Hong Kong stocks closed (01.07) | Hang Seng Index closed down 1.22%, chip stocks reversed the market, and Tencent Holdings (00700) fell more than 7%

The Zhitong Finance App learned that the three major indices of Hong Kong stocks dived in the intraday period, and the decline widened further in the afternoon. At one point, they all fell more than 2% intraday. At the close, the Hang Seng Index fell 1.22% or 240.71 points to 19447.58 points, with a full-day turnover of HK$205.718 billion; the Hang Seng State-owned Enterprises Index fell 1.2% to 7049.71 points; and the Hang Seng Technology Index fell 0.92% to 4354.8 points.

Huatai Securities pointed out that the current AH premium reading is significantly lower than the neutral level calculated by the bank, and the rotation strategy signal indicates that A-shares have a cost performance advantage. Factors such as recent Trump transactions may be the main reason for this AH premium deviation, which is also reflected in the risk-off trading characteristics of overseas liquidity. Furthermore, the outflow of active foreign capital has been relatively small in the past two weeks. At the same time, the continued inflow of capital to the south has also contributed to the recent relative market of Hong Kong stocks. Looking ahead, Hong Kong stocks may still show a volatile pattern, and we continue to suggest exploring dumbbell allocation opportunities from dividends and technology hardware.

Blue-chip stock performance

Tencent Holdings (00700) led the blue chip decline. At the close, it fell 7.28% to HK$379.6, with a turnover of HK$54.765 billion, dragging down the Hang Seng Index by 116.35 points. In response to the US Department of Defense adding Tencent to the 1260H list, Tencent said in a statement, “Tencent's inclusion in this list is clearly a mistake. We are not a military enterprise or military supplier. Unlike export controls or anything else, this list has no impact on our business. Despite this, we will continue to work with the relevant US authorities to resolve the misunderstanding.”

In terms of other blue-chip stocks, SMIC (00981) rose 5.06% to HK$31.15, contributing 9.96 points to the Hang Seng Index; Xinyi Solar (00968) rose 4.14% to HK$3.27, contributing 0.98 points to the Hang Seng Index; Sinopharm Holdings (01099) fell 3.09% to HK$20.4, dragging down 1.4 points of the Hang Seng Index; and Orient Overseas International (00316) fell 2.34% to HK$112.7, dragging down the Hang Seng Index by 0.55 points.

Popular sector aspects

On the market, most of the big tech stocks declined, and Tencent's stock price plummeted by more than 7% due to the “black swan” attack. Consumer electronics is picking up, and the semiconductor localization process is expected to accelerate, with chip stocks rising at the top; the hydrogen energy industry is favorable, and most hydrogen energy concept stocks are strong; prices have risen in many links in the industrial chain, and most photovoltaic stocks have continued to rise; non-ferrous metals, sporting goods stocks, gaming stocks, and mobile phone industry chains are generally flourishing. On the other side, Bitcoin returned to $100,000, and cryptocurrency concept stocks retreated after rushing higher in early trading; pharmaceutical stocks, auto stocks, shipping stocks, etc. fell.

1. Chip stocks had the highest gains. At the close, SMIC (00981) rose 5.06% to HK$31.15; ASMPT (00522) rose 5.05% to HK$76.95; Huahong Semiconductor (01347) rose 2.98% to HK$20.75; and Shanghai Fudan (01385) rose 2.14% to HK$14.34.

According to Omdia data, thanks to strong demand for artificial intelligence, the global semiconductor market revenue reached US$177.8 billion in the third quarter of 2024, up 26% year on year and 8.5% month on month. Looking ahead to the full year, the semiconductor market's annual revenue is expected to increase by 24% in 2024; according to Canalys data, cloud infrastructure service spending in mainland China reached 10.2 billion US dollars in the third quarter of 2024, up 11% year on year; according to Counterpoint data, China's folding screen phone shipments are expected to reach 9.1 million units in 2024, an increase of 2% year on year.

Ping An Securities believes that consumer electronics are currently recovering, and the semiconductor localization process continues to advance. Furthermore, the computing power industry chain brought about by AI will continue to benefit. The semiconductor industry is currently in the recovery stage, and the recovery in consumer electronics will drive a new upward cycle of semiconductors. Guotai Jun An pointed out that China's Ministry of Commerce has included 28 US entities in the list, and friction between China and the US in the fields of technology and military industry continues to intensify. US sanctions against China will accelerate the semiconductor localization process, and the importance of advanced manufacturing processes will increase.

2. Most hydrogen concept stocks are strong. At the close, Reshape Energy (02570) rose 19.07% to HK$196.7; Beijing Electromechanical (00187) rose 12.72% to HK$3.19; and Yihuatong (02402) rose 6.19% to HK$20.6.

The Ministry of Industry and Information Technology, the National Development and Reform Commission, and the National Energy Administration recently jointly issued and implemented the “Implementation Plan to Accelerate the Application of Clean and Low-Carbon Hydrocarbons in the Industrial Sector”. Earlier, the US Treasury issued the final plan for the hydrogen energy subsidy policy to meet many core demands of the energy industry, including extending the loose power matching policy until 2030, and allowing nuclear reactors, electricity from specific states, methane power generation, etc. to be included in the scope of hydrogen energy production subsidies.

