Zhitong Hong Kong Stock Analysis | Capital Binds Together State-owned Banks Reach New Highs, Technology Falls into Panic or Welcomes a Turning Point

[Market Dissection]

In the context of declines in both the US and A-shares, Hong Kong stocks continued to perform steadily today, closing up 0.20%, firmly standing above the annual line.

With the resurgence of conflict in the Middle East, the Islamic Revolutionary Guard Corps launched multiple ballistic missiles from its territory towards the US military base in Jordan, all of which were confirmed intercepted by the US Central Command. According to CCTV News, US President Trump stated in an interview that the US would retaliate after Iran launched missile attacks on US forces. Trump claimed that the US would "strike hard" against Iran, which would face a "severe blow," causing Brent crude to surge 8% back to $90. Oil and gas stocks such as CNOOC (00883) and Shandong Molong (00568) both rose over 2%.

On Wednesday, July 29, Eastern Time, the Federal Reserve announced after the FOMC meeting that the target range for the federal funds rate would remain unchanged at 3.50% to 3.75%. This outcome was expected, but the voting results showed that nine members supported keeping rates unchanged while three opposed this decision, highlighting significant internal divisions within the Fed since Walsh took over as chair. Walsh stated that maintaining the status quo is not a sign of policy inertia, and the market can assess trends based on economic signals. This implies a hands-off approach without any forward guidance, waiting to remedy issues (such as inflation being too high) when they arise. This is actually contradictory to Walsh's repeated emphasis over the past two months that the Fed would not tolerate excessive inflation. It appears relatively dovish, but the market's response is leaning hawkish. The 30-year US Treasury yield soared to 5.21%, the highest since 2007, while the three major US stock indices collectively declined.

Walsh's ambiguous statements ultimately also look at AI; unless AI cannot drive growth, interest rates will only be lowered when inflation decreases. If AI is strong, even slightly higher inflation can be tolerated, which is roughly the thought process.

Microsoft delivered a quarterly report that comprehensively exceeded Wall Street expectations, with total revenue up 18% year-on-year, EPS up 23%, and exceeding analyst expectations by over 10%. The investment in AI has yielded results: Azure revenue increased by over 40%, capital expenditures rose by 70% year-on-year, but were 3.5% lower than expected. Yesterday's performance saw an initial rise followed by a decline. Today, tech stocks continued to drop, collectively falling into panic.

Even Zhongji Xuchuang (03308), which just went public today, could not withstand the pressure. The company globally offered 54,500,000 H shares at HKD 980.00 per share, with net proceeds of HKD 5.2891 billion. The number of shares offered in Hong Kong accounted for 10% of the global offering, with a subscription rate of 16.84 times; the number of shares offered internationally accounted for 90% of the global offering, with a subscription rate of 9.73 times. The subscription was enthusiastic, but today it broke the issue price, falling 2.04%. This is mainly due to poor timing.

However, often this is when a turning point occurs. Looking at the source, South Korea is also actively rescuing its market. Reports indicate that the Korea Exchange is assessing the possibility of "temporarily banning short selling" and "narrowing the price fluctuation limits" as one of the high-intensity measures to respond to the stock market crash. Sources say, "Currently, it has only been confirmed that it is technically feasible." Today, the storage concept stock Demingli (001309.SZ) in A-shares pulled up a limit up from an important bottom. Additionally, the latest report states that Microsoft signed new data center leasing contracts worth over $130 billion last quarter, indicating that large tech companies' spending on AI infrastructure is rapidly increasing Pre-market up over 9%.

In today's atmosphere, large funds continue to cluster around bank stocks, with the five major banks—Industrial and Commercial Bank of China (01398), Agricultural Bank of China (01288), Bank of China (03988), China Construction Bank (00939), and Bank of Communications (03328)—all reaching historical highs. Institutions expect that the revenue and net profit attributable to shareholders of banks will grow by 6% and 4% year-on-year, respectively, in the second quarter of 2026, with revenue growth slightly slower than in the first quarter, mainly due to uncertainties in other non-interest income. Looking ahead to the third quarter, the interim performance of banks continues to show a positive trend. The worse the macro environment, the more the stability advantage of bank stocks becomes apparent. This is also an important reason for the stability of the Hong Kong stock market. Additionally, Tencent (00700), mentioned yesterday, is also a good target for stable growth, continuing to rise slightly today.

