Hong Kong Stock Market Closing (08.29) | Hang Seng Index rose by 0.53%, Chinese banking stocks collectively fell, Meituan-W surged 12% after earnings release

According to the information from the Wise Finance APP, the Hong Kong stock market opened lower in the morning and then fell, with the Hang Seng Index dropping more than 2% at one point. In the afternoon, the index hit bottom and rebounded, turning all into the red. As of the close, the Hang Seng Index rose by 0.53% or 93.87 points to 17,786.32 points, with a total daily turnover of HKD 108.135 billion; the Hang Seng China Enterprises Index rose by 0.34% to 6,247.13 points; and the Hang Seng Tech Index rose by 0.46% to 3,461.22 points.

Galaxy Securities previously pointed out that the performance of Internet companies boosted market confidence. As the pace of rate cuts by the Federal Reserve approaches, attention is focused on the technology sector that is expected to benefit from the rate cut expectations, especially the sub-industries with expectations of dual improvements in the denominator and numerator. In the medium to long term, the fundamentals of the Hong Kong stock market rely more on the domestic economy, with a focus on positive signals from domestic policies.

Performance of Blue Chips

Meituan-W (03690) led the gains in blue chips. As of the close, it rose by 12.55% to HKD 115.7, with a turnover of HKD 100.04 billion, contributing 123.21 points to the Hang Seng Index. Meituan achieved revenue of RMB 155.527 billion in the first half of the year, an increase of 22.87% year-on-year; net profit was RMB 16.72 billion, an increase of 107.81% year-on-year. In the second quarter, revenue was RMB 82.251 billion, an increase of 21.02% year-on-year; net profit during the period was RMB 11.352 billion, an increase of 142.1% year-on-year. The company stated that it will occasionally repurchase Class B ordinary shares in the open market for a total amount not exceeding USD 1 billion.

In other blue chips, China Mengniu Dairy (02319) rose by 9.65% to HKD 13.18, contributing 5.8 points to the Hang Seng Index; Haidilao (06862) rose by 5.67% to HKD 13.04, contributing 1.91 points to the Hang Seng Index; Li Auto-W (02015) fell by 9.75% to HKD 73.15, dragging down the Hang Seng Index by 17.59 points; BYD Electronics (00285) fell by 6.27% to HKD 27.65, dragging down the Hang Seng Index by 2.33 points.

Hot Sectors

On the market, large-cap technology stocks saw mixed gains and losses, with Meituan soaring by 12% after its results, while Alibaba fell slightly. Some banks reported lower-than-expected earnings, leading to a collective decline in domestic bank stocks today; Maersk Line lowered its wk37 rates for the second time, leading to weak performance in shipping stocks; power stocks, gaming stocks, heavy infrastructure stocks, automotive stocks, and oil stocks all declined. On the other hand, new signed orders accelerated, and CRO concept stocks rose collectively; the sector welcomed multiple positive news, with most photovoltaic stocks rising; dairy stocks, water stocks, catering stocks, and others performed well.

1. Collective decline in domestic bank stocks. As of the close, China CITIC Bank (00998) fell by 6.73% to HKD 4.57; Bank of Communications (03328) fell by 6.31% to HKD 5.79; Agricultural Bank of China (01288) fell by 4.09% to HKD 3.52; China Construction Bank (00939) fell by 3.26% to HKD 5.63.

Regarding the pullback in the banking sector, Zhejiang Commercial Bank pointed out that bank stocks have played the role of an ATM machine as a safe haven in the process of style rotation. In addition, on August 28, some banks reported earnings that were lower than some investors' expectations, which also affected market sentiment. Looking at the interim reports of banks that have been released, Bank of Communications' net profit in the first half of the year was RMB 45.287 billion, a year-on-year decrease of 1.63%; Core profit fell by 6.5% year-on-year. China CITIC Bank achieved operating income of RMB 108.64 billion in the first half of the year, a year-on-year increase of 2.60%; net profit was RMB 35.49 billion, a year-on-year decrease of 1.60%.

2. Shipping stocks weakened. As of the close, COSCO Shipping Energy Transportation (01138) fell by 4.41% to HKD 8.45; Pacific Basin Shipping (02343) fell by 2.74% to HKD 2.13; COSCO Shipping Holdings (01919) fell by 1.48% to HKD 10.62.

On August 23, the Shanghai Shipping Exchange released the Shanghai Export Container Comprehensive Freight Index at 3097.63 points, a decrease of 5.60% from the previous period. The freight rates for the US West Coast and East Coast routes fell significantly by 9.51% and 8.08% respectively, while the rates for the Europe and Mediterranean routes also fell by 4.56% and 2.63% respectively. In addition, Maersk reduced its quote to USD 5600/FEU in the second week of September, while Mediterranean shipping companies reduced their quotes to around USD 6040/FEU at the beginning of September. Geopolitically, it was reported that ceasefire negotiations in the Gaza Strip will continue in Doha in the coming days, while the Middle East remains in a "fight-and-talk" situation.

