Hong Kong Stock Market Closing (09.13) | Hang Seng Index rose by 0.75%, gold and pharmaceutical stocks rose throughout the day, while lithium stocks fell again

According to the Wisdom Financial APP, the market is focusing on the September interest rate meeting of the Federal Reserve. The three major indexes of the Hong Kong stock market continued yesterday's rebound trend, with all rising more than 1% during the trading session. As of the close, the Hang Seng Index rose by 0.75% or 128.7 points to 17,369.09 points, with a total daily turnover of 88.88 billion Hong Kong dollars; the Hang Seng China Enterprises Index rose by 0.9% to 6,071.52 points; and the Hang Seng Tech Index rose by 0.13% to 3,479.8 points. Looking at the whole week, the Hang Seng Index fell by 0.43%, the China Enterprises Index fell by 0.56%, and the Tech Index fell by 0.23%.

Amber Hill International pointed out that after the U.S. presidential debate, the market's focus returned to the Fed's rate cut actions. Based on recent economic data, the bank expects the Fed to cut rates by 25 basis points after Wednesday's interest rate meeting, initiating the long-awaited rate-cut cycle. The initiation of the expected rate-cut cycle is positive for the performance of emerging markets and the Hong Kong stock market. Hong Kong stocks are still at a low valuation level, and it is expected that funds will gradually flow back.

Performance of Blue Chips

Zijin Mining (02899) led the gains in blue chips. At the close, it rose by 3.87% to 14.5 Hong Kong dollars, with a turnover of 969 million Hong Kong dollars, contributing 5 points to the Hang Seng Index. Goldman Sachs pointed out that Zijin Mining is one of the few mining companies that benefit from production growth and rising commodity prices. With the rise in copper prices, the bank expects Zijin's recurring net profit to increase from 22.4 billion yuan in 2023 to 41.4 billion yuan in 2026, with a compound annual growth rate of 23%. The bank maintains a "buy" rating on Zijin H shares (conviction buy list) with a target price of 21.5 Hong Kong dollars.

In other blue chips, Sino Biopharm (01177) rose by 3.54% to 3.22 Hong Kong dollars, contributing 1.83 points to the Hang Seng Index; Hansoh Pharma (03692) rose by 3.49% to 19.58 Hong Kong dollars, contributing 1.26 points to the Hang Seng Index; Budweiser APAC (01876) fell by 3.66% to 7.64 Hong Kong dollars, dragging down the Hang Seng Index by 0.95 points; and Alibaba Health (00241) fell by 1.41% to 2.79 Hong Kong dollars, dragging down the Hang Seng Index by 0.41 points.

Hot Sectors

On the market, large-cap tech stocks showed mixed movements, with Alibaba down by 0.54% while Tencent, Meituan, Baidu, and others rose slightly. Gold prices hit another historical high, with gold stocks strong throughout the day; the National Medical Products Administration accelerated the approval of clinical drugs, leading pharmaceutical stocks to rise again; home appliance stocks, shipping stocks, heavy machinery stocks, oil stocks, and telecom stocks generally rose. On the other hand, the oversupply situation in the lithium carbonate market remains unchanged, leading lithium stocks to continue falling; beer stocks, aviation stocks, and gaming stocks are under pressure.

1. Gold stocks lead the gains. At the close, Shandong Gold (01787) rose by 5.7% to 15.2 Hong Kong dollars; China Gold International (02099) rose by 5.28% to 29.9 Hong Kong dollars; Zhaojin Mining (01818) rose by 3.64% to 12.54 Hong Kong dollars; and Lingbao Gold (03330) rose by 3.64% to 12.54 Hong Kong dollars.

Stimulated by the European Central Bank's announcement of rate cuts and expectations of Fed rate cuts, spot gold broke through $2560 per ounce, once again hitting a historical high. As expected, the Eurozone lowered the deposit facility rate by 25 basis points to 3.5%; and lowered the marginal lending rate by 60 basis points to 3.65% The marginal loan rate was lowered by 60 basis points to 3.9%; the year-on-year data of US PPI fell to 1.7%, with a 0.1% rebound in month-on-month data, once again boosting market expectations of a "soft landing". The market generally expects the Fed to cut interest rates by 25 basis points at the upcoming meeting. CITIC Securities previously pointed out that looking ahead, it continues to be optimistic about the allocation value of gold under the expectation of interest rate cuts.

2. Pharmaceutical stocks rose again. As of the close, Akeso Inc-B (01541) rose by 28.65% to HKD 4.94; Kangfang Bio (09926) rose by 9.5% to HKD 61.65; CanSino Biologics-B (02162) rose by 5.3% to HKD 39.75; Novartis Sihuan (09969) rose by 5.1% to HKD 5.77.

Li Li, Director of the National Medical Products Administration, stated at a press conference today that the efficiency of review and approval will be improved. Accelerate the review and approval of urgently needed clinical products, include eligible products in the priority review and approval process, shorten the time limits for technical review, registration verification, and registration inspection, and expedite the approval process. Shorten the implied approval time for clinical trials, pilot projects will be conducted in Beijing, Shanghai, and other places, reducing the review and approval time for innovative drug clinical trials from 60 working days to 30 working days. Dongxing Securities pointed out that domestic innovative drug policies are gradually warming up, providing multi-dimensional support for innovation.

3. Real estate stocks generally rose. As of the close, China Evergrande Group (03990) rose by 4.67% to HKD 2.69; Longfor Group (00960) rose by 2.95% to HKD 8.02; Longfor Properties (03380) rose by 2.7% to HKD 0.76; China Vanke Co., Ltd. (02202) rose by 1.03% to HKD 3.93.

