Hong Kong stocks closed (10.18) | Hang Seng Index closed up 3.61%; semiconductor and brokerage stocks all exploded, SMIC (00981) led the blue chip

The Zhitong Finance App learned that the central bank will now officially launch SFISF operations, officially launch stock repurchases to increase holdings and reloans, and anticipate an opportunity to downgrade before the end of the year. Meanwhile, major macroeconomic data were released in September, and many indicators improved markedly. The three major indices of the Hong Kong stock market collectively strengthened, and the Hengke Index once surged more than 7%. By the close, the Hang Seng Index rose 3.61% or 725.01 points to 20804.11 points, with a full-day turnover of HK$259.056 billion; the Hang Seng State-owned Enterprises Index rose 4.07% to 7471.95 points; and the Hang Seng Technology Index rose 5.77% to 4600.85 points. Looking at the whole week, the Hang Seng Index fell 2.11%, the China Index fell 1.95%, and the Hengke Index fell 2.86%.

Guojun International Research Report points out that domestic policies continue to be introduced, the trend of overseas interest rate cuts is determined, and the future trend of the Hong Kong stock market is mainly upward. The bank believes that the main reason driving the recent strengthening of Hong Kong stocks is the increase in domestic policy expectations compounded by an increase in overseas interest rate cuts during the year, but since then overseas interest rate reduction expectations have cooled down, and the Hong Kong stock market has taken back some of its gains. Looking ahead, the future trend of the Hong Kong stock market is mainly upward. Stock prices in interest-sensitive industries are more flexible, including leading Internet, pharmaceuticals, and consumer industries; in addition, high-dividend (utilities, banks, communication operators) style industries have a higher allocation value.

Blue-chip stock performance

SMIC (00981) leads the blue chip. At the close, it rose 16.35% to HK$30.25, with a turnover of HK$17.336 billion, contributing 29.21 points to the Hang Seng Index. Huatai Securities pointed out that while demand for consumer electronics continues to recover, the capacity utilization rate of leading domestic foundry companies is expected to maintain a recovery trend, and performance is expected to continue to improve. Supported by a steady recovery after fundamentals bottomed out, I am optimistic about the continuation of the subsequent valuation repair of the Hong Kong stock semiconductor manufacturing sector.

In terms of other blue-chip stocks, BYD Electronics (00285) rose 12.32% to HK$35.55, contributing 4.95 points to the Hang Seng Index; Ali Health (00241) rose 9.16% to HK$4.05, contributing 3.5 points to the Hang Seng Index; Electric Energy Industry (00006) fell 0.19% to HK$51.35, dragging down 0.23 points; CNOOC (00883) fell 0.11% to HK$19.02, dragging down the Hang Seng Index by 0.51 points.

Popular sector aspects

On the market, large technology stocks flourished across the board, Meituan surged nearly 9%, and Tencent surged more than 4%. TSMC's performance boosted market expectations, and semiconductors strengthened in the afternoon; two new central bank instruments were implemented, and Chinese brokerage stocks exploded across the board today; the “Biological Products Segmented Production Pilot Work Plan” was reviewed and approved, pharmaceutical stocks were once again strong, leading the CRO direction; consumer electronics ushered in a traditional peak season, and the mobile phone industry chain generally rose; and large consumer stocks, automobile stocks, photovoltaic stocks, gold stocks, and insurance stocks all rose.

1. Semiconductor stocks rallied in the afternoon. At the close, Hongguang Semiconductor (06908) rose 22.54% to HK$0.87; SMIC (00981) rose 16.35% to HK$30.25; Shanghai Fudan (01385) rose 15.89% to HK$17.8; and Huahong Semiconductor (01347) rose 11.79% to HK$23.7.

TSMC's third quarter results exceeded market expectations. The company's revenue for the third quarter was approximately NT$759.69 billion, up 39.0% year on year, up 12.8% month on month; net profit (net profit) after tax was approximately NT$325.26 billion, exceeding market estimates of NT$299.3 billion, up 54.2% year on year and 31.2% month on month. Analysts pointed out that TSMC raised its 2024 revenue growth target after quarterly results exceeded expectations, easing market concerns about global chip demand and the sustainability of the AI hardware boom, and showing investors that its demand for chips is still strong.

Also, recently, a “package of incremental policies” has been released one after another. Tianfeng Securities believes that “a series of incremental policies” may boost demand for terminal electronic consumer goods and drive the industrial chain to exceed expectations. Reviewing the history of semiconductors, the beginning of a major cycle is often accompanied by the occurrence of unpredictable major events. The bank believes that if the current domestic incremental policy effectively stimulates the consumer side, it is expected that the entire industry chain will raise semiconductor demand expectations and become one of the driving forces behind this cycle's upward trend. It is optimistic about the performance of domestic semiconductor demand after the incremental policy.

2. Chinese brokerage stocks exploded across the board. At the close, China Merchants Securities (06099) rose 17.85% to HK$13.6; Shen Wan Hongyuan (06806) rose 14.49% to HK$2.37; CITIC Securities (06030) rose 13.64% to HK$21.25; and Everbright Securities (06178) rose 13.19% to HK$7.81.

The People's Bank of China has now officially launched the Securities, Fund, and Insurance Company Exchange Facilitative (SFISF) operation. According to reports, there are currently 20 securities and fund companies that have been approved to participate in the convenient exchange operation, and the first batch of applications has already exceeded 200 billion yuan. In addition, the People's Bank of China officially launched a stock repurchase reloan with an initial amount of 300 billion yuan, an interest rate of 1.75%, and a term of 1 year.

