Zhitong Hong Kong Stocks Early Insights | Pan Gongsheng: Expand channels for foreign investors to invest in the domestic capital market Bitcoin breaks through $88,000 and continues to set new highs

【Today's Headlines】

Pan Gongsheng: Promote the Coordination of Investment and Financing Functions in the Stock Market and Broaden Channels for Foreign Investors to Invest in the Domestic Capital Market

The National People's Congress of China released a report by Pan Gongsheng, the Governor of the People's Bank of China, on financial work on behalf of the State Council. Pan Gongsheng stated that it is necessary to continuously deepen financial reform and opening up, and accelerate the construction of a modern financial system with Chinese characteristics. Improve the implementation mechanism, target system, and basic currency issuance mechanism of monetary policy, and enhance the market-oriented interest rate formation and transmission mechanism. Support large commercial banks in replenishing capital. Deepen the reform of rural credit cooperatives. Promote the coordination of investment and financing functions in the stock market and broaden channels for foreign investors to invest in the domestic capital market. Develop a multi-tiered bond market, strengthen the construction of financial market infrastructure and overall supervision. Steadily and prudently advance the internationalization of the Renminbi. Continuously provide payment services for key groups. Improve a self-controllable cross-border payment system. Promote the construction of international financial centers in Hong Kong and Shanghai.

【Market Outlook】

Bitcoin Breaks $88,000, Continues to Set New Highs

Overnight, U.S. stocks closed with all three major indices hitting record highs. The Dow Jones Industrial Average rose 304.14 points from the previous trading day, closing at 44,293.13 points, an increase of 0.69%; the S&P 500 index rose 5.81 points, closing at 6,001.35 points, an increase of 0.10%; the Nasdaq Composite Index rose 11.98 points, closing at 19,298.76 points, an increase of 0.06%.

Bitcoin broke through $88,000, continuing to set new highs, rising over $7,500 or 9.5% within 24 hours, with a total market capitalization exceeding $1.72 trillion. Cryptocurrency-related stocks surged, with Canaan Inc. rising over 41%, MicroStrategy up over 25%, and Coinbase up over 19%. Tesla continued to rise by 8.96%, while the chip, semiconductor, and precious metals sectors declined. Popular Chinese concept stocks showed mixed results, with the Nasdaq Golden Dragon China Index up 0.6%. XPeng rose over 5%, and Li Auto rose nearly 3%.

International oil prices fell. The price of light crude oil futures for December delivery on the New York Mercantile Exchange fell by $2.34, closing at $68.04 per barrel, a decrease of 3.32%; the price of Brent crude oil futures for January 2025 delivery fell by $2.04, closing at $71.83 per barrel, a decrease of 2.76%. International gold prices closed lower, with COMEX gold futures down $77.10 per ounce, a decrease of 2.86%, reported at $2,617.70 per ounce.

【Hot Topics Ahead】

Hong Kong Stock Exchange: As of the end of September, the total market value of securities assets held by mainland investors through the Stock Connect exceeded HKD 3.3 trillion

On November 11, the Hong Kong Stock Exchange released the "Ten-Year White Paper on the Interconnection of Capital Markets between Mainland China and Hong Kong." The white paper shows that as of the end of September 2024, there were over 3,300 eligible stocks under the Shanghai-Shenzhen-Hong Kong Stock Connect, covering 90% of the total market capitalization of listed companies in the three markets of Shanghai, Shenzhen, and Hong Kong, with over 80% of the trading volume. In the first three quarters of 2024, the average daily trading volume for northbound and southbound trading was RMB 123.3 billion and HKD 38.3 billion, respectively, representing increases of 21 times and 40 times compared to the first month after the launch in 2014, accounting for 6.7% of the total trading volume in the mainland market and 16.9% of the total trading volume in the Hong Kong market As of September 2024, the total market value of securities assets held by mainland investors through the Hong Kong Stock Connect exceeded HKD 3.3 trillion, more than 200 times that at the end of 2014. As of September 2024, the total amount of securities assets held by foreign investors in mainland China was nearly RMB 7.6 trillion, an increase of over RMB 4.7 trillion compared to June 2018 when MSCI first included A-shares.

