Hong Kong Stock Market Closing (07.02) | Hang Seng Index rose by 0.29%, with mid-cap stocks active. LI AUTO-W led the blue chips

According to the information from the Wise Finance app, the three major Hong Kong stock indexes opened lower in the morning, then quickly surged, with all of them rising by more than 1% at one point, but subsequently falling back and trending lower in the afternoon. As of the close, the Hang Seng Index rose by 0.29% or 50.53 points to 17,769.14 points, with a total daily turnover of HKD 118.434 billion; the Hang Seng China Enterprises Index rose by 0.68% to 6,374.91 points; and the Hang Seng Tech Index fell by 0.43% to 3,539.13 points.

TF Securities pointed out that looking ahead, against the backdrop of significantly improved sentiments from both domestic and foreign investors, Hong Kong stocks have ushered in a significant rebound. The sustainability and upward potential in the future will depend on more solid fundamental data to complement it. During the period of economic recovery verification, a cautious and optimistic attitude is still maintained. In terms of allocation, on one hand, sectors with high dividend yields such as utilities, energy, finance, and telecommunications; on the other hand, the technology industry represented by semiconductors and the internet will continue to be the main driver of industrial transformation.

Performance of Blue-Chip Stocks

Li Auto-W (02015) led the blue-chip stocks. As of the close, it rose by 4.98% to HKD 73.8, with a turnover of HKD 8.88 billion, contributing 7.76 points to the Hang Seng Index. Li Auto delivered 47,800 new cars in June, a year-on-year increase of 46.7%. In the second quarter of 2024, it delivered 108,600 vehicles, a year-on-year increase of 25.5%. As of June 30, 2024, Li Auto's cumulative delivery volume reached 822,300 vehicles, ranking first among Chinese new energy brands in total delivery volume.

In other blue-chip stocks, Orient Overseas International (00316) rose by 4.66% to HKD 132.6, contributing 1.24 points to the Hang Seng Index; CNOOC (00883) rose by 4.46% to HKD 23.4, contributing 25.15 points to the Hang Seng Index; Xinyi Solar (00968) fell by 5.6% to HKD 3.71, dragging down the Hang Seng Index by 1.79 points; Chow Tai Fook (01929) fell by 4.14% to HKD 8.1, dragging down the Hang Seng Index by 1.1 points.

Hot Sectors

On the market, large-cap tech stocks fell today; mid-cap stocks and financial stocks performed strongly, with oil prices hitting a two-month high, and the "Big Three Oil Companies" leading the gains; the sector is expected to see a resurgence in dividend-paying stocks, with most coal stocks rising; sales of real estate companies in June showed a significant improvement month-on-month, real estate stocks generally rebounded, shipping stocks, rare earth concepts, domestic bank stocks, and power stocks all rose. On the other hand, consumer stocks were generally under pressure, with sports goods stocks, Apple concept stocks, and home appliance stocks declining; overcapacity in industries led to a sharp drop in main material prices, and photovoltaic stocks continued to decline.

1. Strong Performance of Oil Stocks. As of the close, CNOOC (00883) rose by 4.46% to HKD 23.4; PetroChina (00857) rose by 4.18% to HKD 8.23; Kunlun Energy (00135) rose by 2.96% to HKD 8.34; Sinopec (00386) rose by 1.19% to HKD 5.12 Due to the escalation of tensions in the Middle East and concerns about the rapid start of the Atlantic hurricane season, crude oil trading approached a two-month high after breaking through the recent trading range. WTI closed above $83 per barrel, the highest level since April, breaking out of last week's narrow trading range. Brent also closed above $86 per barrel, reaching a high of over two months. China International Capital Corporation (CICC) released a report stating that the performance of China's oil and gas sector has been strong so far this year, and is expected to continue outperforming the broader market in the second half of the year. Due to global supply shortages, the bank believes that oil prices will remain high in the second half of this year and may even rise further. As mainland funds seek high-yielding state-owned enterprises in the Hong Kong stock market, the bank mentioned that the "Three Oil Giants" are currently in a favorable position.

2. Shipping stocks continue to rise. At the close, COSCO Shipping International (00316) rose by 4.66% to HK$132.6; China COSCO Shipping Corporation (01919) rose by 4.54% to HK$14.28; Pacific Basin Shipping (02343) rose by 4.07% to HK$2.56; China COSCO Shipping Development (02866) rose by 2.65% to HK$1.16.

On July 2nd, the Baltic Dry Index (BDI) futures contract on the European line rose by nearly 5%, breaking through 5500 points to hit a new historical high. Danish shipping giant Maersk Line stated that it expects the disruption in container shipping through the Red Sea to continue into the third quarter, posing challenges for carriers and shipping companies in the coming months. China International Capital Corporation (CICC) research report pointed out that with the strong demand in Europe and the United States, the short-term upward elasticity of shipping is promising. The bank believes that high freight rates are expected to continue into the peak season of the third quarter, while there may be a risk of price correction with the delivery of new ships in the fourth quarter and a decline in demand. The bank continues to be optimistic about the upward cycle of oil shipping, with strengthened supply-side logic and potential demand waiting to be released, expecting elasticity in the peak season. The bank believes that the dry bulk cycle is expected to come, and recommends seizing opportunities for left-side layout.

