Hong Kong stock market closed (10.09) | Hang Seng Index fell by 1.38%, brokerage, infrastructure, shipping stocks continued to decline, while Meituan-W rose against the trend

According to the Financial Channel APP, the State Council Information Office announced that a press conference will be held on Saturday to introduce the situation related to "increasing the intensity of fiscal policy countercyclical adjustment and promoting high-quality economic development." The three major Hong Kong stock indexes rebounded in the afternoon after falling by more than 3% in the morning session, but then fell again towards the end of the trading day. As of the close, the Hang Seng Index fell by 1.38% or 289.55 points to 20637.24 points, with a total turnover of HKD 427.014 billion; the Hang Seng China Enterprises Index fell by 1.58% to 7365.59 points; and the Hang Seng Tech Index fell by 1.17% to 4640.75 points.

CICC believes that in the case of rapid market surge in the short term, violent fluctuations are a normal technical adjustment of the market. With policy support, the overall upward trend of Hong Kong stocks remains unchanged. It is expected that Hong Kong stocks are still worth looking forward to in October under the joint promotion of the macroeconomic environment at home and abroad. The bank pointed out that with the future upward trend of Hong Kong stocks, the differentiation of fundamentals will also lead to price differentiation, and high volatility and differentiation may become the main features of the operation of Hong Kong stocks in the near future.

Performance of Blue Chip Stocks

Meituan-W (03690) rose against the trend. As of the close, it rose by 2.33% to HKD 184.4, with a turnover of HKD 20.178 billion, contributing 40.37 points to the Hang Seng Index. It was reported that Meituan is further expanding into the Middle East market, with its overseas version app Keeta officially launched in Riyadh, the capital of Saudi Arabia. Starting from 11 am Saudi time this morning, users in Riyadh will enjoy a half-price discount and free delivery benefits on their first order.

As for other blue chip stocks, China Yangtze Power (01038) rose by 2.53% to HKD 52.7, contributing 1.32 points to the Hang Seng Index; CLP Holdings (00006) rose by 1.95% to HKD 49.65, contributing 2.16 points to the Hang Seng Index; Alibaba Health (00241) fell by 7.08% to HKD 4.33, dragging down the Hang Seng Index by 3.41 points; Hong Kong Exchanges and Clearing (00388) fell by 5.52% to HKD 322, dragging down the Hang Seng Index by 37.05 points.

Hot Sectors

On the market, large-cap technology stocks generally traded lower, with Alibaba falling by 1.53% and Tencent falling by 1%. Chinese brokerage stocks and property stocks opened high but closed lower today, with Guolian Securities falling by over 18% and China Overseas Land & Investment falling by 20%; semiconductor stocks and mobile industry chains also rose and then fell back; the spot market continued to decline, shipping stocks continued to decline; the Middle East tension may ease, with overnight oil prices falling by over 4%, leading to another sharp decline in oil stocks; engineering machinery stocks, cement stocks, infrastructure stocks, photovoltaic stocks, pharmaceutical stocks, non-ferrous metal stocks, etc., all fell.

1. Chinese brokerage stocks led the decline. As of the close, Guolian Securities (01456) fell by 18.23% to HKD 4.44; Everbright Securities (06178) fell by 13.85% to HKD 7.96; Huatai Securities (06886) fell by 13.42% to HKD 13.16; and China Merchants Securities (06099) fell by 11.06% to HKD 14.64.

UBS research report pointed out that it believes that the securities industry is experiencing multiple catalytic factors, including macro-level factors such as the mainland's reserve requirement ratio cut, interest rate reduction, and lowering of existing home loan rates; in the capital market, the establishment of market value management guidelines, support for share buybacks, and attracting long-term funds into the stock market The bank pointed out that the sustainability of the securities industry's upward trend depends on multiple catalytic factors, including the adequacy of liquidity, support from macro policies and signs of economic improvement, as well as favorable policies. As this rebound started from a lower base, it may imply a higher rebound magnitude this time. The bank believes that the valuation of A-share brokerage stocks is still relatively cheap, but compared to the historical average valuation, the valuation of H-shares is not considered cheap.

2. Shipping stocks continue to decline. As of the close, COSCO Shipping Energy Transportation (01138) fell by 9.46% to HKD 8.71; COSCO Shipping Holdings (01919) fell by 7.8% to HKD 11.34; Pacific Basin Shipping (02343) fell by 4.66% to HKD 2.25; China Merchants Overseas (00316) fell by 4.14% to HKD 102.

The main contract of the European route continued to decline today after a nearly 20% plunge yesterday, with a further drop today, falling by over 10% at one point. According to the latest data from the Shanghai Shipping Exchange, as of October 7, 2024, the Shanghai Containerized Freight Index (Europe route) was at 2662.75 points, a 15.9% decrease from the previous period. In addition, Maersk's WEEK43 spot rate has dropped to $2600/FEU.

Galaxy Futures pointed out that considering the high capacity in October and November combined with the expected decline in demand, the supply-demand situation is expected to further move towards a loose state. With the current freight rate levels, shipping companies' profits remain good, and short-term spot prices are expected to continue to decline. Guotai Junan Futures believes that after the National Day holiday, with the off-peak season for the European route, airline capacity supply will increase. If the supply of goods cannot match sufficient capacity, the downward trend in freight rates will continue.