Taobao Live's Double 11 Performance Shines, Influencer Sales Surge Over 40% Year-on-Year

According to sources close to Taobao, this year's Tmall Double 11 saw significant breakthroughs in overall performance for Taobao Live, with sales in influencer live streams increasing by over 40% year-on-year. According to public reports, in the first hour of Double 11 pre-sales, the purchase amount in Li Jiaqi's live stream increased by 20%. With Double 11 still ongoing, Cui Dongsheng, the head of the "Jiao Ge Peng You" Taobao live stream, has already celebrated early in his social circle. This year, e-commerce live streaming has shown a stark contrast. Entertainment-based influencers have faced setbacks, while established Taobao live streams focusing on professionalism and service have achieved record sales. Industry insiders analyze that this year's Double 11 marks a clear watershed, with the influencer live streaming sales model hitting a bottleneck, while quality live streaming models that coordinate professional hosts and brand products will become mainstream in the industry.

Leading Pig Farming Enterprises Maintain Profitable October, Industry Enters Key "Cost Competition" Period

As of November 11, the October sales data for major pig farming enterprises has been released, showing varying degrees of price declines across companies. Among them, Muyuan Foods' average selling price dropped to RMB 17.17 per kilogram, while Wens Foodstuff and New Hope fell to RMB 17.64 and RMB 17.37 per kilogram, respectively, with other companies also experiencing declines. Despite this, some companies have maintained optimistic profit situations due to cost reductions, and with some companies benefiting from increased sales, the expected decline in profit scale is relatively limited.

However, the real test period is still far from over. According to Guotai Junan data, on November 11, the spot prices for live pigs in Henan, Sichuan, and Guangdong were RMB 16.52, RMB 16.74, and RMB 17.8 per kilogram, respectively. However, the current prices for the 2501 and 2503 contracts, which represent price expectations for January and March next year, are only RMB 15.5/kg and RMB 13.89/kg, respectively. This significant gap from the near-month contracts and live pig spot prices indicates a relatively pessimistic market expectation for pig prices in the first quarter of 2025. At that time, the industry will gradually enter a critical stage of cost competition, and if related farming enterprises cannot achieve effective cost reductions, they may face another phase of losses.

ASMPT (00522): Company and Potential Offeror Have Ceased Discussions on Possible Privatization

Zhitong Finance APP reported that ASMPT (00522.HK) announced that the company hereby informs its shareholders and potential investors that it has ceased discussions with a potential offeror regarding possible privatization.

China International Marine Containers (Group) Co., Ltd. (02039): Increases Stake in Subsidiary CIMC Enric by 1.068%

China International Marine Containers (Group) Co., Ltd. announced that from October 8, 2024, to November 7, 2024, its wholly-owned subsidiary CIMC Hong Kong continued to purchase a total of 21.664 million shares of CIMC Enric at an average price of approximately HKD 6.79 per share, accounting for about 1.068% of CIMC Enric's total issued shares Alumina Prices Surge, Downstream Forced to Halt Production

On November 11, the main contract for alumina futures 2501 reported another increase, reaching a maximum of 5,477 yuan/ton during the trading session, setting a new high since its listing. Starting from early September this year, alumina prices began a strong upward trend due to supply-side contractions. The futures price rose from around 3,600 yuan/ton, increasing by nearly 2,000 yuan/ton in less than two months. In the spot market, according to Mysteel, the weighted monthly average price of domestic alumina in October 2024 was 4,615 yuan/ton, an increase of 617 yuan/ton from the previous month, up 15.43% month-on-month. The reasons for the skyrocketing alumina prices are mainly due to low spot inventory, overseas force majeure, and slow progress in new production capacity. According to Mysteel, Guangxi Electrolytic Aluminum Plant A has recently begun to halt production due to high alumina costs, initially planning to reduce production by 30%, with a potential increase to 50% later. Guangxi Electrolytic Aluminum Plant B is also affected by high costs, and its technical transformation plan may be expedited, expected to impact annual production capacity by 100,000 tons.