3. Real estate stocks are generally rebounding. At the close, Country Garden Holdings (03383) rose by 3.92% to HK$0.53; Sunac China Holdings (00884) rose by 3.17% to HK$0.325; Longfor Group Holdings (00960) rose by 2.99% to HK$11.04; and Shimao Group (01030) rose by 2.21% to HK$1.39.

Data from China Index Research Institute shows that in the first half of 2024, the total sales of the top 100 real estate companies amounted to RMB 2,083.47 billion, a year-on-year decrease of 41.6%, narrowing by 3.8 percentage points compared to May, marking the fourth consecutive month of narrowing. According to data from the CRIC Research Center, in June, the top 100 real estate companies achieved a sales turnover of RMB 438.93 billion, a month-on-month increase of 36.3% but a year-on-year decrease of 16.7%. The China Index Research Institute believes that in the third quarter, with the implementation of a package of real estate policies boosting market confidence, market activity will pick up and real estate sales will improve. Dongwu Securities stated that although July is traditionally a slow sales season, with the continued impact of policies, the month-on-month decline is expected to be weaker than the same period last year 4. Most domestic bank stocks rose. As of the close, China Everbright Bank (06818) rose by 4.46% to HKD 2.34; Agricultural Bank of China (01288) rose by 4.19% to HKD 3.48; China CITIC Bank (00998) rose by 3.59% to HKD 5.19; China Merchants Bank (03968) rose by 2.68% to HKD 36.4.

Major dividends from the banking sector will be concentrated in July. Industrial and Commercial Bank of China, China Construction Bank, Bank of China, Bank of Communications, and other banks have announced dividend distributions in July, totaling nearly 300 billion yuan, with ICBC and CCB's dividends exceeding the trillion-yuan mark. Including Postal Savings Bank of China, China Merchants Bank, Industrial Bank, and other banks with confirmed dividend dates in July, it is expected that the dividend scale of listed banks in July will exceed 400 billion yuan. Ping An Securities pointed out that since the beginning of the year, the banking sector's yield has consistently outperformed the market, with the continuous pressure on fundamentals attracting continuous inflows of funds due to high dividend characteristics, driving the sector's valuation to recover. As of June 28, the sector's average dividend yield reached 4.8%. Looking ahead, the attractiveness of dividends is expected to be maintained.

Hot Stocks

1. China Rare Earth (00769) surged on high volume, closing at a 9.68% increase to HKD 0.34.

Premier Li Keqiang of the State Council recently signed the State Council Order to promulgate the "Regulations on Rare Earth Management" (hereinafter referred to as the "Regulations"), which will be implemented from October 1, 2024. The "Regulations" consist of 32 articles, clarifying the principles of rare earth management, improving the rare earth management system, and further perfecting the supervision system of the entire rare earth industry chain, which is conducive to promoting the high-quality development of the rare earth industry.

2. China Longyuan Power (00916) significantly increased, closing with a 6.7% rise to HKD 7.49.

China Longyuan Power announced the injection of some new energy assets by its parent company, the State Energy Group, with an expected new energy installed capacity of about 4 million kilowatts. Morgan Stanley pointed out that in January 2022, China Longyuan Power committed to inject a total of 21 million kilowatts of wind or solar power plant assets by its parent company. China Longyuan Power is currently implementing the relevant capital injection plan and is expected to complete it by January 2025.

3. GCL-Poly Energy Holdings (00968) hit a new stage low, closing with a 5.6% decrease to HKD 3.71.

Daiwa released a research report stating that the average selling price of photovoltaic glass in June was weak, which may indicate a weak revenue trend in the second half of the year; the bank estimates that GCL-Poly Energy's net profit growth in the second half of the year may be less than 5%. In addition, the potential drag from the loss-making polysilicon production capacity under GCL-Poly Energy is expected to further lower market expectations for its earnings in the second half of the year.

Newly Listed Stocks

Yuanxu Technology (08637) plunged all day. As of the close, it fell by 39.26% to HKD 1.47.

Yuanxu Technology was priced at HKD 2.42 per share, with a total issuance of 27 million shares, 1000 shares per lot, resulting in a net amount of approximately HKD 12.03 million. It is reported that Yuanxu Technology is a precision engineering service provider headquartered in Singapore, offering precision engineering services to customers, including precision machining services and precision welding services.

It is worth noting that during the public offering stage, Yuanxu Technology received 2480.61 times oversubscription. After buyback and reallocation, the number of shares offered in the public offering was finally 13.5 million shares, accounting for approximately 50% of the total shares offered. Yuanxu Technology also became the second new stock in the GEM market in Hong Kong this year with an oversubscription multiple exceeding a thousand times