Hong Kong Stock Market Closing (09.17) | Hang Seng Index rose by 1.37%, real estate stocks performed well, Midea Group debuted with a nearly 8% increase

According to the Wise Finance APP, the market is focusing on this week's Federal Reserve interest rate decision. The Hong Kong stock market opened low today and rose throughout the day, with all three major indexes up more than 1%. By the close, the Hang Seng Index rose by 1.37% or 237.9 points to 17,660.02 points, with a total daily turnover of 63.078 billion Hong Kong dollars; the Hang Seng China Enterprises Index rose by 1.41% to 6,176.03 points; and the Hang Seng Tech Index rose by 1.12% to 3,536.57 points.

CICC pointed out that the Hong Kong stock market is more sensitive to external liquidity and follows a rate cut due to the linked exchange rate arrangement, giving it greater flexibility than A-shares. At the industry level, growth stocks sensitive to interest rates (biotechnology, technology hardware, etc.), sectors with a high proportion of overseas US dollar financing, local dividend-paying stocks in Hong Kong, real estate, and export chains benefiting from the US rate cut driving real estate demand may also benefit marginally.

Blue Chip Performance

Li Auto-W (02015) led the blue chips. By the close, it rose by 6.26% to 78.9 Hong Kong dollars, with a turnover of 561 million Hong Kong dollars, contributing 10.47 points to the Hang Seng Index. From January to August 2024, Li Auto delivered a total of 288,103 new cars, a year-on-year increase of 38.4%. Changjiang Securities pointed out that the subsequent launch of new car models will further improve the Li Auto product matrix, enhance the overall sales volume space, and the combination of high unit selling prices and economies of scale is expected to maintain a good profit level. It is expected that Li Auto's sales volume will reach 530,000 vehicles in 2024.

In other blue chip stocks, New World Development (00017) rose by 5.48% to 7.12 Hong Kong dollars, contributing 0.86 points to the Hang Seng Index; Cheung Kong Group (01113) rose by 4.38% to 32.15 Hong Kong dollars, contributing 4.28 points to the Hang Seng Index; Haier Smart Home (06690) fell by 2.3% to 23.4 Hong Kong dollars, dragging down the Hang Seng Index by 2.2 points; Hang An International (01044) fell by 0.92% to 21.65 Hong Kong dollars, dragging down the Hang Seng Index by 0.22 points.

Hot Sectors

On the market, large-cap tech stocks generally rose, with Meituan and Alibaba both up more than 1%. As the Fed rate cut approaches, the price of gold hits a historical high again, and gold stocks rise again; the rate cut expectation boosts property sentiment, and Hong Kong property stocks perform well; US hurricanes support oil prices, and the "Big Three Oil" collectively rise; real estate and property management stocks, which performed poorly yesterday, rebound today; banking stocks, gas stocks, auto stocks, gaming stocks, sports equipment stocks, etc., are generally positive. On the other hand, film and television stocks, home appliance stocks, heavy machinery stocks, etc., are sluggish.

1. Gold stocks continue to rise. By the close, Zhaojin Mining (01818) rose by 2.62% to 13.3 Hong Kong dollars; Zijin Mining (02899) rose by 2.44% to 15.1 Hong Kong dollars; China Gold International (02099) rose by 2.25% to 31.85 Hong Kong dollars; Shandong Gold (01787) rose by 1.52% to 16.08 Hong Kong dollars.

On September 16, the international gold price hit a new historical high again, with COMEX gold surging to $2,617.4 at one point, and spot gold rising to a high of $2,589.68. The market is focusing on the Federal Reserve's interest rate decision to be announced in the early hours of September 19 Beijing time. According to the CME Group's FedWatch Tool, the market currently expects a 59% probability of a 50 basis point rate cut by the Federal Reserve, higher than the 43% last Friday Guojin Securities stated that the timing of interest rate cuts is approaching, and the gold price is expected to continue its rapid upward trend. It is expected that the central operating range of the gold price in 2025 will climb to $2600-2700 per ounce. The bank pointed out that the formal interest rate cut by the Federal Reserve indicates a significant increase in the volatility of domestic gold stocks, making it more difficult to obtain relative and absolute returns. Gold companies with refining processes are more likely to release performance in Q4 this year, which can be verified by performance forecasts at the end of January 2025. Stock prices have the foundation to recover towards the gold price.

2. Hong Kong property stocks rose across the board today. At the close, New World Development (00017) rose by 5.48% to HKD 7.12; Cheung Kong Group (01113) rose by 4.38% to HKD 32.15; Wharf Real Estate Investment (01997) rose by 3.87% to HKD 22.8; Link Real Estate Investment Trust (00823) rose by 1.57% to HKD 38.8.

