Hong Kong Stock Market Closing (09.20) | Hang Seng Index rose by 1.36%, property and automotive stocks rose, CRO concept stocks surged at the end of the day on heavy volume

According to the Wisdom Financial APP, the long-awaited rate cut by the Federal Reserve boosted market sentiment, with the three major indexes of the Hong Kong stock market strengthening in the morning session. The Hang Seng Index rose more than 2% at one point, but the gains narrowed in the afternoon. As of the close, the Hang Seng Index rose by 1.36% or 245.41 points to 18258.57 points, with a total daily turnover of HKD 176.802 billion; the Hang Seng China Enterprises Index rose by 1.21% to 6381.5 points; and the Hang Seng Tech Index rose by 1.43% to 3703.84 points.

Guotai Junan International believes that the current valuation of the Hong Kong stock market is relatively low, with a clear improvement trend in profit growth, which is expected to attract net inflows of funds. In addition, the Fed's rate cut helps to enhance the valuation of Hong Kong stocks, making it conducive for Hong Kong stocks to achieve relatively better performance. Galaxy Securities pointed out that as the rate cut cycle begins, this round of global liquidity is improving, with foreign capital flowing into the Hong Kong stock market, and the technology sector is expected to see an upward trend. The investment willingness of southbound funds in the technology sector is also increasing.

Performance of Blue Chips

WuXi AppTec (02359) led the gains in blue chips. As of the close, it rose by 11.7% to HKD 42.5, with a turnover of HKD 654 million, contributing 2.53 points to the Hang Seng Index. Market news stated that the U.S. Senate released the final version of the National Defense Authorization Act (NDAA), which actually included 93 amendments, but did not include S.Amdt.2166 (biological safety proposal).

In other blue chip stocks, WuXi Biologics (02269) rose by 10.4% to HKD 13.38, contributing 7.68 points to the Hang Seng Index; Geely Automobile (00175) rose by 6.97% to HKD 9.97, contributing 6.41 points to the Hang Seng Index; China Yangtze Power (01038) fell by 2.03% to HKD 55.45, dragging down the Hang Seng Index by 1.17 points; China Resources Power (00006) fell by 1.94% to HKD 53.05, dragging down the Hang Seng Index by 2.38 points.

Hot Sectors

On the market, large-cap technology stocks continued to perform well, with Alibaba, Meituan, and NetEase all rising by over 1%, while Tencent saw a slight decline. Market news stated that the U.S. NDAA did not include the biological safety proposal, leading to a surge in CRO concept stocks at the end of the day; the gold price hit a new historical high, with gold stocks collectively rising; news of further relaxation of housing purchase restrictions in first-tier cities led to a rise in property stocks today; automotive stocks, film and entertainment, heavy machinery, sports goods, gaming stocks, and Hong Kong property stocks all rose. On the other hand, military stocks fell again, with China Shipbuilding Defense falling by over 5%; some steel and catering stocks declined.

1. CRO concept stocks surged at the end of the day. As of the close, Kanglong Chemical (03759) rose by 12.87% to HKD 11.14; WuXi AppTec (02359) rose by 11.7% to HKD 42.5; WuXi Biologics (02269) rose by 10.4% to HKD 13.38; and Tigermed (03347) rose by 4.51% to HKD 27.8.

Market news stated that the U.S. Senate released the final version of the National Defense Authorization Act (NDAA), which actually included 93 amendments, but did not include S.Amdt.2166 (biological safety proposal). Citigroup previously pointed out that it is currently unclear whether the U.S. Senate will adopt the House version of the "Biological Safety Act" or another version, or attach a larger bill to the "Biological Safety Act" The bank believes that WuXi AppTec and WuXi Biologics are undervalued. Zheshang Securities, on the other hand, stated that global investment and financing are gradually bottoming out, with a low base in 2023H2, stable leading orders, and a focus on companies where the turning point in orders/performance appears.

2. Gold stocks collectively rose. At the close, Lingbao Gold (03330) rose by 5.65% to HKD 3.18; China Gold International (02099) rose by 4.03% to HKD 33.55; Shandong Gold (01787) rose by 3.92% to HKD 16.44; Zhaojin Mining (01818) rose by 3.57% to HKD 13.36.

On September 20th, spot gold broke through $2610 per ounce, hitting a historical high. Prior to this, the Federal Reserve initiated this round of rate cuts slightly above expectations by 50 basis points, but Federal Reserve Chairman Powell emphasized that data determines action. Huatai Securities pointed out that the combination of "50bp rate cut" + "hawkish stance" has a relatively limited impact on gold prices. Coupled with the fact that the current gold price is quite sufficient for pricing in US rate cuts, the bank expects that gold prices will likely continue to fluctuate at high levels in the short term. Looking ahead, the future trend of the US economy after the rate cut and the US presidential election will be important factors driving further upward movement in gold prices. Based on the backdrop of the US "loose fiscal policy" + "high inflation" structure post-rate cut, it is judged that gold prices may still have upward potential in the long term.

