Hong Kong Stock Market Closing (09.24) | Hang Seng Index rose by 4.13%, breaking through the 19,000 mark. Major policies drive the market surge, with significant gains in financial and technology stocks

According to the Wise Finance APP, the People's Bank of China, the China Banking and Insurance Regulatory Commission, and the China Securities Regulatory Commission announced a series of measures today, including lowering the reserve requirement ratio and interest rates, reducing existing home loan rates, and strengthening the capital market. As a result, the three major indexes of the Hong Kong stock market surged violently, with the Hang Seng Index breaking through the 19,000-point mark and the Hang Seng Tech Index rising by nearly 6%. At the close, the Hang Seng Index rose by 4.13% or 753.45 points to 19,000.56 points, with a total daily turnover of HKD 242.399 billion; the Hang Seng China Enterprises Index rose by 5.09% to 6,714.47 points; and the Hang Seng Tech Index rose by 5.88% to 3,915.58 points.

Guotai Junan International pointed out that the domestic economic policy is focused on stability, real estate policies continue to be optimized, and the profit expectations of the Hong Kong stock market have improved. With the reduction of uncertainty in China's economic and policy fields, the sentiment in the Hong Kong stock market is recovering. Overseas, major central banks have successively implemented their first interest rate cuts, the Federal Reserve's intention to protect the financial and labor markets is evident, some economic data show signs of weakness, and the downward trend in overseas interest rates is a trend. The bank believes that the decrease in uncertainty is particularly evident in the Hong Kong stock market and will be a key driver of the market's rise.

Performance of Blue Chip Stocks

China Merchants Bank (03968) led the blue chips. At the close, it rose by 10.82% to HKD 34.3, with a turnover of HKD 24.02 billion, contributing 21.33 points to the Hang Seng Index. Huachuang Securities believes that although the short-term adjustment of existing mortgage loan rates will have a certain impact on bank profits, the banking index has fully reflected the expectations of this round of policies since September. Therefore, the overall impact on the sector's fundamentals is expected to be neutral. Considering that the mid-term dividends have been substantially distributed, the logic of the sector's dividend strategy remains unchanged. If this round of policies can effectively promote the recovery of the real estate and consumer markets, the pro-cyclical strategy will have significant room and opportunities.

In terms of other blue chip stocks, JD.com Group-SW (09618) rose by 10.17% to HKD 124.6, contributing 29.87 points to the Hang Seng Index; Li Auto-W (02015) rose by 10.11% to HKD 93.15, contributing 19.36 points to the Hang Seng Index; China Shengmu Organic Milk (00881) rose by 9.85% to HKD 9.93, contributing 1.26 points to the Hang Seng Index; China Resources Power (00006) fell by 3.08% to HKD 51.85, dragging down the Hang Seng Index by 3.71 points.

Hot Sectors

On the market, the heavyweight policies drove the market to soar, with large-cap tech stocks across the board rising, JD.com surging by over 10%, Kuaishou and Alibaba rising by over 6%. The central bank introduced a series of heavyweight policies, leading to a surge in major financial stocks; the implementation of reduced existing loan rates boosted real estate stocks and property management stocks; consumer stocks, non-ferrous metal sectors, and the automotive industry chain all rose. On the other hand, education stocks led the decline today, with New Oriental falling by over 6% against the market; some pharmaceutical stocks showed a weak trend; and GDS Holdings, which plummeted by 67% on heavy volume yesterday, fell by another 27%.

1. Surge in Major Financial Stocks. At the close, China Taiping Insurance (02601) rose by 12.47% to HKD 23.9; CITIC Securities (03908) rose by 11.19% to HKD 9.44; CITIC Securities (06030) rose by 10.41% to HKD 13.36. China Merchants Bank (03968) rose by 10.82% to HKD 34.3 On September 24, Pan Gongsheng, Governor of the People's Bank of China, announced a series of incremental monetary policies at a press conference by the State Council Information Office: First, reduce the reserve requirement ratio and policy rates, driving down market benchmark rates. The reserve requirement ratio will be lowered by 0.5 percentage points in the near future, providing approximately 1 trillion yuan of long-term liquidity to the financial market. Lower the policy rate of the central bank, with the 7-day reverse repurchase operation rate lowered by 0.2 percentage points from the current 1.7% to 1.5%. Second, lower existing mortgage rates and unify the minimum down payment ratio for mortgages. Third, create new policy tools to support the development of the stock market.

The central bank has for the first time created structural policy support for the capital market, with securities, funds, and insurance companies exchanging facilities. The initial operation scale is 500 billion yuan, and the funds obtained can only be used for stock market investments. Yan Zhaojun, an analyst at Zhongtai International, stated that the domestic fundamentals in the third quarter continued to weakly recover, the Fed's rate cut opened up policy space for China, and the central bank's combination of policies sent a strong policy signal to boost market confidence.

2. Real estate and property management stocks perform strongly. At the close, Sunac China Holdings (02777) rose by 16% to HKD 0.87; Shimao Group (00813) rose by 15.09% to HKD 0.61; Sunac China Holdings (01918) rose by 13.59% to HKD 1.17; Country Garden Services (06098) rose by 6.09% to HKD 4.7.

Pan Gongsheng, Governor of the People's Bank of China, announced today the reduction of existing mortgage rates and the unified minimum down payment ratio for mortgages, guiding commercial banks to lower existing mortgage rates to near the rates for new mortgage loans, with an average expected reduction of around 0.5 percentage points. The minimum down payment ratio for first-time and second-time home buyers will be unified nationwide, with the minimum down payment ratio for second homes reduced from 25% to 15%.