Automobile stocks continue to maintain their heat. On July 29, the delivery ceremony for Aito M6 users was grandly held at the Chongqing Seres (09927) super factory (Longxing). The Aito M6 pure electric Max+ is equipped with Huawei's QianKun intelligent driving ADS advanced version and 896-line dual-laser radar, with prices dropping to 229,800/249,800 yuan, significantly lower than the previous 259,800-299,800 yuan for the high-end four-wheel drive version, which is expected to contribute to incremental deliveries. Today, it rose over 7%.

Smart driving also has stimuli. On July 30, Guo Shougong, Director of the Equipment Industry Department of the Ministry of Industry and Information Technology, disclosed at the 2026 World Intelligent Connected Vehicle Conference media roundtable that since 2026, the penetration rate of passenger cars equipped with L2-level combined driving assistance functions in China has reached 70.5%. Zhejiang Shibao (01057): Intelligent steering can be applied to various types of vehicles, and the electro-hydraulic steering gear has been used in heavy-duty unmanned mining trucks; the company is a major supplier of electric steering gears for new energy light trucks in China. The company supplies the steering intermediate shaft for Xiaomi automobiles. On July 30 at 19:00, Xiaomi will hold a technology launch conference to fully analyze the Xiaomi Kunlun technology architecture, simultaneously showcasing the N90Max and N70Max extended-range SUV models. Today, it rose over 7%. Another key player in smart driving is MOMENTA-W (06880): it officially obtained permission from the German Federal Motor Transport Authority (KBA) yesterday to conduct L4 autonomous driving tests on urban roads nationwide in Germany, marking the first time a Chinese company has obtained L4 testing qualifications covering urban roads across Germany. SAIC's medium-sized pure electric coupe MG07 has started pre-sales and will be launched in late August, equipped with the Momenta R7 world model, rising over 7% today. Another one to note is Horizon (09660).

Be aware that stocks undergoing a transfer of positions often perform actively. The purpose of the transfer may be to facilitate subsequent cashing out, or to be used as collateral for financing, and shares deposited can be lent out to increase the supply of short positions. In any case, the stock's activity will significantly increase. For example, on July 29, Anker Innovations (00668) experienced a position change, with a total market value of 349 million Hong Kong dollars, accounting for 6.88%. The company's shareholders deposited 2.2768 million shares with Goldman Sachs (Asia) Securities, increasing their shareholding ratio by 4.39% The stock officially entered the Hong Kong Stock Connect list on July 27. The company disclosed on its investor relations platform that its energy storage business continues to maintain a good development trend in the European market, with products under the AnkerSOLIX brand widely recognized by European consumers. Today it rose over 10%.

Additionally, on July 29, Smoore International (06969) experienced a position shift, with a total transfer value of HKD 4.335 billion, accounting for 8.08%. The company's shareholders transferred 500 million shares to Citibank and withdrew 500 million shares from HSBC Hong Kong. The fundamentals are also favorable; on July 28, the mandatory national standard (draft for comments) for "heated tobacco products" was released, with the comment period ending on September 26, and it is planned to be officially implemented six months after publication. Institutions predict that a domestic HNB orderly pilot program is expected to start between the end of 2026 and 2027. Once domestic HNB is opened up, a market with a scale of hundreds of billions will emerge, and today it rose over 6%; related concepts such as Huabao International (00336) and China Tobacco Hong Kong (06055) also rose over 6%.

Entering July, the beer industry welcomes the peak consumption season of the year, with the grand opening of the 36th Qingdao International Beer Festival. Recently, Qingdao Beer Co., Ltd. (00168) announced that its controlling shareholder and its concerted parties plan to increase their holdings by a total amount not less than RMB 150 million (including the amount) and not exceeding RMB 300 million (including the amount), with the number of A-shares and H-shares to be increased based on actual purchases. Today it rose over 3%.

On July 27, Evergrande Property (06666) announced that after the original potential buyer decided not to proceed with the transaction on June 25 this year, and the relevant negotiations have been terminated without a legally binding agreement, the liquidator has re-engaged with "several potential buyers," including both new entrants to the process and other parties that had previously participated. The liquidator's next step is to invite potential buyers to conduct due diligence on Evergrande Property Group. The recent decline was due to the previous unsuccessful attempt, but the company's fundamentals are actually still good. By the end of 2025, Evergrande Property's cash and cash equivalents are expected to reach RMB 4.189 billion, a year-on-year increase of 55.3%, with no bank loans and a capital debt ratio of zero. If the mid-year report can maintain positive net current assets this year, there is a good chance of completing a transaction. Funds are betting on success, and today it rose over 8%.

