1.4 billion will be made in the UGC system/creators and in IP collaboration, similar to that of "King of Glory". The bank believes that compared to existing party games in the market, "Dream Star" can target a wider cross-age audience with its diverse gameplay, social network established through WeChat/QQ, and potential large-scale promotion on major platforms including Douyin. As for NetEase, Goldman Sachs pointed out that the company has successfully launched a similar game, "Egg Party", which generated revenue of approximately CNY 7 billion to CNY 8 billion this year. The competition between "Dream Star" and "Egg Party" in terms of user base and time spent will be worth watching. The bank expects that although there will be some overlap in users between these two games and similar games, the overall potential market for party games is expected to expand rapidly and cater to many other types of gamers, such as shooting and casual games, rather than simply cannibalizing users of these two game types. (wl/a)