Guotai Junan Securities pointed out that from the perspective of reducing the burden of residents' repayments, boosting consumption potential, and suppressing early repayments, the bank believes that it is reasonable to lower interest rates on existing housing loans. The adjustments to existing mortgage rates have been effective in the past two instances. Lowering existing housing loan rates can save interest repayments for borrowers, reduce residents' debt pressure, expand consumption and investment, and also help commercial banks smooth out early repayment pressures, stabilize housing consumption expectations, and boost confidence in home purchases.

3. Tech stocks show strong performance. At the close, JD.com-SW (09618) rose by 10.17% to HKD 124.6; Alibaba-W (09988) rose by 6.05% to HKD 92; Meituan-W (03690) rose by 5.27% to HKD 139.8; Tencent (00700) rose by 3.77% to HKD 402.2.

Guoyuan International believes that the Fed's announcement of a rate cut and the start of a rate-cutting cycle is a substantial positive for the Hong Kong stock internet sector. Due to the market liquidity brought about by the rate cut, it is beneficial for international capital to flow towards assets with higher risk preferences. The Hong Kong stock internet sector is currently at historically low valuations, and future performance growth will be driven by cost reduction, efficiency improvement, and technological iteration, further enhancing safety margins and continuously increasing attractiveness to funds China International Securities pointed out that the Hong Kong Internet sector has clearly reached a bottom, and the operating characteristics of new-stage giants are overall showing: more focus on core business, developing high-margin businesses; improving operational efficiency through organizational structure integration; while increasing share buybacks and dividends, shareholder returns are stronger than most sectors. Based on the mid-year report of 24, the overall mid-year profit release of Internet giants is better than other sectors.

4. Consumer stocks are all strong, with the catering sector leading the way. As of the close, 9F Inc. (09922) rose by 14.92% to HKD 2.85; Naixue's Tea (02150) rose by 11.94% to HKD 1.5; Zhenjiuli Du (06979) rose by 10.5% to HKD 6.63; CR Beer (00291) rose by 7.9% to HKD 25.95; Mengniu Dairy (02319) rose by 7.4% to HKD 14.52.

People's Bank of China Governor Pan Gongsheng stated that the relatively strong monetary policy introduced this time will help support the economy, promote consumption and investment. China International Securities pointed out that with the continuous introduction of favorable policies to expand domestic demand by the country, the overall sentiment of the social services sector has been relatively boosted from the previous pessimistic expectations. Shanghai Securities believes that the Mid-Autumn Festival, as the traditional peak season for sales, and the upcoming National Day holiday are significant nodes in the annual sales of catering enterprises. It is optimistic about leading catering companies innovating themselves to cope with the important trend of the equalization of catering consumption and cost-effectiveness, actively seizing the holiday economy.

5. The automotive industry chain is leading the gains. As of the close, Great Wall Motor (01268) rose by 17.68% to HKD 2.13; Nio-SW (09866) rose by 11.14% to HKD 44.4; Li Auto-W (02015) rose by 10.11% to HKD 93.15; China High Speed Transmission Equipment Group (00881) rose by 9.85% to HKD 9.93.

According to relevant data from the China Automobile Dealers Association, in August, the overall discount rate of the new car market was 17.4%. From January to August this year, the "price war" has led to an overall retail loss of 138 billion yuan in the new car market, which has had a significant impact on the healthy development of the industry. The association called for relevant government departments to pay close attention to the current financial difficulties and shutdown risks faced by the automotive distribution sector, take decisive phased financial relief policy measures, and effectively prevent the systemic risks in the automotive distribution sector.

Guojin Securities pointed out that in September, various provinces successively issued replacement policies in response to the national scrappage renewal policy, encouraging consumers to trade in old cars for new ones, effectively boosting new car sales. With the addition of policy subsidies, the traditional "Golden September" sales performance in the automotive market is impressive, and the incremental momentum of new energy products is higher than historical expectations. In addition, on September 19, the Federal Reserve cut interest rates by 50 basis points, officially starting a global interest rate cut cycle, which is also a positive factor for car consumption. It is expected that the sales performance in the peak season of Golden September and Silver October this year will exceed expectations.

Hot Stocks in Focus

High Ground Holdings (01676) hits a new low. As of the close, it fell by 27.78% to HKD 0.39 .

High Ground Holdings plummeted by 67% yesterday and fell by over 30% again during today's trading. The company will hold a board meeting on September 30 to approve the annual performance. The company previously released its interim performance for the six months ending December 31, 2023, with revenue increasing to approximately 196 million yuan, a year-on-year growth of 60.93% The company's share of losses attributable to owners narrowed by 9.68% to 40.312 million yuan as of December 31, 2023, with cash and cash equivalents of only 41.982 million yuan.

It is worth noting that in August of this year, Highland Holdings issued 10.01 million new shares at a subscription price of HKD 1.4 per share; by the end of 2023, the company successfully issued 24 million new shares at a subscription price of HKD 1.8 per share. The two issuances raised a total of over 57 million Hong Kong dollars for the company. In addition, the stock has recently experienced transfer and storage activities. On August 9, Highland Holdings experienced a transfer anomaly, with China Thai International Securities as the transferring broker and HSBC Hong Kong as the receiving broker, with a transfer ratio of 3.86%; on August 16, the stock experienced a storage anomaly, with a storage ratio of 6.95%, and China Thai International Securities as the receiving broker