[Anatomy Dashboard]
Yesterday's break said, “The current external environment is too complicated; any kind of situation will affect the Hong Kong stock market.” Today, neither market stabilized. The Hang Seng Index was weak and unilaterally declined throughout the day, closing down 3.67%.
Currently, the biggest influence on the market is the exchange rate. Today, the RMB exchange rate continues to decline. The offshore RMB exchange rate once fell below the 7.12 mark and fell more than 350 points during the day; the onshore RMB exchange rate against the US dollar fell more than 300 points. In the early morning of October 15, Beijing time, Christopher Waller, one of the most influential senior officials and board member of the Federal Reserve, said in his latest speech that the Fed needs to be “more cautious” in cutting interest rates in the future. Waller hinted that future interest rate cuts will be less than the sharp rate cut in September. This statement further increases the probability that the Federal Reserve will cut interest rates by 25 basis points in November. According to the CME “Federal Reserve Watch”, the probability that the Fed will drop 25 basis points by November is 95.6%. Meanwhile, the Mainland announced on a daily basis that exports in US dollars rose 2.4% year-on-year in September, far below market expectations; imports in US dollars rose 0.3% year-on-year in September, which is also slightly lower than market expectations.
The US presidential election has entered a heated phase. Harris, who had previously had strong momentum, was overtaken by Trump. Not only was it reversed in betting odds, but it also lagged behind in 6 of the 7 key swing states, further adding to the variables. The Goldman Sachs report shows that the basket index compiled by the bank for betting that the Republican Party will win the election has recently soared to a record high, and the basket index betting that the Democratic Party will win the election continues to fall. According to the forecast market Polymarket's bet, the probability of Trump's victory over Harris has risen from roughly flat at the end of September to about 55%. There is proof: Trump Media Technology Group (DJT) surged more than 18%, and this month's increase is close to 100%. The RMB is the currency most sensitive to the “Trump deal,” and bears take the opportunity to gain strength. The securities sector, as the standard-bearer, was once again suppressed. For example, China Merchants Securities (06099) and GF Securities (01776) fell by more than 8%.
According to people familiar with the matter, Biden administration officials are already discussing restricting Nvidia and other US companies from selling advanced artificial intelligence (AI) chips to “some countries” to limit their AI development and capabilities. Officials focused on Persian Gulf countries, which are increasingly in demand for AI data centers and have strong financial resources to fund them. The reason is the fear that these companies' products may be transferred to China. Every time the market releases such negative remarks, the first impact is that the CXO category is hit, and Kanglong Chemical (03759), Tiger Pharmaceuticals (03347), etc. fall by more than 7%.
The outlook for oil has also dimmed. For the third month in a row, OPEC lowered its oil demand growth forecast for this year and next two years, and the organization has long been slow to recognize the slowdown in global fuel demand. In its monthly report, OPEC said that by 2024, global oil consumption will increase by 1.9 million b/d, an increase of about 2%, a decrease of 106,000 b/d from the previous forecast. International oil prices closed down more than 2%, and at one point plummeted by more than 5% in the intraday period. The feedback behind the slowdown in oil demand is the weakness of the overall economy. As a result, many consumer categories are weakening today, such as China Resources Beer (00291), China Free (01880), and Zhenjiu Li Du (06979), all falling by more than 8%.
Also, today the Korean peninsula is once again unsettled. On the 15th local time, South Korea's Joint Chiefs of Staff released a video of the bombing carried out by North Korea. South Korea's Joint Chiefs of Staff previously released news that North Korea bombed a section of the Gyeongui Line and East Sea Line connecting North Korea and South Korea at around 12:00 on the same day north of the inter-Korean military demarcation line. Recently, friction has continued on the peninsula. Multinational forces have been stationed in South Korea, and drones have also entered the sky over Pyongyang, causing frequent acts of provocation. To be honest, North Korea is quite restrained. When did it endure this kind of provocation, it would have been in trouble long ago if it followed its own ideas. The Ministry of Foreign Affairs talks about the situation on the peninsula: the top priority is to avoid further intensification of the conflict. Our main focus is to maintain strategic strength, just like the US attitude of Israel constantly making trouble and trying to drag America down. Judging from the performance of the market, it is definitely impossible to fight, because the military industry of Hong Kong stocks did not respond at all, but it did not prevent A-shares from speculating on the military industry. Some people say that the market came down for this reason; this is not objective. Why is Korea's KOSPI 200 still rising? The main problem is still at the level of exchange rates and power games.