Weichai Power (02338) Plans to Increase Investment in Shandong Heavy Industry Group Finance Co., Ltd. by 784 Million Yuan

According to Zhitong Finance APP, Weichai Power (02338) announced that on November 11, 2024, the existing shareholders of the heavy industry finance company (including the company, Shaanxi Fast Gear (a subsidiary in which the company holds a 51% stake), Shandong Heavy Industry, Weichai Heavy Machinery, and Shantui Co., Ltd.) and China National Heavy Duty Truck Group (Hong Kong) signed an investment agreement with the heavy industry finance company. The existing shareholders of the heavy industry finance company and China National Heavy Duty Truck Group (Hong Kong) each agreed to invest a total of 5.576 billion yuan in the heavy industry finance company. The total amount of investment made by the group according to the investment agreement is 784 million yuan, of which 338 million yuan will be used to increase the registered capital of the heavy industry finance company, and 447 million yuan will be used to increase the capital reserve of the heavy industry finance company.

Kedi-B (02487): CU-10201 (4% Minocycline Foam for External Use) Has Received Market Approval from the National Medical Products Administration

According to Zhitong Finance APP, Kedi-B (02487) announced that the group's CU-10201 (4% Minocycline Foam for External Use) has received market approval from the National Medical Products Administration of the People's Republic of China. The indication for CU-10201 is the treatment of non-nodular moderate to severe acne and is suitable for use in children aged nine and older as well as adult patients.

[Stock Highlights]

Dongfang Electric (01072): New Orders Show Steady Growth

In October, under the leadership of the Wind Energy Professional Committee of the China Renewable Energy Society, 12 wind turbine manufacturers, including Envision Energy, Goldwind Technology, Yunda Co., Ltd., Mingyang Smart Energy, SANY Heavy Energy, Dongfang Electric, Electric Wind Power, CRRC, China Shipbuilding Industry Corporation, United Power, Harbin Wind Power, and Xinglan Wind Power, signed the "Self-Discipline Convention for Maintaining a Fair Competitive Environment in the Chinese Wind Power Industry."

In the first three quarters, the production of steam turbine generator sets and wind turbine generator sets significantly increased year-on-year. In the first three quarters of 2024, the company's power generation equipment production reached 40.4 GW, a year-on-year increase of 29%. Among them: hydropower generator sets 2.5 GW, down 41% year-on-year; The steam turbine generator has a capacity of 32.4 GW, a year-on-year increase of 38%; the wind turbine generator has a capacity of 5.5 GW, a year-on-year increase of 53%; the output of power station steam turbines is 22.1 GW, a year-on-year decrease of 1%; the output of power station boilers is 18.9 GW, a year-on-year increase of 4%.

CITIC Construction Investment Securities' research report points out that Dongfang Electric's profitability improved in the third quarter, with net profit attributable to the parent company recovering growth, showing significant recovery compared to the second quarter. The company's Q2 performance declined mainly due to the delivery of low-priced coal power orders; additionally, the decline in gross profit margins for wind power and engineering contracting also had a considerable negative impact. In Q3, these impacts gradually diminished, and net profit attributable to the parent company and profitability improved significantly. In the third quarter, the company added new orders worth 25.2 billion yuan, a year-on-year increase of 64%, but a quarter-on-quarter decrease of 15%. The firm expects the company's net profit attributable to the parent company for 2024-2026 to be 3.61 billion, 4.55 billion, and 5.22 billion yuan, corresponding to PE ratios of 14.0, 11.1, and 9.7 times, respectively.

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