Hong Kong Stock Market Closing (01.30) | Hang Seng Index fell 2.32%, once again breaking below the 16,000 level. Technology, semiconductor, and property stocks are under pressure.

Zhitong App learned that the three major stock indexes in Hong Kong opened lower in the morning and then fluctuated lower throughout the day. Among them, the Hang Seng Index once again fell below the 16,000 level. At the close, the Hang Seng Index fell 2.32% or 373.79 points to 15,703.45 points, with a total daily turnover of HKD 94.86 billion; the Hang Seng China Enterprises Index fell 2.47% to 5,275.37 points; the Hang Seng Tech Index fell 3.27% to 3,098.87 points.

CITIC Securities believes that although the recent unexpected reserve requirement ratio cut and a series of real estate policies are expected to boost market sentiment in the short term, considering the current sluggish market sentiment, the sustained rise of the market still depends on the continuous implementation of policies and fundamental data. The risk of further adjustment of the loose monetary policy expectations of the US Federal Reserve and the unexpected rise in US bond yields may still suppress the valuation of the Hong Kong stock market in the first half of the year. The bank still sees the value of allocating "volatile market" Hong Kong stocks with high dividend assets.

Performance of blue-chip stocks

HANG LUNG PPT (00101) led the decline in blue-chip stocks. At the close, it fell 8.4% to HKD 9.05, with a turnover of HKD 158 million, dragging down the Hang Seng Index by 2.3 points. HANG LUNG PPT announced its annual performance as of the end of last year, with revenue of HKD 10.316 billion, a year-on-year decrease of 0.3%. Net profit attributable to shareholders increased by 3.5% to HKD 3.97 billion; in addition, with the increase in net interest expenses, basic net profit attributable to shareholders decreased by 1% to HKD 4.137 billion, and basic earnings per share also decreased to HKD 0.92 accordingly.

Almost all blue-chip stocks were hit hard, with only 4 stocks in the green. Hansoh Pharmaceutical (03692) rose 1.16% to HKD 12.2, contributing 0.26 points to the Hang Seng Index; China Unicom (00762) rose 0.55% to HKD 5.48, contributing 0.29 points to the Hang Seng Index; Shenzhou International (02313) fell 7.24% to HKD 67.95, dragging down the Hang Seng Index by 6.86 points; SMIC (00981) fell 6.36% to HKD 14.42, dragging down the Hang Seng Index by 6.44 points.

Hot sectors

On the market, large-cap technology stocks fell collectively, while real estate and property management stocks were under pressure. Semiconductor stocks, tourism and sightseeing, automobile dealers, sports goods stocks, automobile industry chains, mobile phone industry chains, and domestic insurance stocks were among the top decliners. On the other hand, the price of Bitcoin returned above $43,000, and Bitcoin-related stocks were active; Nine Dragons Paper announced positive earnings, and paper stocks rose against the trend.

1. Semiconductor stocks led the decline. At the close, Huahong Semiconductor (01347) fell 7.17% to HKD 15.02; SMIC (00981) fell 6.36% to HKD 14.42. Semiconductor company Jingmen Semiconductor (02878) fell 5.56% to HKD 0.255; Shanghai Fudan (01385) fell 0.59% to HKD 10.04.

Recently, there have been market reports indicating that global mainstream wafer foundries have initiated a new round of price competition, either directly or indirectly. According to research, the main range of price reductions in the wafer foundry industry is for processes above 28nm. Within the range of processes above 28nm, the average price of 12-inch foundries in the first quarter of 2024 decreased by about 11.1% YoY, while the average price of 8-inch foundries decreased by about 25.2% YoY. The magnitude of the price reductions is larger compared to the same period in previous years. Tianfeng Securities believes that TSMC's fourth-quarter revenue will exceed expectations. Considering the support of Huawei smartphones for local chip suppliers, as the inventory of Huawei smartphones increases, it is expected that IC design companies will increase their wafer orders, driving the utilization rate of local wafer foundries to recover. In a pro-cyclical background, the development of the domestic industry may lead to a better recovery of local wafer foundries compared to the industry average.