Until now, the negotiations between China and Europe have not reached a solution acceptable to both sides. Auto stocks continued to adjust. However, it still can't hide the brilliance of Chinese car companies. The 90th one-week Paris Motor Show opened on the 14th, and a “China Show” was staged. This time, Zero Run International brought the first global model, the Zero Run B10. According to the plan, Zero Sports will launch at least one new car for overseas sales every year for the next three years. Currently, Zero Run International has “entered” the markets of 13 European countries, including Belgium, France, Germany, Greece, and Italy. He Xiaopeng revealed that in 2025, Xiaopeng Motor (09868) aims to enter more than 60 countries and regions around the world and become the number one high-end Chinese new energy brand overseas. In the next ten years, Xiaopeng Motor will accelerate the expansion of the global “Pengyou Circle”, targeting overseas sales to account for half of total sales. The pre-sale price of the Xiaopeng P7+, which was released on the same stage, started at 209,800 yuan. He Xiaopeng published the pre-sale report card as soon as the press conference — the order exceeded 30,000 units in 1 hour and 48 minutes. Models such as the Wenjie M9, GAC AION second-generation AIONV, and Xinghai S7 made their debut at the auto show. Europe engages in trade protectionism; in the end, it is impossible to protect it. Britain is very curious; it is not following the EU in raising automobile tariffs. The BMW CEO said that the EU ban on fuel vehicles “is no longer realistic” or will cause the automobile industry to “shrink drastically.”
Mergers, acquisitions and restructuring were on the cusp. After the “Six Rules of Mergers and Acquisitions” were released, the first completed project was released. Gansu Energy (000791.SZ) Disclosure Notice: The review meeting of the M&A and restructuring review committee of the Shenzhen Stock Exchange was held on October 14, 2024. The transaction of Gansu Energy issuing shares to purchase assets met the restructuring conditions and information disclosure requirements. The merger, acquisition and restructuring project was accepted on July 5, 2024, and the first round of inquiries was received two weeks later. Until the meeting was held on October 14, 2024, the restructuring project took 101 days from acceptance to completion. As can be seen, the efficiency of supervision and review of A-share mergers, acquisitions and restructuring projects has been greatly improved.
The Hong Kong stock market was in turmoil today on Auto Street (02443). It broke out once on October 8. It reached a high of 117.10 yuan that day, then went out for three days, then surged 75.87% again today. Judging from the trading volume in 2022, the company is the largest used car trading service provider in the country. China has a huge used car trading market, which has also nurtured many opportunities, and competition is quite intense, such as Tourover Car Maintenance, Melon Seed, Youxin, Renren Auto, JD Auto's trade-in platform, etc. Over the past three years, Auto Street's gross margin has fluctuated around 60%, at 62.8%, 60.9%, and 63.5%, respectively, while the net profit margin has declined all the way to single digits. By 2023, it was only 1.9%. It can be seen that profitability declined significantly. Perhaps the only way is equity transfers, restructuring, etc., to be hopeful. Meanwhile, Zhixing Automotive Technology (01274) also increased 15.67% due to the implementation of overseas projects for intelligent front-view all-in-one computers.
