Zhitong Hong Kong Stock Exchange Unravels | The market is watching the US midterm elections go hand in hand in the direction of exports and domestic demand
[Anatomy Dashboard]
Voting for the US midterm elections is about to begin, congressional control is pending, and the market is generally in a wait-and-see mode. It is expected that US stocks will have to be tested in the future. A-shares are also unlikely to improve; Hong Kong stocks are relatively stable, rising slightly by 0.57% today.
This midterm election is clearly bad for the Republican Party. In order to plan ahead, Trump said on a podcast program on Monday that if the Democrats get a majority of seats in Congress in the midterm elections and then launch an investigation against Musk, he will take action to protect Musk, such as pardoning Musk early. He is also considering using the same measures to protect workers and others close to him. Trump said that former US President Joe Biden adopted this approach and pardoned members of the House Special Committee investigating the attack on the Capitol in advance. Trump has no choice but to secure the military's heart. As for Iran, they continue to adopt the trend of fighting and talking, such as the attack on Iran's Qeshm Island yesterday. The Iranian military proposed five principles for lasting peace: ending the war on all fronts, completely lifting sanctions against Iraq, paying war compensation, recognizing Iraq's sovereignty over the Strait of Hormuz, and guaranteeing no further aggression. These conditions seem unreliable.
In recent days, intensive domestic releases have been favorable, and the provision of various types of liquidity will boost market confidence to a certain extent. In addition to securities, insurance stocks are also generally trending strongly today. The decline in the early period was due to large losses in the equity investment category, but almost all of them have already been paid out. This is a basic calculation. Recently, the Central Bank and the Securities Regulatory Commission introduced instruments such as easy swaps, stock holdings and reloans to clearly support the entry of insurance capital into the market as long-term patient capital; premiums for new life insurance policies have clearly picked up in September. Savings insurance covers residents' demand for moving deposits, and the trend on the debt side is slowly improving. China Taibao (02601) rose more than 4%, while China Financial Insurance (02328) and China Taiping (00966) all rose more than 3%.
The central bank's latest move announced that the foreign exchange reserve ratio will be raised from 4% to 6% starting November 15. After the news was announced, the offshore RMB plummeted by about 200 points against the US dollar to 6.6664 in the short term, ending the continuous upward trend of nearly three weeks. In addition to curbing the exchange rate from appreciating too fast, the other reason for this move is to further enhance the competitiveness of exports. This is a factor in today's strong automobile categories such as Sinotruk (03808), Sany Heavy Industries (06031), and others.
The direction of domestic demand is even more important. Five departments including the National Development and Reform Commission recently issued the “Guiding Opinions on Strengthening Consumer Infrastructure Construction and Promoting Healthy Consumer Investment”. Clearly, strengthening consumer infrastructure construction is an important gripper for improving consumer supply and promoting effective investment. For example, in the catering sector, Haidilao (06862) announced that Zhang Yong, the controlling shareholder, chairman of the board of directors and CEO, prepaid all principal and accrued interest from previous loans to the company on November 2. Follow-up observations focused on the hot pot season in the fourth quarter: whether the turnover rate can stabilize above 3.9 times/day, whether the takeout business can maintain high growth under a high base, and when the sub-brand adjustments will bottom out, rising more than 6% today; Yum China (09987) is optimistic. The company announced Q3 results after the Hong Kong stock market closes on November 3. The market average forecast revenue of US$3.5 billion rose 9% year on year, and quarterly profit of US$315 million was expected to increase 11.8% year over year, even in the context of the food and beverage price war. The focus is on management's guidance on the same store and the pace of opening stores in the fourth quarter, which increased by more than 3%; other well-known consumer categories such as Li Ning (02331): a board meeting will be held on November 5 to consider and approve the issuance of a special dividend to the company's shareholders; Mengniu (02319), China Resources Beer (00291), and Dongpeng Drinks (09980) all rose more than 4%.