2. Real estate stocks collectively declined. At the close, Sunac China (01918) fell 7.14% to HKD 1.17; Yuzhou Group (03377) fell 6.67% to HKD 0.35; Yuexiu Property (00123) fell 6.48% to HKD 4.91; Agile Property (02777) fell 5.45% to HKD 1.04.

On January 29th, the China Evergrande liquidation case was heard in the High Court of Hong Kong. The judge pointed out that China Evergrande's debt restructuring plan lacked progress and the company's assets were insufficient to cover its liabilities, officially ordering the liquidation of China Evergrande. Daiwa Securities expects that the order for Evergrande's liquidation will cause other defaulting developers' creditors to closely monitor and imitate, potentially triggering a new wave of liquidation applications, which will put pressure on the stock prices of already troubled real estate companies. In addition, UBS pointed out that Guangzhou has relaxed restrictions on the purchase of units larger than 120 square meters, becoming the first first-tier city to announce such relaxation. With the recent statement by the Ministry of Housing and Urban-Rural Development that local governments can independently regulate the real estate market, it is believed that other first-tier cities may follow suit. The bank mentioned that it communicated with Guangzhou Zhongyuan Real Estate on the 28th and found that the foot traffic in the sales center has slightly increased, but transactions are still relatively weak. The bank noted that previous relaxations of mortgage loans or housing purchase restrictions often led to a recovery lasting about four weeks, but the magnitude and duration have narrowed. In terms of stock prices, although loose policies are positive, the bank expects limited impact on real estate stock prices.

3. The entire mobile phone industry chain fell throughout the day. At the close, GoerTek (01415) fell 6.27% to HKD 16.74; FIT Hon Teng (02038) fell 5.77% to HKD 0.49; Q Technology (01478) fell 3.32% to HKD 2.91; Sunny Optical Technology (02382) fell 2.44% to HKD 54.05.

The latest report from IDC shows that in the fourth quarter of 2023, the shipment volume of the Chinese smartphone market was approximately 73.63 million units, a YoY growth of 1.2%, achieving a rebound for the first time after 10 consecutive quarters of decline. However, it is important to note that although the overall market has finally returned to a growth trend, the market performance is still significantly lower than expected. The annual shipment volume of the Chinese smartphone market in 2023 is approximately 271 million units, a YoY decrease of 5.0%, reaching the lowest shipment volume in nearly 10 years. Sunny Optical Technology issued a profit warning, expecting that the shareholders' net profit for 2023 will be approximately 1.084 billion to 1.204 billion yuan, a YoY decrease of about 50% to 55%. The announcement stated that the expected decrease is mainly due to the continued weak demand in the global smartphone market, intense industry competition, and the ongoing trend of decreasing average selling prices and gross profit margins for the group's mobile phone lenses and camera modules.

In addition, Apple will announce its first-quarter financial results after the US stock market closes on February 1st. The market expects Apple's Q1 revenue to be $117.95 billion, compared to $117.15 billion in the same period last year. It is understood that Apple has experienced four consecutive quarters of declining revenue and has been downgraded by major banks at the beginning of the year. A UBS report pointed out that Apple's demand trend was weak as of the end of December last year, and the potential accumulation of iPhone inventory may become a headwind for the second quarter ending in March this year. In December last year, iPhone sales in China fell by 18% YoY. According to Apple's Chinese website, the price of the iPhone 15 was lowered in January, which is believed to be a move to clear inventory.

4. The trend of the automotive industry chain is sluggish. As of the close, US Auto (01268) fell by 9.81% to HKD 2.85; China High Speed ​​(00881) fell by 3.89% to HKD 13.82; Li Auto-W (02015) fell by 1.56% to HKD 107.6.