Expectations of a Fed rate cut have further boosted sentiment in the Hong Kong property market. The latest data from Centaline Property shows that 15 transactions were recorded in the top ten housing estates in Hong Kong over the weekend, a significant increase of 87.5% from 8 transactions last weekend, reaching a new high in about half a year since late March this year. Chen Yongjie, Vice Chairman of Centaline Property Asia Pacific and President of the Residential Department, stated that the market generally expects the Fed to announce a rate cut at the interest rate meeting. The recent market sentiment has continued to improve, and the property market sentiment is also positive. Many buyers are taking advantage of the low prices before the rate cut to absorb the market, leading to a significant increase in property viewings and transactions. It is believed that the property market will continue to warm up after the rate cut.

3. Property stocks and property management stocks rebounded. At the close, Sunac China Holdings (03377) rose by 6.49% to HKD 0.197; Longfor Group (03380) rose by 3.9% to HKD 0.8; Country Garden Services Holdings (00884) rose by 3.2% to HKD 0.226; Yuexiu Services (06626) rose by 2.53% to HKD 3.24.

The National Bureau of Statistics recently released data on the real estate market. From January to August, various indicators such as the sales area and sales amount of new houses nationwide, the funds in place for real estate enterprises, and the new construction area of houses have all shown a narrowing year-on-year decline. Among them, the year-on-year decline in the sales area of new houses nationwide has narrowed for three consecutive months, and the decline in sales amount has narrowed for four consecutive months; the decline in funds in place for real estate enterprises has narrowed for five consecutive months, and the decline in new construction area of houses has narrowed for six consecutive months.

Guojin Securities pointed out that the central bank recently stated that maintaining price stability and promoting moderate price increases are important considerations in grasping monetary policy; it has begun to introduce some incremental policy measures to further reduce corporate financing and household credit costs. The efforts of monetary policy and the decrease in mortgage rates have positive implications for the real estate sector, and there are expectations for a decrease in both incremental and existing mortgage rates.

4. Most automotive stocks rose. At the close, Li Auto-W (02015) rose by 6.26% to HKD 78.9; Leapmotor (09863) rose by 4.45% to HKD 23.45; GAC Group (02238) rose by 1.35% to HKD 2.26 The China Association of Automobile Manufacturers data shows that from September 1st to 8th, the retail sales of passenger vehicles reached 388,000 units, a year-on-year increase of 10% and a month-on-month increase of 5%. From September 1st to 8th, the retail sales of new energy vehicles reached 214,000 units, a year-on-year increase of 56% and a month-on-month increase of 11%. In addition, as of midnight on September 14th, the car scrappage subsidy application on the vehicle replacement platform has exceeded 1 million (with a daily average of over 13,000 applications). Guotai Junan Securities believes that with the steady promotion of the vehicle replacement policy across the country, the industry prosperity in 2H24E is expected to improve.

Recently, the U.S. government decided to significantly increase import tariffs on Chinese products, with the tariff on electric vehicles increasing by 100%. According to the announcement from the Office of the United States Trade Representative, some tariff adjustments will take effect on September 27th. Industry insiders analyzed that China's export volume of new energy vehicles to the U.S. is very small, so the actual impact of this tariff increase on China's export of new energy vehicles is limited.

5. Banking stocks generally rose. At the close, Postal Savings Bank of China (01658) rose by 2.42% to HKD 4.23; Bank of Communications (03328) rose by 2.27% to HKD 5.41; China Merchants Bank (03968) rose by 2.21% to HKD 30.1.

Minsheng Securities pointed out that at the current stage, the growth rate of financial aggregate indicators has stabilized, and the central bank has stated that its supportive monetary policy stance remains unchanged, providing good support for stable economic growth. On the other hand, government investment continues to increase, which is expected to provide certain support to social financing. Due to expectations of interest rate cuts on existing home loans and the disclosure of interim results, the sector has recently experienced some pullback. However, in the process of stabilizing and improving the economy, the high dividend yield of banks still remains attractive. Dahua Jixian believes that after the recent adjustment in the stock prices of domestic banks, the valuation has been suppressed, the dividend yield has increased, and it may bring a glimmer of hope for defensive stocks.

Hot Stock Movements

1. Sungrow Power (01079) announces profit surge. At the close, it surged by 62.5% to HKD 0.052.

Sungrow Power announced a profit surge, expecting an unaudited post-tax comprehensive net profit of not less than approximately HKD 40 million for the year ended June 30, 2024, compared to a post-tax comprehensive net loss of approximately HKD 107.6 million in the same period last year. The expected return to profit is mainly due to a significant increase in the group's revenue in the 2024 fiscal year; a substantial reduction in general and administrative expenses in the 2024 fiscal year, among other factors.

2. Kaisa Group (01638) surges on heavy volume. At the close, it surged by 17.44% to HKD 0.101.

Kaisa Group disclosed further information on the restructuring of overseas debts. The announcement stated that, following recalculation and confirmation by the information agent, approximately 75.11% of the outstanding principal amount of debts within the Kaisa scope and approximately 81.07% of the outstanding principal amount of debts within the Ruijing scope have been joined by supporting holders in the restructuring agreement In the first half of this year, Jiayuan Group delivered a total construction area of approximately 280,000 square meters in 12 projects in Shenzhen, Beijing, Chongqing, Xuzhou, Jieyang, Zhongshan, and other places.

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