Haitong Securities believes that the establishment of SFISF can improve the financing capacity and leverage capabilities of non-bank financial institutions. As far as the capital market is concerned, swap financing is limited to investing in the stock market, which is conducive to maintaining the stability of the capital market. Furthermore, since treasury bonds and central bank notes are high-grade, highly liquid assets, it is expected that institutions can finance at a lower cost. If they increase their holdings of listed companies with high dividends and supported performance, and use FVOCI measurement, it is expected that they can obtain better investment returns on the basis of covering financing costs.

3. Pharmaceutical stocks are once again strong. At the close, Genting Xinyao B (01952) rose 20.46% to HK$28.55; Fangda Holdings (01521) rose 14% to HK$0.57; Tiger Pharmaceuticals (03347) rose 8.77% to HK$37.2; and Pharmaceuticals (02359) rose 7% to HK$51.2.

The State Drug Administration reviewed and approved the “Pilot Work Plan for Segmented Production of Biological Products” on October 18. This pilot work is based on the development status of China's biomedical industry and actual supervision, responds positively to industrial development needs, and explores phased production of some innovative and clinically urgently needed biological products through commissioned production methods. According to reports, the pilot work will focus on the review and approval of the phased production of biological products, enterprise quality management, post-marketing supervision, etc., to explore the establishment of a scientific and efficient management system for the whole process of segmented production, promote the biomedical industry's optimal allocation of resources, orderly integration into the international industrial chain, and achieve high-quality development.

4. Domestic housing stocks rebounded collectively. At the close, Zhongliang Holdings (02772) rose 11.72% to HK$0.143; Sunac China (01918) rose 7.59% to HK$2.41; Agile Group (03383) rose 6.9% to HK$0.93; and R&F Properties (02777) rose 6.45% to HK$1.65.

On October 17, Shanghai, Shenzhen, Sichuan and other places adjusted their housing provident fund policies, including increasing rental withdrawal amounts, supporting intergenerational assistance for home purchases, and supporting withdrawals from rent to repurchase. In addition, Xi'an is optimizing policies related to real estate. Among them, it is proposed to abolish sales restrictions for commercial housing, price limits for new homes, and standards for ordinary housing and non-ordinary housing, increase the amount of provident fund loans, reduce the down payment ratio for provident fund loans, support enterprises and institutions to use inventory removal policies to purchase existing commercial housing, and optimize pre-sale fund disbursement procedures.

The State Information Office recently held a press conference to introduce policies and measures relating to stabilizing the property market. Minister of Housing and Construction Ni Hong summed up the “combo punch” as “four cancellations, four reductions, and two increases.” Among them, the “two additions” policy attracted much attention, that is, the implementation of 1 million new urban village renovation units and dilapidated housing renovation, and the credit scale for the “white list” project increased to 4 trillion yuan. CITIC Securities pointed out that overall, the real estate market is stopping falling and stabilizing, and blue-chip real estate development companies have obvious investment value.

5. Gold stocks were higher throughout the day. At the close, Lingbao Gold (03330) rose 4.17% to HK$3; Zhaojin Mining (01818) rose 3.98% to HK$14.1; Zijin Mining (02899) rose 3.86% to HK$17.2; and Shandong Gold (01787) rose 3.05% to HK$17.56.

US retail sales increased in September, strengthening expectations of a 25 basis point cut in interest rates. Furthermore, geographically, the Israel Defense Forces announced on Thursday that Hamas leader Zinwal had been killed in an attack in the Gaza Strip, and he was charged by Israel as the mastermind of the “Al-Aqsa flood operation” on October 7 last year. International gold prices continued to be strong, and spot gold broke through the 2,700 US dollar mark, reaching another record high.

Benefiting from the continued rise in gold prices, a number of listed gold mining companies are now announcing promising results for the first three quarters. Among Hong Kong stock listed companies, Shandong Gold is expected to achieve net profit attributable to owners of the parent company in the first three quarters of RMB 1,850 billion to RMB 2,250 billion, an increase of 37.52% to 67.26% over the previous year. In addition, Zhaojin Mining achieved net profit of 881 million yuan in the first three quarters, an increase of 141.07% over the previous year.

Popular exotic stocks

1. Zoomlion Heavy Industries (01157) performed well. At the close, it was up 9.65% to HK$5.

Zhonglian Heavy Industries announced that the board of directors has reviewed and passed the “Proposal on General Authorization to Repurchase Some H Shares of the Company”. The plan is to repurchase some H shares at the right time. The repurchased shares will all be cancelled to increase earnings per share and increase shareholders' return on investment. The proposal authorizes the board of directors to repurchase no more than 10% of the total number of issued H shares during the validity period. However, the bill still needs to be submitted to the shareholders' meeting for consideration and approval.

2. Fuyao Glass (03606) rose after the results. At the close, it was up 6.99% to HK$56.6.

Fuyao Glass released its report for the first three quarters of 2024. During the period, it obtained operating revenue of 28.314 billion yuan (RMB, same below), an increase of 18.84% over the previous year; net profit to mother was 5.479 billion yuan, an increase of 32.79% over the previous year. The third quarter achieved revenue of 9.97 billion yuan, an increase of 13.4% year on year; net profit to mother was 1.98 billion yuan, an increase of 53.5% year on year. UBS raised the company's 2024-2030 net profit forecast by 7% to 12%, and the target price was raised from HK$58 to HK$66.