Hong Kong stocks closed (10.15) | Hang Seng Index closed down 3.67%, China Resources Brewery (00291) fell nearly 13%

The Zhitong Finance App learned that the three major indices of the Hong Kong stock market fell collectively today. The Hang Seng Index fell 900 points in the intraday period, falling below the 20,000 mark; the Hang Ke Index performed the worst, and at one point the decline increased by more than 5% at the end of the session. At the close, the Hang Seng Index fell 3.67% or 774.08 points to 20318.79 points, with a full-day turnover of HK$261,288 billion; the Hang Seng State-owned Enterprises Index fell 3.99% to 7277.83 points; and the Hang Seng Technology Index fell 4.65% to 4450.95 points.

Ping An Securities believes that the US non-agricultural data for September greatly exceeded expectations, driving the correction of interest rate cut expectations, which may mean that the most relaxed overseas environment facing Hong Kong stocks is over. Domestically, on October 12, the China Information Office's special finance session sent a signal to the market about a package of subsequent incremental policies, or stabilized the market, which had a complicated performance after the holiday season to a certain extent. Overall, after the market returned to rationality, Hong Kong stocks showed more of a volatile upward trend. At the same time, high volatility and high industry differentiation may have become the main characteristics of Hong Kong stocks recently.

Blue-chip stock performance

China Resources Beer (00291) led the blue chip decline. At the close, it fell 12.87% to HK$29.45, with a turnover of HK$1,305 billion, dragging down the Hang Seng Index by 11.4 points. Guoxin Securities pointed out that feedback on beer consumption during the National Day holiday was weak. On the one hand, it will take some time for positive macroeconomic policies to increase consumption power; on the other hand, the beer industry has already entered a low season. Overall, the current market's expectations for the performance of beer leaders in the second half of the year are low, and the current macroeconomic policy has clearly strengthened. Next year, as demand gradually improves, the beer industry is expected to usher in resilience above healthy inventory levels and a low sales base.

In terms of other blue-chip stocks, Changjiang Infrastructure Group (01038) rose 1.67% to HK$54.7, contributing 0.92 points; Electric Energy Industry (00006) rose 0.79% to HK$51.2, contributing 0.91 points to the Hang Seng Index; Xinyi Solar (00968) fell 8.83% to HK$3.2, dragging down the Hang Seng Index by 2.42 points; and Zhongsheng Holdings (00881) fell 6.95% to HK$11.52, dragging down the Hang Seng Index by 1.17 points.

Popular sector aspects

On the market, large technology stocks all fell sharply, Alibaba fell more than 5%, and Tencent fell more than 4%. Major consumer stocks were pressured, and beer stocks had the highest decline; domestic housing stocks fell collectively, with many stocks falling more than 10%; Trump reiterated tariffs on Mexican cars, and auto stocks continued their decline; the strengthening of the US dollar put pressure on non-ferrous metals; infrastructure stocks, Chinese brokerage stocks, and oil stocks declined one after another. On the other side, the semiconductor “weather vane” accelerated recovery, and the semiconductor sector surged higher in early trading; Bitcoin hit 66,000 US dollars, and cryptocurrency ETFs continued to rise.

1. Domestic housing stocks fell across the board. At the close, Zhongliang Holdings (02772) fell 19.33% to HK$0.121; Sunac China (01918) fell 12% to HK$2.2; R&F Properties (02777) fell 10.71% to HK$1.5; and Agile Group (03383) fell 9.71% to HK$0.93.

According to statistics from the China Index Institute, in September alone, the sales volume of TOP100 real estate companies fell 38.81% year on year and 2.2% month on month. On a cumulative basis, in the first three quarters of this year, the performance scale of the top 100 real estate companies all remained at historically low levels. According to data from the China Index Institute, from January to September 2024, the total sales of the top 100 housing enterprises were 2969.94 billion yuan, a year-on-year decrease of 38.8%.

Furthermore, according to the HSBC research report, the policy-led rebound in the stock market from April to May was used as a reference to re-evaluate the current valuation of the domestic housing industry and return to large stocks. According to the bank, the valuations of only three domestic housing stocks, including China Overseas and China Resources Land, are at or below the May high level. The valuations of other domestic housing stocks have all surpassed the May level by a large margin. These valuations are difficult to explain rationally.

2. Auto stocks continued to decline. At the close, Great Wall Motor (02333) fell 8.27% to HK$13.98; Ideal Automobile-W (02015) fell 6.94% to HK$98.55; and Xiaopeng Motor-W (09868) fell 6.81% to HK$44.5.

