Hong Kong Stock Market Closing (10.10) | Hang Seng Index rose by 2.98%, high dividend concept stocks performed strongly, Guojun, Haitong resumed trading and soared collectively

According to the Wisdom Financial APP, the market is focused on the State Council Information Office's press conference this Saturday, combined with the implementation of the People's Bank of China's 500 billion "convenience swap," Hong Kong stocks reversed their decline today, with all three major indexes rebounding strongly, each rising more than 4% at one point during the trading session. As of the close, the Hang Seng Index rose by 2.98% or 614.74 points to 21,251.98 points, with a total turnover of 325.327 billion Hong Kong dollars for the day; the Hang Seng China Enterprises Index rose by 3.46% to 7,620.74 points; and the Hang Seng Tech Index rose by 2.05% to 4,736.1 points. Looking at the whole week, the Hang Seng Index fell by 6.53%, the China Enterprises Index fell by 6.57%, and the Hang Seng Tech Index fell by 9.39%.

Galaxy Securities pointed out that a new round of Fed rate cuts has officially begun, with a continued tone of preemptive rate cuts this year, global liquidity improving, relatively positive for the performance of Hong Kong stocks, but attention should be paid to the disruptive factors of the U.S. election on market sentiment. Combined with the 924 policy package and the market expectations boosted by the Central Political Bureau meeting in September, as policies continue to be implemented, the performance of Hong Kong stocks is expected to be boosted. It is expected that there is a high probability of upward volatility in the fourth quarter, and further observation is needed on the slope of domestic economic recovery and the intensity of subsequent fiscal policy enhancements.

Performance of Blue Chip Stocks

China Resources Beer (00291) led the blue chips. As of the close, it rose by 10.42% to 33.9 Hong Kong dollars, with a turnover of 1.373 billion Hong Kong dollars, contributing 8.39 points to the Hang Seng Index. CMB International pointed out that with stimulus in consumption policies, improving consumer expectations, and a rebound in domestic demand, the valuation of essential sectors will be supported. The bank stated that it is expected that beer companies will introduce new products targeting the mid-range price segment, the industry will enter a low base period, raw material costs will continue to decline, and sales and profit growth rates are expected to gradually improve.

In other blue chip stocks, Geely Auto (00175) rose by 9.34% to 12.88 Hong Kong dollars, contributing 10.79 points to the Hang Seng Index; Trip.com Group-S (09961) rose by 8.48% to 505.5 Hong Kong dollars, contributing 11.02 points to the Hang Seng Index; SMIC (00981) fell by 6.25% to 25.5 Hong Kong dollars, dragging down the Hang Seng Index by 11.61 points; WuXi AppTec (02359) fell by 1.06% to 56.25 Hong Kong dollars, dragging down the Hang Seng Index by 0.35 points.

Hot Sectors

On the market, most large-cap tech stocks rose, with Meituan up more than 5% and Alibaba up more than 2%. With the implementation of the People's Bank of China's 500 billion "convenience swap," high dividend assets strengthened today, leading sectors such as infrastructure, coal, water utilities, and oil saw significant gains; major financial and consumer stocks regained momentum, Haitong Securities and Guotai Junan resumed trading and surged collectively, with major asset restructuring plans in place; during the holiday season, real estate markets in many places heated up, with several real estate companies announcing price hikes or full withdrawal of discounts, leading to a general rise in property stocks. On the other hand, chips continued their previous decline, with SMIC falling by over 6%.

1. Concept stocks with high dividends such as coal and oil rose. As of the close, China Railway (00390) rose by 8.97% to 4.25 Hong Kong dollars; Yanzhou Coal Mining (01171) rose by 8.82% to 11.1 Hong Kong dollars; China Shenhua (01088) rose by 5.77% to 34.85 Hong Kong dollars; CNOOC (00883) rose by 4.15% to 20.1 Hong Kong dollars The central bank today announced the establishment of the first phase of a 500 billion yuan swap facility to support eligible securities, funds, and insurance companies in using assets such as bonds, stock ETFs, and constituents of the SSE 300 Index as collateral to exchange for high-grade liquid assets such as national bonds and central bank bills. According to sources close to the central bank, the swap facility has a term not exceeding 1 year, and extension can be applied for upon maturity; the scope of collateral may be expanded in the future depending on the situation. The flexibility in these operations indicates that the tool will have a lot of room for development in the future.