Expectations for a reduction in existing home loan rates have risen again. Earlier market news stated that China may lower the interest rates on existing home loans as early as September, reducing the borrowing costs for millions of families to stimulate consumption. Informed sources said that some home loan rates may be immediately reduced by up to 50 basis points; commercial banks are making final preparations to welcome the upcoming adjustment in mortgage rates. Huatai Securities believes that the reduction in existing home loan rates will reduce the group of early repayments, thereby reducing the pressure of second-hand housing sales, helping to stabilize price expectations, and promoting a healthy cycle in the industry.

4. Lithium stocks continue to fall. As of the close, Tianqi Lithium (09696) fell by 6.06% to HKD 19.54; Ganfeng Lithium (01772) fell by 2.22% to HKD 15.86.

Earlier news of the suspension of production at Ningde Times Jiangxi Lithium Mine stimulated a sharp rise in lithium carbonate futures prices, but after the sentiment was digested, there was a volatile decline in the morning session. JP Morgan believes that similar speculation occurred in February this year, with lithium prices surging by about 30% to RMB 120,000 per ton within two weeks, but the upward trend was short-lived due to stagnant fundamental factors, and the industry began to hedge against high prices. The bank believes that this rise is similar to the previous situation and expects the upward trend to be short-lived. It maintains a "reduce" rating on Ganfeng Lithium and Tianqi Lithium, with target prices lowered to HKD 13.5 and HKD 16, respectively. Hongta Futures believes that under the influence of oversupply, it will take time for lithium carbonate futures prices to stabilize, and they are expected to mainly operate at low levels with fluctuations 5. Three major airlines are under pressure. As of the close, Air China (00753) fell by 3.85% to HKD 3; China Southern Airlines (01055) fell by 2.77% to HKD 2.46; China Eastern Airlines (00670) fell by 2.12% to HKD 1.85.

Citi released a research report stating that the mainland aviation industry has shown a characteristic of strong volume but weak prices this summer. According to CAAC statistics, passenger traffic volume increased by 12% year-on-year, 18% higher than in 2019. International capacity has rebounded to 77% of 2019 levels, but the pace of price recovery far exceeds expectations. The average price of economy class tickets, excluding taxes, decreased by 11% compared to last year. In addition, industry profitability in the Asian region is also facing challenges. The three major airlines were relatively conservative in capacity adjustments in July this year, but outbound capacity recovery was strong. Overall, the industry's performance in the summer was somewhat disappointing.

Furthermore, looking at the second-quarter performance, demand for business travel remains weak, and may not be able to support prices in the face of off-peak season capacity increases. The bank downgraded China Eastern Airlines from "Buy" to "Sell", with a target price lowered from HKD 2.53 to HKD 1.7, and China Southern Airlines from "Buy" to "Neutral", with the target price reduced from HKD 3.8 to HKD 2.8. Although the bank maintained a "Buy" rating on Air China and listed it as the top pick, the target price was lowered from HKD 5.35 to HKD 3.8.

Hot Stocks

1. Innovent Biologics-B (01541) surged again. At the close, it rose by 28.65% to HKD 4.94.

Innovent Biologics announced that it has received a recent payment of USD 5 million from SynBioTx for the authorization and cooperation agreements related to IMM2510 and IMM27M through its wholly-owned subsidiary SYNBIOTX. Currently, under the authorization and cooperation agreements, the company has received a total of USD 15 million in upfront and recent payments, and expects to receive up to an additional USD 35 million in remaining potential near-term payments in the future.

2. Evergrande Auto (00708) surged on high volume. At the close, it rose by 23.35% to HKD 0.28.

In the first half of this year, Evergrande Auto achieved revenue of RMB 383.77 million, a year-on-year decrease of 75.17%; with a loss of approximately RMB 20.255 billion, a 1.95-fold increase year-on-year. Faced with huge debts and operational pressures, Evergrande Auto once sought to introduce third-party buyers to sell related shares in order to obtain financial support. However, more than 3 months later, there has been no substantial progress in the matter of introducing strategic investors to Evergrande Auto.

3. Kangfang Bio (09926) continues to hit new stage highs. At the close, it rose by 9.5% to HKD 61.65.

After the heavyweight research results of IVOIREx HARMONi-2 were published in WCLC, Kangfang Bio received positive recommendations from multiple institutions. JP Morgan raised its sales forecast by over 40%, raised the target price to HKD 68, and reiterated Kangfang Bio as the preferred choice in the Chinese biotechnology field, with a "Neutral" rating. In addition, CCB International raised Kangfang Bio's target price to HKD 59, maintaining an "Outperform" rating 4. YTO Express Group (00038) continues its upward trend. As of the close, it rose 9.12% to HKD 7.9 .

The General Office of the Ministry of Agriculture and Rural Affairs and two other departments recently issued a supplementary notice on intensifying efforts to continue implementing the agricultural machinery scrappage and renewal subsidy policy. The scope of scrappage subsidies will be expanded, with each province able to determine, based on the previously specified 9 types of agricultural machinery, up to 6 additional types of machinery to be included in the scrappage subsidy scope. The notice also proposes an increase in the scrappage subsidy standards.

5. Zulong Entertainment (09990) shines. As of the close, it rose 6.67% to HKD 1.6 .

Developed and launched by Zulong Entertainment, the card RPG mobile game "Dragon Clan: Gate of Cassel," which holds the official authorization of "Dragon Clan" and its animated series, started its public beta testing yesterday. Prior to the public beta testing, the game had already received over 3 million pre-registrations across all platforms, and on the first day of public beta testing, it topped the iOS free chart. It is worth mentioning that "Dragon Clan Fantasy," launched by Zulong at the end of 2018, is also based on the Dragon Clan IP, with total revenue exceeding 4.4 billion RMB as of December 31, 2023