According to media reports, on Sunday (13th) local time, US Republican presidential candidate Trump explained his trade policy in detail on the “Sunday Morning Looking to the Future” program. The report said that the former president proposed a new “United States-Mexico-Canada Agreement” (USMCA) as part of his larger move to boost domestic employment and revitalize the automobile industry.

Trump claims that the US has been “deceived by Mexico, China, Canada, and the European Union” in the past. He doesn't care if a new agreement can be reached, but the US must get rid of the North American Free Trade Agreement (NAFTA). Earlier, Trump said he would introduce new tariffs to prevent Chinese automakers from producing cars in Mexico and exporting them to the US. Trump has said that tariffs of up to 200% will be imposed, and this time he has hinted that higher tariffs may be imposed.

3. Oil stocks collectively declined. At the close, CNOOC (00883) fell 4.22% to HK$19.3; CNPC (00857) fell 3.12% to HK$6.21; and Sinopec (00386) fell 2.25% to HK$4.77.

Overnight, international oil prices fell by more than 2%, and at one point in the intraday period they all fell by more than 5%. For the third month in a row, OPEC lowered its forecast for the growth of global oil demand. OPEC expects global crude oil demand to grow at 1.93 million b/d in 2024, compared to 2.03 million b/d; global crude oil demand is expected to grow at 1.64 million b/d in 2025, compared to 1.74 million b/d previously. Furthermore, there are reports that Israel may avoid attacking Iran's crude oil infrastructure, which allays concerns about the tense situation in the Middle East.

4. Non-ferrous metals are clearly pressurized. At the close, Luoyang Molybdenum (03993) fell 6.17% to HK$7; Jiangxi Copper (00358) fell 5.57% to HK$14.58; Ganfeng Lithium (01772) fell 5.44% to HK$20; Zijin Mining (02899) fell 4.51% to HK$16.5.

Since the US CPI overall exceeded expectations in September, the bond market expects the Fed to cut interest rates by only 45 basis points during the year, while the options market is betting that only one interest rate cut will be left during the year, and may even stop cutting interest rates until the beginning of next year after cutting interest rates by 25 basis points during the year. The US dollar continued its gains in recent weeks, and hit a 10-week high during the intraday period on the 14th, putting pressure on dollar-denominated commodities, including precious metals. Huatai Securities pointed out that the policy continues to gain strength, but under the current price position, the fundamentals of copper, aluminum, etc. may be somewhat differentiated. Investors are advised to pay attention to the risk that high copper prices will curb demand.

5. The semiconductor sector surged higher and retreated. At the close, Huahong Semiconductor (01347) fell 5.62% to HK$21.85; Jingmen Semiconductor (02878) fell 5.36% to HK$0.53; Shanghai Fudan (01385) fell 3.88% to HK$15.86; and SMIC (00981) fell 1.88% to HK$26.15.

In September of this year, South Korea's semiconductor exports reached a record high of US$13.63 billion (approximately RMB 96.5 billion), up 36.3% from the previous year. Among them, the export value of memory chips surged 60.7% year on year to reach 8.72 billion US dollars. Analysts pointed out that the Korean chip market has always been viewed as a “weather vane” for the global semiconductor industry chain. South Korea's chip exports and inventory data indicate that the recovery momentum of the global semiconductor market is expected to continue further, stimulated by demand for AI computing power.

Also, according to media reports, the US government discussed restricting Nvidia and other US companies from selling advanced artificial intelligence chips to some countries. The new scheme will cap certain countries' export licenses. People familiar with the matter said that officials are concerned about Persian Gulf countries, which are increasingly interested in artificial intelligence data centers and have strong financial resources.

Popular exotic stocks

1. China General Education (02175) resumed trading and plummeted. At the close, it was down 53.7% to HK$1.44.

Trading of China Tongcai Education Co., Ltd. has been suspended for nearly 2 years since 9:00 a.m. on November 29, 2022. Since the resumption guidelines have fully met the requirements of the Stock Exchange, including the issuance of 2022 and 2023 annual reports, trading resumed this morning. In June of this year, the company announced its interim results for the six months ended February 29, 2024, with revenue of approximately RMB 184 million, up 2.5% year on year; net profit of about RMB 67.6 million, down 15.3% year on year.

2. Jetstar (02115) was higher throughout the day. At the close, it was up 14.5% to HK$0.229.

Jet Xinlong announced that the offender MayAir HK Holdings Limited proposed privatizing the company through an agreement arrangement. According to the plan, the plan shares will be cancelled in exchange for cash of $0.25 per share of the plan, which is about 25% premium over the closing price of HK$0.2 before the suspension of trading. The offender is wholly owned by MayAir Technology. MayAir Technology's shares are listed on the Science and Technology Innovation Board of the Shanghai Stock Exchange.