Zhitong Hong Kong Stock Exchange Unravels | Market chooses the direction with least resistance across the border (02432) to lead Hong Kong Stock Connect's new target

[Anatomy Dashboard]

Yesterday, I mentioned that Hong Kong stocks were watching the trend of US stocks. Overnight, US stocks took a sigh of relief. The rebound of Intel and Atlas helped the index. However, market confidence was not effectively restored. Hong Kong stocks continued to adjust today, closing down 0.58%, reaching a critical position on the 10-day line.

US inflation data for February showed signs of cooling. Among them, the core CPI was lower than expected month-on-month and year-over-year. The US CPI rose 2.8% year on year in February, a new low since November last year. Core CPI rose 3.1% year over year, a new low since April 2021. Not to mention whether this data is watery; the key point is that the impact of the new round of tariffs is not showing, and the market is worried that inflation may continue to rise in the future. According to the Chicago Mercantile Exchange's FedWatch tool, investors still expect the Federal Reserve to keep interest rates unchanged at 4.25% to 4.50% after the next meeting on March 19. There is room for interest rate cuts of about 66 basis points this year, which is basically the same as last week. It can be seen that expectations for the Federal Reserve to cut interest rates are not strong; the pressure is on Trump's side; it will be difficult to handle the stock market if policies are not adjusted.

There are various opinions about the decline in US stocks. Komo is strong: he believes that the worst phase of US stock adjustment may have passed, as the credit market shows that the probability of a US recession is low; Komo strategist pointed out that the recent decline in US stocks was mainly driven by quantitative fund position adjustments, not due to fundamentals or fund managers' concerns about risk; he also predicted that mutual funds and pension funds will rebalance buying at the end of the month or quarter, which may boost US stocks. You need to know that Xiaomo CEO Jamie Dimon was once speculated as a candidate for the new Trump administration's finance secretary, but Trump wrote on November 14, 2024 that he would not invite Dimon to join the administration. Meanwhile, Larry Fink, CEO of BlackRock, the world's largest asset management company, recently warned that the US economy is weakening due to tariffs. BlackRock has a very good relationship with the Democratic Party. The bipartisan financial struggle continues.

Trump continues to play Russia-Ukraine cards. On Wednesday local time, US President Donald Trump threatened that if Russian President Putin rejects the 30-day cease-fire agreement that Ukraine has agreed to, he will destroy the Russian economy. But he insisted he didn't believe things would get to that point. This kind of threat is of no use to Russia at all; economic measures can be directly ignored, because all the sanctions that should have been imposed have been completed, and Russia has had no trade with the US in the first place. Ukrainian President Zelensky said at a press conference on Wednesday that Ukraine will not recognize any territory occupied by Russia as belonging to Russia; this is a red line for Ukraine. There is a saying: What you can't get on the battlefield is even less likely to get at the negotiation table. As can be seen from the above, Trump's mediation plan is too unreliable. Russia has no cards, and Ukraine still does not agree to cede land. The demands of both parties have not been met, and I don't know how Trump is still talking to Putin. It is very clear that Russia will continue to occupy more land first, and Ukraine also needs to be tenacious.

As a result, the status quo is still being maintained, and there is no light in sight for the time being. The story isn't easy to tell; Hong Kong stocks don't dare to rush upwards; they can only take the direction of least resistance. The ones that are less resistant are those recently included in the Hong Kong Stock Connect because they are supported by south-bound capital. Yuejiang (02432), the first cooperative robot that has been mentioned continuously, has gone viral. Today, it has risen by more than 20%. After being included in the Hong Kong Stock Connect, the capital is insanely sought, and its fundamentals are also quite strong. Based on 2023 shipments, Yuejiang Robotics ranked second in the global collaborative robot market, with a market share of 13%, second only to Denmark's Universal Robots (Universal Robots), with a market share of 1.8 percentage points ahead of Yuejiang. In the domestic market, Yuejiang Robotics performed even more prominently, ranking first in export volume for 7 consecutive years, and its market share in the domestic collaborative robot market reached 41%, leaving internationally renowned brands such as Japan's Fanuc (12%) and Germany's KUKA (9%) far behind. As of 2023, Yuejiang Technology has shipped a total of 72,000 units worldwide and operates in more than 80 countries and regions around the world, covering major overseas markets such as the United States, the European Union, Japan, and Southeast Asia, accounting for 59% of overseas revenue. Coupled with the newly launched world's first “dexterous operation+straight knee walking” man-made intelligent humanoid robot, it has opened up scenario cooperation between domestic first-tier car manufacturers, electronics manufacturers, coffee and milk tea shops, and achieved trial production and batch production by the middle of this year. It is expected that its market share will increase further. I like this kind of capital that can actually be realized.

Youbi Choice (09880) and the Beijing Humanoid Robot Innovation Center jointly released the “Tiangong Walker”, a full-scale humanoid robot for scientific research and education, at a price of 299,000 yuan. Currently, “Tiangong Walker” has opened pre-orders and is scheduled to go on sale in the second quarter of this year. Tiangong Walker has a height of 170 cm. It has the characteristics of “6 heights” of high bionics, high strength, high performance, high stability, high expansion and high openness. Today's trend is moving higher and lower.

