【Yuan Zhifeng Column】Four Major Chinese Bank Stocks All Rise Over 5%

Stock Recommendation Today - China Mobile (941, $78.5), Target Price $85.0, Stop-Loss Price $75.0

1) Market Outlook

Hong Kong stocks rose significantly on Wednesday, with turnover hitting a new high in over a month, and southbound funds net buying over HK$10 billion. The July rebound in Hong Kong equities is confirmed, and the Hang Seng Index is expected to recover to 24,100–24,600 points. Investors are advised to buy on pullbacks.

2) Summary of China and Hong Kong Market Conditions Yesterday

The Hang Seng Index opened 44 points higher on Wednesday, then continued to climb, peaking at 814 points up at 24,311, closing at 24,199, up 702 points or 3.0%. Turnover increased 18% from the previous day to HK$375.8 billion, compared to an average daily turnover of HK$319 billion in June.

Southbound funds via Stock Connect recorded net inflows of approximately HK$14.2 billion. Zhipu (2513), Alibaba (9988), and Tencent (700) saw net inflows of HK$4.33 billion, HK$3.98 billion, and HK$2.51 billion respectively. Xiaomi (1810), Yangtze Optical Fibre (6869), and Kingboard Laminate (1888) recorded net outflows of HK$700 million, HK$500 million, and HK$220 million respectively. Cumulative net inflows since July have reached about HK$37.8 billion, compared to HK$27.1 billion in June.

The Hang Seng Index rose 3.0%, with 73 constituent stocks up, 19 down, and 1 unchanged. Alibaba (9988), Xiaomi (1810), and Kuaishou (1024) surged over 12%, 9%, and 8% respectively, leading the blue chips. ICBC (1398), China Construction Bank (939), Bank of China (3988), and Bank of China Hong Kong (2388) all rose over 5%. China Overseas (688) gained over 4%. CNOOC (883), CITIC (267), Sands China (1928), Galaxy Entertainment (27), China Telecom (728), and Laopu Gold (6181) rose over 3%. Ping An (2318), China Unicom (762), and Trip.com (9961) rose nearly 3%. WH Group (288) fell over 5%, the worst performer among blue chips. CATL (3750), Techtronic (669), and WuXi Biologics (2269) fell over 3%. WuXi AppTec (2359) dropped over 2%. Hansoh Pharma (3692) and Geely (175) declined over 1%.

The Hang Seng Tech Index rose 5.0%, closing at 4,731, with 27 components up, 2 down, and 1 unchanged. Large tech stocks led the rally: Tencent (700), Meituan (3690), and JD.com (9618) rose over 3%, NetEase (9999) and Baidu (9888) rose over 4% and 6% respectively, Kuaishou (1024) and Xiaomi (1810) rose over 8% and 9%, and Alibaba (9988) surged over 12%. Zhipu (2513) rose over 13%, the biggest gainer. Minimax (100) and SenseTime (20) rose 12%. Lenovo (992) and Alibaba Health (241) rose over 6%. Tongcheng Travel (780), BYD Electronic (285), and Bilibili (9626) rose over 5%. Li Auto (2015) rose over 4%. SMIC (981) and Hua Hong Semiconductor (1347) rose over 3%. Leapmotor (9863) fell over 3%, the biggest loser.

By sector, large tech, AI, and mainland bank stocks outperformed the market. Alibaba (9988) and Xiaomi (1810) rose over 12% and 9% respectively. Zhipu (2513) rose over 13%, Minimax (100) and SenseTime (20) rose 12%. All four major mainland banks rose over 5%.

Lithium battery, solar, and biotech stocks declined. Tianqi Lithium (9626) and Ganfeng Lithium (1772) fell over 8% and 7% respectively, CATL (3750) fell over 3%. GCL Technology (3800) and Xinyi Solar (968) fell over 4% and 2% respectively. WuXi Biologics (2269) and Innovent (1801) fell over 3% and 1% respectively.

On Wednesday, the Shanghai Composite Index opened 0.2% higher, dipped 0.6% in early trading, then reversed to rise 0.6%, before weakening in the afternoon to close at 3,970.88, down 0.5%. The Shenzhen Component Index fell 1.9%. The STAR 50 Index rose 0.7%. Total turnover in Shanghai and Shenzhen markets was about RMB 2.56 trillion, down RMB 20 billion from the previous day. The average daily turnover in June was about RMB 3.11 trillion.

3) Stock-Specific News

According to Bloomberg, domestic large model company Zhipu (2513) plans to place 19.8 million H-shares at HK$1,588 to HK$1,698 per share, a 6.96% to 12.99% discount to yesterday's closing price of HK$1,825, raising HK$31.4 to HK$33.6 billion. (Economic Times)

Tech news site The Information, citing sources, reported that Zhipu (2513) is evaluating the possibility of developing its own AI chips to meet surging demand for its open-source GLM series large models and address computing resource constraints due to U.S. export controls. (Economic Times)

CICC (3908) announced an expected profit of RMB 7.708 to 8.227 billion for the first half of this year, up 78% to 90% year-on-year. Last year's profit for the same period was RMB 4.33 billion. (Economic Times)

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