Hong Kong Stock Market Review: Starting to Fluctuate

Although there are no specific numbers over the weekend, it gives people an expectation without limits. While the debt-to-equity swap is expected to break a vicious cycle and pave the way for future demand stimulation, considering the soft September data and the upcoming release of Q3 GDP, more measures may be needed in the short term.

During this period, the Hong Kong stock market may continue to fluctuate, always rising too fast, with the intensity unable to keep up. The market needs time to adapt to the new valuations.

Furthermore, most of the recent consumer stocks have risen on emotions and have now fallen back quite a bit. But since there are bottoming targets and deflation is expected to stop, consumer stocks are still worth paying attention to, especially as many industry leaders provide decent buybacks and dividends.

For example, in the catering sector, YUM China's rebound this time is not the strongest, but it is the most resistant to decline. From the beginning of the year to now, the company has already returned nearly $1 billion to shareholders, exceeding the full year of last year. The target for this year is to return $1.5 billion, planning to return around $1.5 billion again in 2025-2026.

Compared to others, large chain fast food restaurants are more likely to control costs and stabilize profit margins during a downturn, providing shareholder returns while crossing cycles.

In the sporting goods sector, ANTA's Q3 performance did not meet management's expectations, especially Fila, raising concerns that future growth rates will not only slow down but may also turn negative. Although during the Golden Week, ANTA/Fila sales have significantly increased, the performance on Singles' Day will be crucial for Q4. Optimistically, overall inventory and discounts remain at healthy levels.

In comparison, the performance of AMER Sports, which went public through a spin-off, exceeded expectations, with the stock price nearly doubling from the low. The company announced a 60% year-on-year revenue growth during the Golden Week. With several brands selling well at the moment, low base numbers coupled with channel and management advantages, it seems to be replicating Fila's success.

In addition, Singles' Day will start early tonight. The current valuations of the three major e-commerce platforms Alibaba, Pinduoduo, and JD.com are similar, with a forecasted PE ratio of around 11 times.

Alibaba has more short-term catalysts. Firstly, this year marks the first WeChat-Taobao interoperability, to see if it can bring accelerated growth of active buyers to Alibaba. Secondly, Alibaba introduced a new monetization policy in September, which is expected to drive accelerated revenue growth. In order to protect merchants, Alibaba's new "no refund" strategy has been online for two months, intercepting over 400,000 unreasonable refund requests daily. Of course, there won't be high expectations for Q3 data, and improvement will only appear in Q4.

As for Pinduoduo, according to Sensor Tower data in August, the user base of Temu has reached 91% of Amazon's, and is expected to surpass Amazon by the end of the year. The report also states that in 84 countries and regions, users in 53 countries are more inclined to use Temu, especially in Europe, where 28 out of 30 countries prefer Temu. Still, the market share of Temu in the United States is expected to grow to 2.3% next year, which is far from Amazon's 40%