Hong Kong stocks closed (01.13) | The Hang Seng Index fell 1%, losing the 19,000-point level, airline stocks declined throughout the day, while SMIC rose over 6% against the trend

According to the Zhitong Finance APP, strong non-farm payrolls have dampened interest rate cut expectations, with the market focusing on the U.S. inflation data to be released this week. The three major indices of the Hong Kong stock market fell under pressure, with the Hang Seng Index experiencing six consecutive declines and falling below the 19,000 mark. The Hang Seng Tech Index once dropped over 2%, but the decline later narrowed. By the close, the Hang Seng Index fell 1% or 190.15 points to 18,874.14 points, with a total turnover of HKD 134.047 billion; the Hang Seng China Enterprises Index fell 0.79% to 6,843.71 points; the Hang Seng Tech Index fell 0.91% to 4,221.92 points.

CICC believes that the overall Hong Kong stock market has not yet escaped the oscillation pattern, and caution is the main approach in the short term. Under the assumption of policy support but unrealistic overly strong expectations, more active intervention can be made during downturns, but profits should be taken moderately during exuberance. Structurally, the firm continues to recommend stable returns (dividends + buybacks, especially for growth companies with a high proportion of net cash). Attention should be paid to marginal demand improvement supported by policies, combined with sectors that have undergone more thorough industry clearing.

Blue Chip Performance

SMIC (00981) led the blue chips. By the close, it rose 6.18% to HKD 34.35, with a turnover of HKD 5.278 billion, contributing 13.2 points to the Hang Seng Index. Goldman Sachs raised the target price for SMIC from HKD 33.4, an increase of 13.8% to HKD 38, maintaining a "neutral" rating. Goldman Sachs expects that under the long-term growth of semiconductor demand in China and geopolitical risks, SMIC will show a gradual upward trend. For the fourth quarter of 2024, it is expected that revenue will increase by 1% quarter-on-quarter to USD 2.2 billion, with a gross margin of 18.5%, which is better than previous data and consistent with management's guidance range.

In other blue chips, Alibaba Health (00241) rose 2.85% to HKD 3.25, contributing 0.92 points to the Hang Seng Index; PetroChina (00857) rose 2.46% to HKD 6.25, contributing 5.02 points to the Hang Seng Index; Haier Smart Home (06690) fell 6.83% to HKD 24.55, dragging down the Hang Seng Index by 6.9 points; MTR Corporation (00066) fell 4.17% to HKD 24.15, dragging down the Hang Seng Index by 3.1 points.

Popular Sectors

On the market, large technology stocks generally showed declines, with Alibaba down 1.88% and Tencent down 0.97%. The U.S. imposed the most severe sanctions on Russian oil, pushing oil prices higher, leading oil stocks to rise against the trend; some semiconductor stocks maintained their upward momentum, with SMIC rising over 6% and Hua Hong Semiconductor rising over 3%; most domestic property stocks rebounded, with Sunac China strongly rebounding over 14%; film and television stocks and gold stocks rose. On the other hand, Guo Minghao expects that iPhone shipments in 2025 will fall short of expectations, causing Apple concept stocks to decline; soaring oil prices combined with exchange rate pressures led airline stocks to fall throughout the day; home appliance stocks, gaming stocks, Hong Kong real estate stocks, and automotive stocks all fell.

1. Oil stocks rose against the trend. By the close, PetroChina (00857) rose 2.46% to HKD 6.25; CNOOC (00883) rose 2.23% to HKD 19.24; CNOOC Services (02883) rose 1.73% to HKD 7.05.

On January 10, U.S. President Biden announced a new round of sanctions against the Russian economy, involving the country's two largest oil companies and 183 oil tankers, aimed at cutting off major funding sources for Russia related to the Russia-Ukraine conflict. The market expects this to affect Russian oil production by 3 million barrels per day and export volume by 1.4 million barrels per day, catalyzed by this news Last Friday, the WTI crude oil futures settlement price rose by 3.58%, closing at $76.57 per barrel; the Brent crude oil futures settlement price rose by 3.69%, closing at $79.76 per barrel.

CICC pointed out that looking ahead, it maintains its judgment in the annual outlook, predicting that the new equilibrium in the oil market in 2025 may be tight balance, low inventory, and high risk. Under the baseline scenario, the Brent oil price center may shift to the range of $80-85 per barrel. In addition, if oil supplies from Russia or the Middle East are affected by geopolitical factors, it could bring an additional upside potential of $5-10 per barrel.

2. Airline stocks all fell. As of the close, Air China (00753) fell by 3.61%, closing at HKD 4.54; China Eastern Airlines (00670) fell by 2.9%, closing at HKD 2.34; China Southern Airlines (01055) fell by 2.43%, closing at HKD 3.61.

On January 10, local time, U.S. President Biden announced a new round of sanctions against the Russian economy, involving the country's two largest oil companies and 183 oil tankers, leading to a strong rise in both domestic and international crude oil futures prices. In addition, robust non-farm employment data boosted the U.S. dollar index. CITIC Securities pointed out that key driving variables for the airline industry include flight volume, passenger load factor, ticket prices, oil prices, and exchange rates. Guotai Junan expects that domestic net oil ticket prices will rise by about 30% year-on-year in Q4 2024, with airlines significantly reducing losses in the off-season compared to the same period last year. It is expected that the downward trend in oil prices will continue in Q1 2025, and the performance during the Spring Festival travel season is promising.

3. Apple concept stocks fell sharply. As of the close, Q Technology (01478) fell by 5.31%, closing at HKD 5.31; BYD Electronics (00285) fell by 4.73%, closing at HKD 37.25; Sunny Optical (02382) fell by 2.87%, closing at HKD 60.9.