Currently, degeneration of sows capable of breeding has been confirmed, but it has not been fully transmitted to the supply side. As of the close of trading this morning, LH2701, the main pig force, closed at 9270 yuan/ton and hit a new low on the market. On the spot side, according to Mysteel data, the national standard pig market price fell all the way from 9.70 yuan/kg on October 20 to 9.02 yuan/kg on November 2. The cumulative drop in less than two weeks was 0.68 yuan/kg, a decrease of about 7.01%. The industry is in a time misalignment phase where “sows have been reduced, pork supply has not been reduced.” Institutions have already begun to lay out. In the third quarter of 2026, the market value of public fund agricultural sector holdings reached 38.852 billion yuan, accounting for 0.49% of the market value of stock investment, an increase of 0.2 percentage points over the previous month. This means that institutional capital has begun to make up from a low allocation level to the agriculture and breeding sector; the current allocation ratio of the agricultural sector is still below the industry standard level of 0.57%, and has been in a state of low allocation for 8 consecutive quarters. Overall positions have not yet entered the crowded range. The upward inflection point of breeding stocks is usually ahead of the inflection point in pig prices. Leading Muyuan shares (02714) surged by more than 6%, while Dekang Agriculture and Animal Husbandry (02419) rose nearly 2%.
On November 3, according to data from the Macau Gaming Inspection and Coordination Bureau, Macau's gross gaming revenue in October was 21.68 billion patacas, an increase of more than 3.6 billion patacas over the previous month, and rebounded by about 20%. In October, gross gaming revenue still fell 10% year on year, falling for five consecutive months. The month-on-month recovery is the core catalyst. Relatively speaking, the cash flow of individual gaming stocks is relatively good. If the economy recovers, this sector is more flexible. Galaxy Entertainment (00027) rose by more than 4%, while MGM International (00200) and MGM China (02282) both rose more than 4%.
Other rising individual stocks are fueled by news: TCL Electronics (01070) announced on November 2 that the acquisition of TCL's air conditioning business was completed, and the target company became a wholly-owned subsidiary and consolidated into the financial statements; in 2025, TCL Air Conditioning's net profit exceeded HK$1.9 billion, and product production and sales exceeded 22 million units. TCL Electronics' adjusted net profit for the first three quarters is estimated to be HK$2.11 billion to HK$2.25 billion, up 45% to 55% year on year. Global MiniLED TV shipments of 2.43 million units increased 77.1% year on year, leading the market share in the world, rising more than 6% today.
Yingxing Holdings (01440) announced in late October that it intends to sell all of Circle's issued share capital and transfer sales loans to Rongwei Investment Co., Ltd. at a cost of HK$58.7 million. The sale will improve the balance and liability situation and allow management to reallocate resources to other promising businesses. Judging from the point of time, it should be fast, up more than 3%.
The power generation of some power generation companies has declined, but the profit base is still stable. The role of thermal power has changed — more in-depth peak regulation, and no longer mainly about power generation. The fixed costs brought about by this part of the transformation are covered by the national capacity compensation policy. This policy mainly pays for the installed capacity that can be dispatched and covered by the unit. It looks at the installed capacity and peak support capacity, not the current wind speed or actual power generation. Even if wind is low and power generation falls for a certain period of time, as long as the unit is included in the compensation list, it can obtain a stable income to hedge against the performance pressure brought about by fluctuations in spot electricity prices and power generation capacity. Although power generation at the bottom of Longyuan Electric Power (00916) declined, the third quarter reported a net quarterly decline in receivables financing, representing years of backlog of new energy subsidies. The repayment rate has already exceeded new confirmation. There are also a series of favorable acquisitions. Today, it has surged more than 8%. Huadian International (01071) is all worth paying attention to.
[Section Focus]
According to reports, in October, the sales gap between new car companies widened further. Zero Sports Auto (09863) delivered 106,127 vehicles worldwide, an increase of 51% over the previous year, and remained above 100,000 vehicles for the fourth month in a row; in the first 10 months, it delivered a total of about 772,700 vehicles, achieving 77.3% of the annual target of 1 million vehicles. Xiaopeng Group (09868) delivered 50,237 vehicles, up 19.6% year on year, up 21.8% month on month, and surpassed 50,000 vehicles for the first time; of these, 13,326 vehicles were delivered overseas, up 166% year on year, accounting for about 26.5% of the total delivery volume for the month. The delivery volume of the Xiaomi car (01810) also exceeded 50,000 units, which is a step higher than the more than 40,000 cars announced in September.