3. Real estate stocks rose again. At the close, China Evergrande (03990) rose by 7.93% to HKD 3.13; Shimao Group (00813) rose by 6% to HKD 0.53; China Jinmao (00817) rose by 5.97% to HKD 0.71; Vanke (02202) rose by 5.44% to HKD 4.46.

Market sources mentioned that China is considering further relaxing housing purchase restrictions in first-tier cities. Informed sources stated that regulatory authorities are discussing relaxing household registration restrictions on home purchases in first-tier cities such as Beijing and Shanghai. Regulators are also considering allowing no distinction between first-time and second-time home buyers under the premise of differentiated policies for different cities. Following the significant rate cut of 50 basis points by the Federal Reserve, market expectations for domestic rate cuts have increased.

However, the LPR pricing for September was released this morning, with 1-year and 5-year rates remaining unchanged. Orient Securities believes that after the Federal Reserve's significant rate cut, there is more room for flexible adjustment in domestic monetary policy, and the probability of rate cuts and reserve requirement cuts in the short term is increasing. Taking into account the current economic situation and price trends, the central bank may lower key policy rates in the fourth quarter, which will then guide LPR pricing to follow suit.

4. Automobile stocks performed well. At the close, Geely Auto (00175) rose by 6.97% to HKD 9.97; XPeng Motors-W (09868) rose by 6.88% to HKD 38.05; Li Auto-W (02015) rose by 2.77% to HKD 85.45; Nio-SW (09866) rose by 2.44% to HKD 42.05.

The latest data from the China Passenger Car Association shows that from September 1-15, retail sales of passenger vehicles reached 828,000 units, an 18% year-on-year increase, up 12% from the same period last month; retail sales of new energy passenger vehicles reached 445,000 units, a 63% year-on-year increase, up 12% from the same period last month In the second week of September, the daily average retail sales of passenger vehicles reached 63,000 units, a year-on-year increase of 26% compared to the same period last year, and an 18% increase from the previous month.

The effectiveness of the old-for-new policy is becoming evident. According to data from the Ministry of Commerce, the Ministry of Commerce's platform for old-for-new subsidies has received over 1.04 million subsidy applications, driving new car sales of approximately 130 billion yuan. Additionally, according to reports from Global Times, the European Union is reportedly delaying the vote on imposing tariffs on imported electric cars from China. Three EU diplomats stated that the EU's scheduled vote at the meeting on September 25th has been canceled.

Hot Stock Movements

1. Joyy Inc. (02400) surged significantly. At the close, it rose by 9.36% to 20.45 Hong Kong dollars.

Data from Qimai showed that Joyy Inc.'s mobile game "Joyy Town" ranked 29-45 on the iPhone bestseller list in the past week, showing an upward trend. Guoyuan Securities pointed out that the company focuses on self-developed game products, strives to reduce costs and increase efficiency, and enhance commercialization. Considering the continuous launch of self-developed products contributing to revenue, the increase in user scale and distribution efficiency on the TapTap platform will drive growth in advertising revenue.

2. Sino Biopharmaceutical (01093) significantly increased. At the close, it rose by 6.4% to 4.99 Hong Kong dollars.

Sino Biopharmaceutical announced that the board of directors has further resolved to repurchase shares on the market for up to 5 billion Hong Kong dollars within 24 months from the date of this announcement, at times and frequencies determined by the board. The company will use its available cash reserves to fund the share repurchase. The repurchased shares will be cancelled.

3. Rongchang Biotech (09995) declined again. At the close, it fell by 6.62% to 10.72 Hong Kong dollars.

Recently, there were rumors circulating that Rongchang Biotech is implementing a plan to lay off over a thousand employees, with plans to further increase the scale of adjustments. In response, reports quoted Rongchang Biotech as stating that the recent personnel adjustments are not significant layoffs, but are based on the company's strategic development needs to optimize the management team structure, enhance team's professional capabilities and overall efficiency, achieve dynamic balance of the team, and better adapt to market changes and business needs.

4. Lao Pu Gold (06181) fell at the end of the day after hitting record highs for several consecutive days. At the close, it fell by 7.69% to 120 Hong Kong dollars.

On September 10th, the list of stocks eligible for the Stock Connect officially took effect, with Lao Pu Gold being included. In addition, the company saw rapid growth in revenue and profits in the first half of the year, with net profit increasing by nearly 200% year-on-year. It is worth noting that Lao Pu Gold has characteristics of a family business governance. According to the company's previous disclosure, as concerted parties, Xu Gaoming and his son Xu Dongbo collectively hold 78.27% of Lao Pu Gold's shares, with Hongqiao Jinji (Xu Gaoming holds 70%, Xu Dongbo holds 30%) holding 45.84% of the shares, and Hongqiao Jinji's Tianjin Jincheng, as a general partner, holding 6.51%