Tianfeng International analyst Guo Mingqi stated that Apple faces severe challenges in 2025, with iPhone shipment growth nearly stagnating. Even the release of the new iPhone SE4 is unlikely to boost sales, as business in China continues to shrink, and AI services have yet to contribute. He noted that previous surveys showed that most iPhone users are not interested in Apple Intelligence, which aligns with supply chain surveys indicating that the introduction of Apple Intelligence has not helped spur a wave of iPhone upgrades.

Guo Mingqi mentioned that after discussions with major suppliers, Apple has adopted a more cautious approach to its iPhone production plans for this year. Apple estimates that its delivery volume this year will be between 220 million and 225 million units, similar to last year's 220 million units, but lower than the market expectation of 240 million units. Therefore, Guo Mingqi estimates that even if Apple launches the new iPhone SE4 in the short term, the delivery volume in the first half of the year is still expected to decrease by 6% compared to the same period last year.

4. Hong Kong real estate stocks are under pressure. As of the close, Link REIT (00823) fell by 2.18%, closing at HKD 31.4; Hang Lung Properties (00101) fell by 1.83%, closing at HKD 5.9; Hysan Development (00012) fell by 1.79%, closing at HKD 21.9 The U.S. non-farm data for December far exceeded expectations, increasing market expectations for a second inflation in the U.S. Bank of America predicts that the December employment data may finalize the pause in interest rate cuts in January. The Federal Reserve made a strong hawkish turn at the December FOMC meeting, and a pause in interest rate cuts in January is clearly the baseline scenario, with the upcoming employment report closely predicting this decision. Citigroup's research report states that compared to last November, the outlook for Hong Kong's real estate sector has become more pessimistic, expecting property prices to decline by 3% this year. UBS has also lowered its forecast for Hong Kong property prices this year from an increase of 0% to 5% to flat, reflecting a potential reduction in the number of interest rate cuts after the U.S. elections.

Popular Active Stocks

1. Sunac China (01918) Strong Rebound. As of closing, up 14.62%, reported at HKD 1.49.

According to reports, Sunac's domestic bond "H Sunac 05" (bond code: 135548.SH) underwent a second restructuring that was approved by creditor voting on January 10. The total amount of this domestic bond restructuring is RMB 15.4 billion, involving 10 domestic bonds, with the new plan expected to reduce debt by over 50%. Reports indicate that 9 out of the 10 domestic bonds have passed the voting for restructuring, with only "H Sunac 07" yet to form an effective resolution; this bond is expected to repay principal and interest in installments by January 21, 2025, at the latest.

Previously, Sunac China announced that it was actively communicating with the petitioners regarding the liquidation petition proposed by China Cinda (Hong Kong) Asset Management, striving to negotiate an effective solution under the principle of fairness to other creditors. The company will also strongly oppose the petition. Additionally, on January 12, the second batch of Shanghai One No. 1, jointly created by CITIC, New Lake, and Sunac, opened for sale, achieving sales of RMB 6.6 billion on the same day, with a sell-through rate exceeding 96%.

2. Evergrande Property (06666) Strengthens Again. As of closing, up 14.08%, reported at HKD 0.81.

On the evening of January 10, Evergrande Property announced that the company had previously faced forced execution by relevant banks regarding approximately RMB 13.4 billion in pledged deposits and had filed a lawsuit with the Guangzhou Intermediate People's Court in Guangdong Province regarding recovery matters. Currently, the Guangzhou Intermediate People's Court has made a relevant judgment. According to the judgment, the responsible parties should repay Evergrande Property's subsidiaries a total of approximately RMB 13.4 billion, as well as bear a total of approximately RMB 72.7154 million in case acceptance fees.

3. HAPO Pharmaceuticals-B (02142) Hits New Highs. As of closing, up 10.79%, reported at HKD 2.67.

HAPO Pharmaceuticals announced that it has signed a licensing agreement with Kelun-Biotech for HBM9378/SKB378 with Windward Bio AG. According to the agreement, Windward Bio has obtained exclusive rights to research, develop, produce, and commercialize HBM9378/SKB378 globally (excluding Greater China and certain Southeast Asian and West Asian countries). HAPO Pharmaceuticals and Kelun-Biotech are entitled to receive up to USD 970 million in upfront and milestone payments, as well as tiered royalties based on net sales ranging from single to double-digit percentages 4. COSCO Shipping Energy Transportation (01138) continues to rise. As of the close, it rose 7.57%, closing at HKD 7.25.

The U.S. Department of the Treasury announced severe sanctions on the Russian oil industry effective January 10, 2025. Morgan Stanley published a research report indicating that the sanctions may gradually drive the "shadow fleet" out of the market, which would benefit the legitimate tanker market. The firm believes that the negative sentiment reflecting weaker-than-expected performance for the peak season in the fourth quarter of 2024 may improve. The firm has a positive outlook on COSCO Shipping Energy Transportation.

5. New Giao RV (00805) debuts on the market. As of the close, it fell 22.83%, closing at HKD 0.98.

New Giao RV priced its shares at HKD 1.27, issuing a total of 240 million shares, with a minimum purchase of 2,000 shares, raising approximately HKD 253 million in net proceeds. Public information shows that New Giao RV is a company with a wide business network in Australia and New Zealand, designing, developing, manufacturing, and selling custom trailer caravans. According to Frost & Sullivan data, based on revenue and sales in 2023, the company ranks second in market share in the RV industry in both Australia and New Zealand