Other types newly included in the Hong Kong Stock Connect include hydrogen fuel cell systems to reshape energy (02570), AI application Shiteng Holdings (02562), which all rose by more than 14%, and Dexiang Shipping (02510), a shipping category, which rose more than 5%.

Other capital has returned to dividend stocks. Coal is relatively good, and the market is reporting that the supply side of the industry is expected to shrink this year. On February 28, the China Coal Industry Association and the China Coal Distribution and Marketing Association jointly issued a proposal for the development of the coal industry from the five dimensions of “strictly enforcing the strict implementation of electricity and coal contracts,” “promoting coal production control,” “promoting the washing of all raw coal,” “controlling imports of poor quality coal,” and “strengthening industry self-discipline.” The recent valuation of the coal sector is at a low level, only 10.28 times, which is slightly lower than the average value of 9.3 times over the past 5 years. At the same time, the dividend rate of coal companies is high. In 2024, the dividend rate of coal companies ranked first in the industry. After a continuous correction for nearly three months, the attractiveness of dividend rates has further increased. Power Development (01277), China Coal Energy (01898), and China Shenhua (01088) all bucked the trend today.

The 2025 “Report on the Work of the Government” clearly proposes to support the safe and healthy development of deep-sea science and technology, combined with the implementation of national scientific research projects such as the “Mingyuan Project”. The marine economy has already broken the 10 trillion target in 2024. Deep-sea resource development (combustible ice/minerals), intelligent equipment (AUV robots), and undersea data centers (IDC energy-saving alternatives) are the three main tracks. Marine science and technology are inseparable from the shipbuilding industry. The main reason for fermentation was China Shipbuilding Defense (00317), which rose 3.46%.

On March 13, Alibaba (09988) announced the launch of its flagship AI application, New Quark. The new Quark is based on Ali's reasoning and multi-modal large model, and has been fully upgraded to a borderless “AI superbox”. After the user enters instructions in the “AI Super Box”, the Quark Intelligence Center will automatically recognize the intention, sort out the plans, and then deploy various models and agent modules to help the user complete the task. Currently, New Quark can answer questions and perform tasks in different scenarios such as AI search, AI writing, AI sketching, AI PPT, academic research, AI search, AI health quiz, and travel planning. Alibaba said that in the future, the latest results of the Tongyi series models will be integrated into Quark as soon as possible. I don't know how strong the product is. Today, Ali is not doing much.

[Section Focus]

In late February, according to CCTV news reports, Trump ordered a national security investigation into US copper imports. This move is seen as the first step in imposing potential tariffs on this metal. The policy has already triggered a surge in US copper imports, and traders are scrambling to hoard large amounts of copper resources before a possible tariff policy is introduced. At present, the London copper price has risen to its highest level since October. It is now reported at 9,797 US dollars/ton, up nearly 12% since this year. Citigroup said that in the next three months, copper prices will break through the 10,000 US dollars/ton mark, and the global copper market will continue to be tight until the US import tariff policy becomes clear. Goldman Sachs analysts expect “US copper imports may increase by 50% or even 100% in the coming months. By the end of the third quarter, the rise in copper prices will cause US copper inventories to surge from the current 95,000 tons to at least 300,000 to 400,000 tons, accounting for 45-60% of the global reported inventory, while copper stocks in other regions will be very low.” This large-scale hoarding has created huge arbitrage opportunities. As of last week, the Chicago Mercantile Exchange's May copper futures contract was 800 US dollars/ton higher than the London counterpart. Citibank analysts believe that the tight physical market outside the US may continue until May/June to temporarily offset the price resistance brought about by the broader US tariff announcement.

Main varieties: Jiangxi Copper (00358), China Nonferrous Mining (01258), Minmetals Resources (01208).

[Individual Stock Mining]

Jiangxi Copper Co., Ltd. (00358): Strong demand for copper in AI data centers, profitability continues to improve

The company's net profit for the first three quarters was 4.984 billion yuan, up 0.83% year on year. The company's subsidiary Fuye and Ding Copper 2024H1 achieved net profit of 535 million yuan, close to a net profit of 598 million yuan for the full year of 2023. Smelter profits are expected to increase significantly in 2024.

Comment: For 2024 results, many organizations expect an increase of 10% or more. The company's business covers copper mining, smelting, processing, etc. Profits are affected by multiple factors such as metal prices, macroeconomic environment, costs, and processing price increases. Higher gold prices will have a positive impact on the company's mineral gold business. There is strong demand for copper in AI data centers. By 2050, copper demand will increase 70% compared to 2021. According to reports, as a key material in data centers, copper is used not only for power supply systems, but also for cooling systems and connecting processors. On December 12, the controlling shareholder Jiangtong Group increased its holdings of the company's H shares by 714,000. Jiangtong Group plans to continue to increase the company's H shares, with a cumulative total of no less than 36.6272 million shares and no more than 69.2545 million shares. The implementation period is within six months from now. In terms of production, production of major products such as cathode copper, gold, and sulfuric acid all increased. Among them, cathode copper production increased 18.89% year on year, and gold production increased 31.02% year on year. The company actively promotes industrial restructuring and construction of key projects, promotes the construction of projects such as the Kazakhstan tungsten mine project and the Wushan copper mine phase III expansion project, and accelerates the international strategic layout.

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