The price war in the current automotive industry is still ongoing. According to incomplete statistics, about 10 car companies have recently announced car purchase discount policies, including Tesla, Li Auto, and XPeng. Daiwa pointed out that Tesla is asking upstream component suppliers to reduce prices by up to 10%. It believes that Tesla's price reduction actions will put pressure on the profit margins of other new energy vehicle companies and have a negative impact on the overall atmosphere of the Chinese automotive industry. In addition, according to preliminary calculations by the China Passenger Car Association, the retail market for narrow passenger cars this month is expected to be around 2.2 million units, a MoM decrease of 6.5%; the retail market for new energy vehicles is expected to be around 800,000 units, a MoM decrease of 15.3%, with a penetration rate falling to 36.4%.

According to a survey of the "China Automobile Dealers Inventory Alert Index" released by the China Automobile Dealers Association, the inventory alert index for Chinese automobile dealers in December 2023 was 53.7%, a YoY decrease of 4.5 percentage points and a MoM decrease of 6.7 percentage points. The inventory alert index is above the boom-bust line, indicating that the automobile circulation industry is still in a downturn. Looking ahead to 2024, dealers believe that automobile demand will continue the growth momentum of the second half of 2023, but competition will be more intense, and they will continue to face issues such as further price reductions for new cars, high inventory pressure, tight funds, and low unit profits. 5. Bitcoin concept stocks perform actively. As of the close, BC Technology Group (00863) rose 7.97% to HKD 6.64; Ouke Cloud Chain (01499) rose 5.56% to HKD 0.285; and New Fire Technology Holdings (01611) rose 4.04% to HKD 2.32.

On Monday, the price of Bitcoin returned above $43,000, resuming its recent upward trend. After a significant decline this year following the long-awaited approval of a Bitcoin spot ETF, Bitcoin has recently regained its momentum. Bitcoin closed around $42,000 in 2023. Since 2024, the cryptocurrency has accumulated a rise of approximately 1.25%. In addition, according to Tencent News "First Line" report, CSOP Asset Management (Hong Kong) has submitted an application for a Bitcoin spot ETF to the Hong Kong Securities and Futures Commission. This is the first institution in Hong Kong to submit an application for a Bitcoin spot ETF. The Hong Kong Securities and Futures Commission hopes to expedite the approval of the first Hong Kong Bitcoin spot ETF, and plans to list the first Hong Kong spot Bitcoin ETF on the Hong Kong Stock Exchange after the Spring Festival. It is reported that prior to this, the Hong Kong Securities and Futures Commission and the Hong Kong Monetary Authority issued a circular in December 2023, stating that they are ready to accept applications for the recognition of virtual asset spot ETFs.

Hot Stocks

1. Tong Ren Tang Pharmaceutical (03613) issues profit warning, and as of the close, it fell 16.37% to HKD 9.3.

Tong Ren Tang Pharmaceutical announced that it expects a decrease in group revenue of 11% to 15% for the year ending December 31, 2023, compared to the same period in 2022, and a decrease in post-tax profit of 18% to 22%.

2. Zhejiang Shibao (01057) announces profit increase, and as of the close, it rose 15.93% to HKD 2.11.

Zhejiang Shibao announced that it expects a significant increase of 373.98% to 437.17% in net profit attributable to shareholders of the company for the year ending December 31, 2023, compared to the same period last year, reaching RMB 75 million to 85 million.

3. Nine Dragons Paper (02689) rises and falls, and as of the close, it rose 4.83% to HKD 3.04.

Nine Dragons Paper announced that it expects the company's equity holders' profit for the six months ending December last year to be approximately RMB 200 million to 400 million, compared to a loss of RMB 1.389 billion in the same period last year, turning the loss into a profit. 4. Evergrande Auto (00708) rose during trading and closed up 4.37% at HKD 0.239.

Sean, the CEO of Evergrande Group, emphasized that the subject of the overseas liquidation order issued by the court is China Evergrande, which is listed in Hong Kong. Currently, the management and operation system of Evergrande Group and other domestic and foreign subsidiaries, which are independent legal entities, remain unchanged.

5. Nanjing Panda Electronics (00553) rose slightly and closed up 3.13% at HKD 2.64.

Musk announced that the first human patient has received a brain implant chip from his startup company, Neuralink Corp. Nanjing Panda Electronics previously stated that the research and development project of their multimodal human-machine interaction system based on brain-computer interface technology is still in progress.