3. Most photovoltaic stocks rose. At the close, Xinte Energy (01799) rose by 5.62% to HKD 6.77; GCL-Poly Energy (03800) rose by 4.63% to HKD 1.13; Sinovel Energy (03868) rose by 2.74% to HKD 0.75.

The State Council Information Office released the White Paper "China's Energy Transition". It mentioned the orderly promotion of large-scale wind and solar base construction, planning and constructing 450 million kilowatts of large-scale wind and solar base projects. Actively promoting the development of distributed new energy, carrying out the "Thousand Villages and Ten Thousand Households Embracing Wind Action" and "Thousand Villages and Ten Thousand Households Basking in Light Action". In addition, Longi and Zhonghuan, two major photovoltaic leaders, recently announced a rise in silicon wafer prices. Huatai Securities pointed out that the photovoltaic sector is expected to enter the final stage of this round of downward cycle in the second half of the year. The "positive factors" for the sector are gradually accumulating at present, with no additional "marginal negative factors", so the bottom is not pessimistic.

4. CRO concept stocks rose collectively. At the close, WuXi AppTec (02359) rose by 3.16% to HKD 34.25; Zai Lab (06127) rose by 2.54% to HKD 7.27; WuXi Biologics (02269) rose by 2.28% to HKD 10.76.

With the stabilization and recovery of overseas investment and financing, CXO's overseas orders have shown a clear warming trend, with the growth rate of new orders accelerating quarter by quarter. Specifically, Kanglong Chemical's new order amount in the first half of the year increased by over 15% year-on-year; Hualan Biological Engineering's new order amount in the first half of the year increased by over 20%, and there was a significant increase in the second quarter compared to the first quarter; as of the end of June 2024, WuXi Biologics' uncompleted order volume increased to USD 20.11 billion, with uncompleted orders within 3 years totaling around USD 3.64 billion.

As the interim reports are about to close, outstanding performance of high-quality stocks. At the close, IGG (00799) rose by 21.8% to HKD 3.24; China Feihe (06186) rose by 13.17% to HKD 4.04; Meituan-W (03690) rose by 12.55% to HKD 115.7; China Aircraft (00696) rose by 10.72% to HKD 9.19; Zhengzhou Coal Mining Machinery Group (00564) rose by 7.24% to HKD 9.18; PICC Group (01339) rose by 6.14% to HKD 2.94; Luye Pharma Group (02186) rose by 5.94% to HKD 3.03; YTO Express Group (00038) rose by 5.01% to HKD 7.75.

Hot Stocks on the Move

1. Li Auto-W (02015) plummeted after earnings, closing down by 9.75% at HKD 73.15.

Li Auto achieved revenue of RMB 31.678 billion in the second quarter, a year-on-year increase of 10.6%; net profit was RMB 1.1 billion, a year-on-year decrease of 52.3%; adjusted net profit was RMB 1.503 billion, a year-on-year decrease of 44.9%. The vehicle gross margin was 18.7%, a year-on-year decrease of 2.3 percentage points. The company expects to deliver 145,000 to 155,000 vehicles in the third quarter; projected third-quarter revenue of RMB 39.4 billion to 42.2 billion, a year-on-year increase of 13.7% to 21.6%.

2. China Longyuan Power (00916) under pressure throughout the day, closing down by 6.38% at HKD 6.16.

Longyuan Power achieved revenue of RMB 18.883 billion in the first half of the year, a year-on-year decrease of 4.9%; net profit attributable to equity holders of the company was RMB 4.02 billion, a year-on-year decrease of 21.6%. The decline in revenue was mainly attributed to wind power segment sales of RMB 13.781 billion in the first half of 2024, a decrease of 9.4% year-on-year.

3. BYD Electronics (00285) hit a 4-month low, closing down by 6.27% at HKD 27.65.

BYD Electronics achieved revenue of RMB 78.581 billion in the first half of the year, an increase of 39.87% year-on-year; net profit attributable to shareholders was RMB 1.518 billion, an increase of 0.14% year-on-year, with net profit growth far below previous institutional expectations. The gross profit margin decreased from around 7.85% in the first half of 2023 to around 6.85% in the period, mainly due to changes in sales structure.

4. China International Travel Service (01880) continues to hit new lows, closing down by 4.82% at HKD 46.4.

The Ministry of Finance and four other departments previously issued the "Notice on Improving the Policy of In-city Duty-Free Shops." Ping An Securities pointed out that although the in-city duty-free related policies have been implemented, there are significant differences from past policies and the applicable purchasing groups, and there is still considerable room for duty-free operators to expand cooperation with more brands. The sales increment brought by in-city duty-free shops still needs to be observed, and operators need to actively expand cooperation with brand owners under the existing policies