3. Property stocks opened high and fell. As of the close, Agile Group Holdings (02772) fell by 20.3% to HKD 0.157; China SCE Group Holdings (01030) fell by 5.44% to HKD 2.26; Yuexiu Property (00123) fell by 5.31% to HKD 6.06; Sunac China Holdings (01918) fell by 3.85% to HKD 2.25.

A report from HSBC Research points out that taking the stock market rebound dominated by policies from April to May as a reference, the valuation of the property industry is re-evaluated, focusing on large-cap stocks. The bank mentioned that only three property stocks, including China Overseas Land & Investment and China Resources Land, have valuations at or below the high levels in May, while the valuations of other property stocks have significantly exceeded the May levels, making these valuations difficult to explain reasonably.

It is worth mentioning that the real estate market has heated up in many places during the holiday. The latest data from the China Index Research Institute shows that the average subscription volume of surveyed new housing projects in most cities during the National Day holiday exceeded the total for September. In first-tier cities, the average subscription volume of monitored projects in Guangzhou and Shenzhen during the holiday reached twice the level of September, while in Beijing and Shanghai, it exceeded the total for September. The number of second-hand housing transactions in key cities has generally increased compared to last year's National Day holiday, with Qingdao increasing by 216%, Shenzhen by 168%, and Wenzhou by 144%.

4. Semiconductor stocks surged and then fell back. As of the close, SMIC (01347) fell by 3.6% to HKD 24.1; Shanghai Fudan Microelectronics (01385) fell by 3.36% to HKD 17.26; Hua Hong Semiconductor (06908) rose by 17.05% to HKD 1.03 The report released by the Semiconductor Industry Association (SIA) of the United States recently showed that in August 2024, global semiconductor sales reached $53.1 billion, a year-on-year increase of 20.6% and a month-on-month increase of 3.5%. This sales data has achieved continuous growth for five months and hit a historical high in August. In addition, the strong demand for AI is continuously driving the chip boom cycle. Hon Hai Precision, the parent company of Foxconn, announced that it is building the world's largest NVIDIA GB200 chip manufacturing factory in Mexico to meet the booming demand for Blackwell chips in the AI market.

Guojin Securities believes that with the large-scale shipment of NVIDIA's B-series chips and the popularization of AI applications such as Wensheng Video, the industry chain will usher in good opportunities for cargo transportation and is optimistic about core beneficiary companies. With the semiconductor industry actively recovering and the industry chain actively benefiting, it is optimistic about undervalued leading companies that are expected to benefit from cyclical recovery, performance improvement, and valuation repair.

5. Oil stocks fell again. As of the close, CNOOC (00883) fell by 5.16% to HKD 19.3; CNOOC Service (02883) fell by 3.64% to HKD 7.14; Sinopec (00386) fell by 3.61% to HKD 4.8; PetroChina (00857) fell by 3.14% to HKD 6.16.

Overnight, crude oil fell sharply, with both WTI and Brent crude oil falling by more than 4.6%. This was mainly due to the possibility of easing geopolitical tensions in the Middle East. Some analysts say that the likelihood of an attack on Iranian oil infrastructure is small and warn that if Israel shifts its focus to any other target, oil prices could face significant downward pressure.

Guangda Futures recently pointed out that as global crude oil consumption enters the seasonal off-peak period and according to the latest online meeting of OPEC+, the organization will gradually increase production as planned in December. Therefore, without considering strong uncertainties in geopolitical factors, the fundamental impact of crude oil itself is biased towards the downside. In this context, if the subsequent geopolitical situation eases, oil prices may quickly recover downwards in the short term, with a medium to long-term downward shift.

Hot Stocks

1. XPeng Motors-W (09868) rebounded significantly. As of the close, it rose by 4% to HKD 46.85.

XPeng Motors announced the global debut of the XPeng P7+ on October 10. Previously, the official introduction stated that the new car is the "world's first AI car" and the first model equipped with XPeng's new generation of autonomous driving hardware platform, which will be officially launched in the fourth quarter. XPeng Motors set a new monthly record in September with a delivery volume of 21,352 vehicles, a year-on-year increase of 39%.

2. Hongteng Precision (06088) surged in the morning session. As of the close, it rose by 3.33% to HKD 2.79.

Hon Hai Precision, the parent company of Foxconn, announced that it is building the world's largest NVIDIA GB200 chip manufacturing factory in Mexico to meet the booming demand for Blackwell chips in the AI market. Liu Yangwei, Chairman of Foxconn, stated that Foxconn is the first company globally to ship NVIDIA GB200 AI chips

IPO Debut

Rongli Construction (09639) debuted with a first-day drop. As of the close, it fell by 15.07% to HKD 0.62.

Rongli Construction was priced at HKD 0.73 per share, issuing a total of 250 million shares with 5,000 shares per board lot. The net proceeds are expected to be approximately HKD 149.7 million. It is reported that Rongli Construction is a sizable Hong Kong contractor engaged in civil and cable engineering, as well as solar photovoltaic system engineering. According to a report by Frost & Sullivan, Rongli Construction is the largest cable and civil pipeline installation subcontractor in Hong Kong in 2023, with a market share of around 13.6% based on revenue for the 2023/24 fiscal year