According to Guojin Securities Research, under the “14th Five-Year Plan” target, the industry will usher in a big year, double the scale to drive the industrial chain towards commercialization, and under policy promotion, demonstration effects, and cost reduction in the industrial chain, the industry will usher in continuous volume, focusing on the two major directions of green hydrogen integration projects and fuel cell vehicles. Hydrogen energy is an important gripper for achieving zero carbon. In the upstream, middle, and downstream acceleration promotion process, the focus is on investment opportunities for core components such as electrolyzers, hydrogen pipelines, compressors, hydrogen storage cylinders, and fuel cell systems.

3. Some PV stocks continued their gains. At the close, Follett Glass (06865) rose 4.33% to HK$12.06; Xinyi Solar (00968) rose 4.14% to HK$3.27; and GCL (03800) rose 1.85% to HK$1.1.

Since the price of silicon wafers rose on January 1, the price of Zhonghuan silicon wafers rose again on January 6. According to reports, recently, the transaction prices of silicon materials, silicon wafers, and batteries have all risen due to industry self-regulation and pre-holiday preparation expectations. SMM's latest silicon price is 410,000 yuan/ton, the price of N-type 183 silicon wafers has risen 0.05 yuan/piece to 1.23 yuan/piece, and the battery price has risen to 0.285 yuan/W. Judging from the current trend of price increases, self-regulatory action is beginning to show results. Haitong Securities believes that the fundamentals of the photovoltaic industry are at the bottom inflection point, supply, demand, and inventory levels are beginning to show a positive trend, and the PV sector stock price already has a high investment cost ratio after short-term adjustments.

4. Shipping stocks fell again. At the close, COSCO Marine Holdings (01919) fell 3.31% to HK$12.26; Haifeng International (01308) fell 2.79% to HK$20.9; and Orient Overseas International (00316) fell 2.34% to HK$112.7.

Starting in February 2025, the shipping alliance pattern will change. Maersk and Hapag-Lloyd will form a Gemini Alliance. MSC will independently cooperate with the PA Alliance formed by ONE, YML, and HMM on some European networks, and the OA alliance pattern will remain unchanged. Haitong Futures pointed out that the market anticipates that the freight rate center may move further downward under the new alliance pattern. In the early days of the establishment of the alliance, there was a motivation to compete for market share, especially based on MSK's aggressive pricing strategy and MSC's emphasis on market share.

Popular exotic stocks

1. The volume of Jingwei Tiandi (02477) soared. At the close, it was up 87.46% to HK$12.26.

Jingwei Tiandi announced last night that on January 6, a controlling shareholder, Jingwei Tiandi Group signed an agreement with an independent third party, Hengfeng International to sell 99.5 million shares, accounting for about 19.9% of the company's total share capital; the price per share was HK$4.52, a discount of 30.89% over the same day's closing report, to cash out nearly HK$450 million. After completion, Jingwei Tiandi Group's holdings in the company will be reduced from the current 51% to 31.1%.

The controlling shareholders of Hengfeng International are Qian Fenglei, founder of Zhejiang Hengfeng International; other shareholders include Shen Guojun, founder and chairman of Yintai Group; Cao Guowei, chairman and CEO of Sina Group; Hu Xiaoming, partner of Alibaba and former CEO of Ant Financial; and Cai Wensheng, former chairman of Meitu.

2. Dream World (01119) rose throughout the day. At the close, it was up 10.53% to HK$1.89.

Chuangmeng Tiandi issued an announcement stating that it has noticed recent fluctuations in stock prices and trading volume. Currently, all of the Group's business operations are normal. At the same time, the company plans to repurchase shares in accordance with the repurchase authorization of the 2023 Annual General Meeting of Shareholders. The total share repurchase amount will not exceed HK$200 million. The Board believes that share buybacks can enhance the value of shares, thereby increasing shareholder returns.

3. Oriental Selection (01797) rebounded markedly. At the close, it was up 7.53 percent to HK$16.86.

Tianfeng Securities believes that the WeChat store may bring new opportunities for Oriental Selection and Development. Since the Oriental Selection “Little Essay” incident occurred, the bank believes that Oriental Selection has undergone major changes in business, logic, valuation, and expectations. During this period, Dongfang selected and refined its own products in depth, enhanced supply chain capabilities, and refined online marketing strategies; successfully completed the transition of operations in the context of traffic switching; it is still an excellent product technology and culture company.

4. Luoyang Molybdenum Industry (03993) performed well. At the close, it was up 4.39% to HK$5.71.

On the evening of January 6, Luoyang Molybdenum announced the production volume of major products for 2024. The annual output of copper metal and cobalt metal was 652,200 tons and 114,200 tons respectively, up 55% and 106% year-on-year respectively. The annual production of molybdenum metal was 154,000 tons, a year-on-year decrease of 2%; the annual production of tungsten metal was 8,288 tons, an increase of 4% over the previous year. The annual production of niobium metal was 1,024 tons, up 5% year on year; the annual production of phosphate fertilizer was 1.18 million tons, up 1% year on year.

5. The mobile card (09923) jumped and fell. At the close, it was down 10.18% to HK$9.97.

It was announced that it plans to place 19.15 million shares at HK$10.1 per share, a discount of about 9% from yesterday's closing price of $11.1. The net proceeds from the placement are approximately HK$189 million. Approximately 40% will be used to expand the Group's overseas presence in various business divisions in Asia; approximately 40% will be used to invest in R&D, including the use of artificial intelligence in proprietary software to enhance the competitiveness of the Group's commercial digital ecosystem; and approximately 20% will be used for working capital and general corporate purposes.