"Market Review" Hang Seng Index holds at 24,000, Northbound capital turns to a net outflow of over 3 billion, Alibaba and Xiaomi weak

In June, the Caixin China Services PMI fell to 50.6, and the Hang Seng Index retreated today, falling below the 24,000 level. U.S. President Trump announced on Wednesday that a trade agreement has been reached with Vietnam, which includes a 20% tariff on goods imported from Vietnam to the U.S. The Dow Jones and Nasdaq both fell 0.02% and rose 0.9% respectively overnight. Trump proposed the "Big and Beautiful Act," which gained enough votes to pass through the House of Representatives. At the time of writing, the yield on U.S. 2-year bonds fell to 3.764%, the yield on U.S. 10-year bonds fell to 4.253%, and the U.S. dollar index fell 0.04% to 96.74. Dow futures rose 4 points or 0.01%, while Nasdaq futures rose 0.08%. The Shanghai Composite Index rose 6 points or 0.2% to close at 3,461 points, the Shenzhen Component Index rose 1.2%, and the total trading volume of the Shanghai and Shenzhen markets reached 1.3 trillion yuan. Regarding the trade agreement between the U.S. and Vietnam, a spokesperson for the Ministry of Commerce stated that they welcome all parties to resolve economic and trade differences with the U.S. through equal consultations, but firmly oppose any party achieving a deal at the expense of China's interests. If such a situation occurs, China will resolutely take countermeasures to safeguard its legitimate rights and interests.

The Hang Seng Index opened 12 points higher, initially rising 47 points to 24,269 points before retreating, at one point falling 301 points to a low of 23,920 points, ultimately closing down 151 points or 0.6% at 24,069 points; the Hang Seng China Enterprises Index fell 76 points or 0.9% to 8,648 points; the Hang Seng Tech Index fell 35 points or 0.7% to close at 5,233 points. The total market turnover for the day was 231.247 billion yuan. The total turnover of northbound trading was 127.837 billion yuan, while southbound funds recorded a net outflow of 3.048 billion yuan today (compared to a net inflow of 5.036 billion yuan the previous day), marking another net outflow since May 26. Hong Kong Exchanges and Clearing (00388.HK) fell 1.4%.

Multi-Point Intelligent (02586.HK) plans to apply for a stablecoin license in Hong Kong, with its stock price rising 23.6% to 11.14 yuan, with a turnover of 1.877 billion yuan. Guotai Junan International (01788.HK) rose 11.6%, with a turnover exceeding 4.5 billion yuan. Steel stocks, which rose yesterday, fell back today, with Maanshan Iron & Steel (00323.HK) down nearly 5%, and Chongqing Iron & Steel (01053.HK) sliding 23.3% to 1.32 yuan, with a turnover of 1.569 billion yuan. Chow Tai Fook (06168.HK) and Coconut Water IFBH (06603.HK) each fell 7.6% and 10.9%.

【Northbound Funds Flow Out, Alibaba and Xiaomi Weak】

In the tech sector, South African Naspers expressed skepticism about Meituan's (03690.HK) international expansion, stating a lack of confidence and considering reducing its stake. Meituan's stock price fell 2.5% for the day. Alibaba (09988.HK) fell 2.9% to 106.2 yuan, with a trading volume of 16.471 billion yuan. Goldman Sachs released a report considering Alibaba's strong business momentum, but due to increased investment in food delivery and instant retail businesses, the firm lowered its earnings per share forecast for Alibaba for the fiscal years 2026 to 2028 and reduced the target price from 154 yuan to 146 yuan Xiaomi (01810.HK) saw its stock price drop 3.4% to HKD 58.1, with a trading volume of HKD 13.6 billion. Xiaomi founder Lei Jun revealed that there are currently too many people in line for Xiaomi cars in China, so the company will prioritize resolving domestic delivery issues over the next two years, and will consider exports around 2027. Haitong International released a report stating that Xiaomi's car sales exceeded 25,000 units in June, a month-on-month decline of about 3,000 units. The YU7 was launched on June 26, with over 240,000 units locked in within 18 hours; the main pressure currently lies in the delivery end, and the pace of capacity release in the factory's second phase will be a key variable. The firm expects YU7's monthly deliveries to exceed 40,000 units by the end of the year.

【Stock Rise of a Thousand: Mobile Stocks Perform Well】

The Hong Kong stock market turned slightly weaker today, with a rise and fall ratio of 28 to 21 for main board stocks (compared to 29 to 21 yesterday). There were 1,151 rising stocks (up 3.2%), with 51 Hang Seng Index constituent stocks rising and 31 falling, resulting in a rise and fall ratio of 60 to 36 (compared to 80 to 18 yesterday). The market recorded short selling of HKD 26.743 billion today, accounting for 13.336% of the total trading volume of HKD 200.534 billion for shortable stocks (compared to 14.58% yesterday).

The United States and Vietnam reached a tariff agreement, with Shenzhou (02313.HK) and Yue Yuen (00551.HK) rising 2.4% and 2.1%, respectively, while Techtronic Industries (00669.HK) rose 1.2%. Mobile component stocks Sunny Optical (02382.HK), Q Technology (01478.HK), and GoerTek (01415.HK) rose between 4.1% and 4.7%, while AAC Technologies (02018.HK) rose 3.4%.

Citigroup released a report stating that Trump announced a trade agreement between the U.S. and Vietnam. The U.S. will impose a 20% tariff on goods exported from Vietnam to the U.S. and a 40% tariff on re-exported goods. The firm believes this is basically in line with market expectations. Looking back, Trump had proposed a 46% reciprocal tariff on imported goods from Vietnam. In contrast, the U.S. enjoys duty-free access to the Vietnamese market. Citigroup expects the U.S. may soon finalize tariff legislation with other ASEAN countries, such as Cambodia and Indonesia. This news will be most beneficial for Techtronic Industries, as 65% of its revenue comes from the U.S., but nearly half of its products sold in the U.S. are manufactured in Vietnam. Citigroup reiterated its "Buy" rating on Techtronic Industries, Shenzhou International, Kiu Hung (01836.HK), and Crystal International (02232.HK)