The Chief Executive of the Hong Kong Special Administrative Region, Lee Ka-chiu, will publish the 2024 “Policy Address” at 11:00 a.m. on October 16 (Wednesday). According to some sources, Lee Ka-chiu will announce a number of measures to strengthen Hong Kong's position as a global financial center during the publication of the “Policy Address”. Prior to the release of the 2024 “Policy Address”, the Hong Kong stock market experienced a wave of rapid rise, which attracted widespread attention from investors around the world. The property market is an important part of Hong Kong's economy. There must not be a dead end. After the abolition of the “hot tricks” in the property market, the level of activity in the property market increased, but property prices are still at a low level, falling by almost 30% from a higher level. How to stabilize property prices is a top priority. The market is closely watching the release of the “Policy Address” on Wednesday to see if any clear property market measures have been introduced. Today, the trend of Cheung Kong Infrastructure Group (01038) and Sun Hung Kai Properties (00016) is strong.
[Section Focus]
According to the latest data, thanks to the wave of artificial intelligence (AI) technology driving up server investment, South Korea's semiconductor exports reached a record high of 13.63 billion US dollars (about 96.5 billion yuan) in September of this year, up 36.3% from the previous year. In the first 10 days of October, South Korea's chip exports soared by 45.5% to reach 3.07 billion US dollars. 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. According to SEMI data, the performance of mainland China is particularly prominent in the global investment wave. Mainland China's spending on semiconductor manufacturing equipment continued to rise against the trend in 2023, becoming the only region that continued to increase year-on-year in the first half of this year, and also maintained its position as the world's largest semiconductor equipment market. From 2022 to 2026, there will be 109 new fabs around the world, including more than 70 in mainland China.
Ju Long, global vice president of the international semiconductor organization SEMI and president of China, said that the development of emerging industries such as AI and related applications, new energy vehicles, and advanced packaging, represented by the huge demand for computing power stimulated by AI (artificial intelligence) and big data, will drive the global semiconductor industry to reach a market size of 1 trillion US dollars around 2030.
Major products in the Hong Kong stock market: SMIC (00981), Shanghai Fudan (01385), Huahong Semiconductor (01347), and ASMPT (00522).
[Individual Stock Mining]
SMIC (00981): E-Fangke Chuangchuang 50 ETF will reach record highs in revenue and production
Recently, SMIC announced that E-Fangda Shanghai Science and Technology Innovation Board 50 ETF increased its domestic stock holdings by 9.6,162 million shares, an increase of 0.48%. In the first half of the year, the company achieved operating income of 26.269 billion yuan, an increase of 23.2%; net profit of 1,646 billion yuan, a year-on-year decrease of 45.1%.
Comment: SMIC's results for the second quarter of this year exceeded the company's earlier growth guidelines and market expectations, with sales revenue of US$1.9 billion, an increase of 9% over the previous quarter. Among them, shipments exceeded 2.11 million 8-inch wafers, an increase of 18% over the previous month. The company's global market share is 6%, up from 5% in 2023, surpassing GF and Lianhua Electronics to become the third largest chip manufacturer in the world. The company anticipates that some customers will continue to demand early delivery. Depreciation will increase quarterly due to the expansion of production capacity. The capacity utilization rate has reached 81%, and the gross margin is 13.7%. According to the guidelines, the company's revenue and output will reach record highs in the second quarter of this year.
In terms of revenue sources, there was little change in the share of business contributions in each region this quarter. The revenue contribution of China increased by 0.8% compared to the previous quarter, reaching 81.6%, while business revenue in the US region contracted, and remained flat in Europe and Asia. Wafer sales revenue remains SMIC's main revenue source, accounting for 93% of total revenue, a slight increase from 92.9% in the previous quarter and 92.1% in the same period last year. The company said that it received some urgent orders in the first quarter, but the 12-inch production line was close to full load and could not fully meet all orders, so priority will be given to guaranteeing express orders related to market share, that is, consumer electronics such as mobile phones. At the same time, after coordination with customers, the delivery time for computer and tablet products will be delayed backwards. Demand for standard products is generally relatively stable. In terms of price, ASP will drop every quarter, but not that fast. Some orders with full 12-inch production capacity will be relatively stable.
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