【Sector Focus】

On July 30, the founding conference of the Quantum Information Standardization Technical Committee of the Ministry of Industry and Information Technology was held in Beijing. Ke Jixin, a member of the Party Leadership Group and Vice Minister of the Ministry of Industry and Information Technology, attended the meeting and delivered a speech. Officials from relevant departments of the Ministry of Industry and Information Technology, representatives of the Quantum Information Standardization Committee, and industry experts participated in the meeting. The Quantum Information Standardization Committee is mainly responsible for the formulation and revision of industry standards in the fields of basic common technologies for quantum information, quantum computing, quantum communication, and quantum precision measurement, with the secretariat located at the China Academy of Information and Communications Technology The establishment of this standards committee is of great significance, as it will unify technical specifications, testing standards, and interface protocols, accelerating the transition of quantum technology from laboratory to commercial bidding and government-enterprise procurement; in the long term, it will benefit the standardization of the domestic industrial chain and domestic substitution.

Related Hong Kong stocks: Guofu Quantum (00290), China Telecom (00728).

[Stock Picking]

Midea Group (00300): Continues to win bids for mobile data center temperature control procurement orders; demand for high-temperature catalytic air conditioning in Europe explodes

Midea's building technology has won bids for China Mobile's temperature control procurement orders for mobile data centers for several consecutive years. In June, the company won the bid for China Mobile's new round of low-pressure chiller procurement project for 2026-2028, securing 70% of the share in this procurement. In the past month, Midea Group has added nearly 200,000 air conditioning orders in the European market, including an urgent order of 30,000 mobile air conditioners from a French customer, which took only 7 days from order confirmation to the first batch of shipment.

Commentary: Due to the ongoing extreme high temperatures in Europe, local demand for air conditioning has exploded. The company's air conditioning orders in Europe have surged, with overseas air conditioning orders continuing to grow. Since the beginning of this year, PortaSplit sales have doubled compared to the entire last year, with shipments exceeding 200,000 units. By the first quarter of 2026, Midea's entire product line will have over 500 million appliances capable of networking, achieving over 140 million smart appliances connected globally, with more than 150 million smart users, completing AI layout for over 150 categories of home appliance products. The company's technological transformation has been successful, evolving from a home appliance manufacturer to a technology group, focusing on three tracks: AI + robotics + new energy.

ToB Explosion: A second curve worth hundreds of billions, with growth significantly higher than ToC and higher gross margins. Dual-drive (ToC + ToB), ToC (67%): Air conditioning market share 35%; high-end brands COLMO + Toshiba, with high-end revenue exceeding 20 billion by 2025, accounting for over 15%. ToB (33%, high growth): Revenue of 122.8 billion by 2025 (+17.5%); Q1 2026 building technology 10.8 billion (+10.1%), robotics 8.2 billion (+11.8%). The company has a global layout, with 29 overseas R&D centers and 43 manufacturing bases covering 50 countries; overseas revenue is expected to reach 195.9 billion by 2025 (+16%), accounting for 43%.

Full industrial chain: Core components such as compressors, motors, and controllers are self-researched and produced, with costs 10%-15% lower than peers and shorter delivery cycles. Lighthouse factories: 6 (the first in the home appliance industry), with the Chongqing building technology factory being the world's first full-process AI lighthouse factory in the central air conditioning industry.

Robotics: KUKA + self-developed humanoid robots have orders exceeding 2 billion, with concentrated deliveries in H2 2026. New energy vehicle components: orders exceeding 5 billion, supporting leading automotive companies.

AI + High-end: AI home appliance penetration rate target of 40% by 2026; COLMO stores over 2000, with high-end revenue accounting for over 20%. The company's globalization deepens, with OBM self-owned brands going overseas, experiencing high growth in Southeast Asia, North America, and the Middle East Midea Group's business has covered more than 200 countries and regions. The overseas and ToB business is experiencing strong growth, and Midea Group's ToB business growth rate is expected to exceed that of the ToC business.

Recently, Midea Group and Alibaba Group's first cooperation point is to jointly build core capabilities for whole-house intelligence, focusing on three major directions: family AI brain, IoT ecosystem and life service scenario interconnection, and popular smart hardware. The company has a high dividend and large share buyback. The company returns 100% of its net profit (dividends + buybacks), with an expected dividend yield of approximately 5% in 2026. The company continues to buy back shares in large amounts, and strong profit growth along with an active shareholder return policy has significantly boosted investor confidence. Due to the ongoing extreme high temperatures in Europe, local air conditioning demand has surged, with Midea's air conditioning bases in Wuhu and Guangzhou receiving a total of 200,000 new orders from Europe within a month. The PortaSplit mobile split air conditioner has received over 160,000 new orders since June