On the export side, Chery (09973) exported 206,600 vehicles in October, up 58.7% year on year; Geely (00175) exported 107,200 vehicles, up 158% year on year; and BYD (01211) doubled year on year's export of 170,200 vehicles. Overseas markets are becoming a core source of growth to hedge against weak domestic demand. Automobiles have indeed fallen very badly. Because of the poor economy, everyone's own expectations were not high, but the October data clearly exceeded expectations. Furthermore, overseas exports were also new expectations, especially after the exchange rate was lowered, which is even more beneficial to them. It is currently at the bottom and has good investment value. Main varieties: BYD (01211), Zero Sports (09863), Xiaopeng Group (09868), Xiaomi Group (01810).
[Individual Stock Mining]
Unify Enterprise China (00220): Price increases continue to catalyze deepening brand operations and increasing gross profit margins
The wave of food and beverage price increases continues to ferment. 2026H1 achieved total revenue of 17.32 billion yuan, an increase of 1.4% year on year; realized net profit of 1.4 billion yuan to mother, an increase of 9.0% year on year. On the revenue side, 2026H1 food/beverage/other business revenue was +4.7% /--- 0.3%/+2.2% year-on-year, respectively.
Comment: Food and beverage price increases continue to be catalyzed, and the company's profitability continues to increase. 2026H1 achieved a gross profit margin of 35.0%, an increase of 0.7 pct over the previous year, mainly due to product structure upgrades. On the cost side, trade-off promotions, asset depreciation, transportation expenses, etc. have increased compared to the same period last year. It is expected that sales rates will increase year on year, and management rates will continue to be optimized. In summary, the profit margins of food/beverage/other businesses were +1.0pct/+0.1pct/-1.8pct, respectively, and the overall net profit margin increased 0.6 pct to 8.1% year over year, and the profit center increased. Overall, China's 2026H1 operations of unified enterprises have remained steady, improving the quality and efficiency of operations, and the profit growth rate is faster than revenue growth.
In the food business, instant noodles continue to expand to meet the diverse needs of consumers, and Tang Da Ren's “pork bone flavor” large single products have achieved steady growth. Season-limited products (volcanic spicy pork bones, etc.) continue to maintain popularity, and high-end container noodles are popular. Manhan Diner: Bound to Sam's member store, launch new products, seize the high-end, high-priced instant noodle market, and have a higher gross margin. Revenue from the beverage business declined slightly. Tea drinks/juice/milk tea were -3.5% /- 5.5%/+7.3%, respectively. Unifying green tea and unifying iced black tea continued to consolidate the brand positioning, and the marketing layout was carried out around youth, and the Chunfu brand began to operate independently.
Other products deepen channel customer cooperation, customize products for member stores and snack volume sales, and continuously improve terminal competitiveness. The company has deeply sunk its dealer channel network. The dealer system covers first-tier and second-tier supermarkets, convenience stores, county kiosks, transportation channels (high-speed rail/high-speed), member stores (Sam), and the channels operate in a hierarchical manner; online Douyin, JD, Pinduoduo+ offline traditional channels cover both, and has strong marketing capabilities.
Looking ahead to the second half of the year, on the product side, instant noodles may continue to build products based on cost performance to cover more consumer demand. The large single product, Tangda Tonkotsu Ramen, is expected to continue to grow; the beverage business may continue to cultivate channels to maintain the potential of individual products. Jasmine Milk Green is the second growth curve, and brand operations may be further deepened. On the profit side, the company is expected to further optimize operating efficiency on the basis of steady operation, raise the level of net interest rates, excellent cash flow, full profit dividends in 2025, and stable dividend returns.