Guosheng Securities believes that for companies with high dividend yields, this policy helps major shareholders increase their holdings at a lower cost, potentially increasing the dividend payout ratio and attracting more investors seeking stable returns. Taking a listed company with a dividend yield of 4% as an example, assuming the stock price remains unchanged, borrowing 200 million yuan at a 2.25% interest rate for additional holdings would result in a dividend income of 8 million yuan, with interest expenses of 4.5 million yuan, and an estimated net income of around 3.5 million yuan. This interest rate differential income can exist in the long term and has a clear advantage, helping major shareholders of listed companies proactively increase their holding frequency and dividend payout ratio. The higher the dividend yield, the higher the interest rate differential income, making this policy a means for the country to support the high dividend strategy of listed companies.

2. Real estate stocks generally rose. At the close, Sunac China Holdings (01918) rose by 17.33% to HKD 2.64; China Evergrande Group (02202) rose by 6.72% to HKD 7.31; Longfor Group Holdings (00960) rose by 6.7% to HKD 13.38; Agile Group Holdings (02777) rose by 4.76% to HKD 1.76.

With multiple policies coming into effect before the holiday, during the National Day "Golden Week," the visitation and subscription volume of core city properties have generally increased significantly compared to before the holiday. Data from the China Index Research Institute shows that the average subscription volume of new housing projects during the National Day holiday in most cities exceeded that of the entire month of September. In first-tier cities, the average subscription volume of monitored projects in Guangzhou and Shenzhen during the holiday was double that of September, while in Beijing and Shanghai, it exceeded the volume of September. According to Ke Rui, the subscription area in 22 key cities during the National Day period increased by 12% month-on-month and 26% year-on-year.

In addition, as the market gradually stabilizes, several real estate companies have issued notices or posters announcing price increases or the full withdrawal of discounts. Midea Real Estate announced that starting from October 8th, all properties for sale nationwide will fully withdraw a 2% purchase discount. China Resources Land Beijing also announced that starting from October 8th, all properties for sale by the Beijing company will be raised by 2% on the existing prices; China Fortune Land Development also issued a poster stating that starting from October 8th, discounts on their projects including Huaxiang Yihao, Yihao Gongguan, Yujing Xingcheng, Yujing Xingcheng Yuanqi, and Daxing Xingguangcheng will be withdrawn by 2%.

3. Auto stocks performed well. At the close, Geely Automobile Holdings Limited (00175) rose by 9.34% to HKD 12.88; XPeng Inc. (09868) rose by 8% to HKD 50.6; Nio Inc. (09866) rose by 4.62% to HKD 48.7; BYD Company Limited (01211) rose by 4.4% to HKD 298.8.

During this year's National Day holiday, the domestic auto market experienced a consumption boom. Hongmeng Intelligent Mobility official data shows that during the National Day holiday, the sales of Aito R7, Aito M9, and Aito M7 exceeded 9,600 units, 7,800 units, and 9,000 units respectively Zero Run Auto CEO Zhu Jiangming stated on WeChat Moments that on the last day of National Day, Zero Run's sales hit another record high, with over 17,000 units sold during the 7-day holiday. Carfans founder Sun Shaojun mentioned, "ZEEKR added over 10,000 units during the National Day, IM Motors added over 20,000 units, and XPeng added over 16,000 orders."

With the arrival of the peak season in the industry known as "Golden September and Silver October," as well as the incremental release of the previous policy of trading in old for new, the new energy vehicle market accelerated its growth in September, with multiple brands reaching new historical highs. According to CCTV News, informed sources revealed that recently, China, the United States, and the European Union have been intensively communicating on trade issues related to electric vehicles. After the EU member states voted on October 4 to pass the final ruling draft of the EU electric vehicle anti-subsidy case, the China-EU working group will continue negotiations.

4. Consumer stocks regain momentum. By the close of trading, China Resources Beer (00291) rose by 10.42% to HKD 33.9; 99 Billions (09922) rose by 8.85% to HKD 4.18; Trip.com Group-S (09961) rose by 8.48% to HKD 505.5; Feihe International (06186) rose by 5.27% to HKD 6.19; and Zhenjiu Lidu (06979) rose by 5.26% to HKD 8.21.

Huatai Securities pointed out that the valuation of the consumer sector is currently at the bottom range, and with policy catalysis, a future "Davis Double-Click" is expected. Most leading consumer companies have a 2024 P/E ratio ranging from 10 to 20 times, with a relatively low institutional allocation. The market's pessimism towards consumption has been adequately reflected. Looking ahead, leading consumer companies have strong performance resilience. With the boost in market confidence from policy combinations and the effective implementation of boosting domestic demand and consumption policies, the consumer sector's performance is expected to improve, and valuations are expected to continue to recover. CITIC Securities believes that the significant characteristics of the post-consumer cycle, coupled with clear policy attitudes and economic recovery expectations, will positively drive the recovery expectations of the consumer market.

5. Some Hong Kong media stocks show strength. By the close of trading, Emperor Entertainment Group (00491) rose by 61.9% to HKD 0.068; Television Broadcasts (00511) rose by 11.58% to HKD 3.47; Shaw Brothers Holdings (00953) rose by 9.32% to HKD 0.129.

On October 9, Li Yonghua, Deputy Representative of International Trade Negotiations of the Ministry of Commerce, and Paul Chan, Financial Secretary of the Hong Kong Special Administrative Region Government, jointly signed the "Agreement II on Amending the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) Agreement on Trade in Services." "Agreement II" will come into effect from the date of signing and will be officially implemented from March 1, 2025. "Agreement II" introduces additional opening measures in the areas of film and television services.

In the film sector, restrictions on Hong Kong service providers investing in film production will be lifted, and Hong Kong service providers will be allowed to establish distribution companies approved by the mainland competent authorities to operate distribution business for Hong Kong films imported in a buyout form. In the television sector, restrictions on the number of Hong Kong individuals participating as key creative personnel in online TV dramas will be lifted, and Hong Kong-produced imported dramas will be allowed to be broadcast during prime time on mainland television stations after approval by the State Administration of Radio, Film, and Television

Hot Stock Movements

1. Major asset restructuring plan finalized, Guotai Junan Securities and Haitong Securities resumed trading and soared collectively. As of the close, Haitong Securities (06837) surged by 95.48% to HKD 7.09; Guotai Junan (02611) rose by 55.07% to HKD 12.26.

On the evening of October 9th, Guotai Junan and Haitong Securities released related merger and reorganization proposals and a joint announcement. The two parties plan to carry out a major asset restructuring through a stock-for-stock absorption merger and raise supporting funds. The exchange ratio between Haitong Securities and Guotai Junan is 1:0.62, meaning that every 1 share of Haitong Securities A-shares can be exchanged for 0.62 shares of Guotai Junan A-shares, and every 1 share of Haitong Securities H-shares can be exchanged for 0.62 shares of Guotai Junan H-shares. The merged company will adopt a new company name.

2. Tailing Pharmaceutical (01011) resumed trading and surged. By the close, it rose by 17.5% to HKD 0.47.

Tailing Pharmaceutical announced that the company is considering issuing new shares to four creditors (including two major shareholders) to capitalize the outstanding principal amount and interest of the group's existing loans owed to the subscribers. If implemented, it will result in any subscriber holding more than 30% of the company's share capital, triggering the obligation to make a mandatory general offer. As of the announcement date, the company has not entered into any agreements with any subscribers.

3. October Paddy Field (09676) hits a new low. By the close, it fell by 13.62% to HKD 12.18.

October Paddy Field is about to enter the one-year lock-up period for pre-IPO investors. A previous announcement indicated that the lock-up expiration date for pre-IPO investors including YF Mega Media (HK) under Yunfeng Fund, Sequoia Capital China Growth, and Ceyuan Ventures is October 12, 2024. It is worth noting that on October 7th, October Paddy Field experienced abnormal changes in its holdings, with a holding ratio of 34.61%, and the custodian broker being China International Finance Hong Kong Securities