【Yuan Zhifeng Column】High Hong Kong Stock Turnover Suggests Sustainable Rebound

Today's Recommendation - Kuaishou (1024, HK$42.1), Target Price HK$46.5, Stop-Loss Price HK$40.5

1) Market Outlook

Hong Kong stocks traded mixed on Thursday. The Hang Seng Index fell 0.7%, while the Hang Seng Tech Index was unchanged, with turnover reaching its highest level in over a month. Southbound funds recorded net inflows of nearly HK$10 billion. The July rebound in Hong Kong stocks is confirmed, and the Hang Seng Index is expected to rise to 24,100–24,600 points. Investors are advised to buy on dips.

2) Summary of China and Hong Kong Market Conditions (Previous Day)

On Thursday, the Hang Seng Index opened flat, rose in early trading to a high of 24,354 (up 154 points), then gradually declined, falling as much as 282 points in the afternoon. It closed at 24,030, down 169 points or 0.7%. Turnover remained stable at approximately HK$377.2 billion, compared to a June daily average of HK$319 billion.

Southbound funds via Stock Connect recorded net inflows of about HK$9.8 billion. Zhipu (2513), Alibaba (9988), and Hua Hong Hongli (1347) saw net inflows of HK$5.58 billion, HK$2.21 billion, and HK$1.21 billion respectively. E Fund Hang Seng ETF (2800) and Tencent (700) recorded net outflows of HK$2.31 billion and HK$1.43 billion. Cumulative net inflows since July reached approximately HK$47.6 billion, compared to HK$27.1 billion in June.

The Hang Seng Index fell 0.7%, with 26 gainers, 66 decliners, and 1 unchanged among constituents. Semiconductor leaders SMIC (981) and Lenovo (992) surged over 10% and 7%, the best performers among blue chips. WuXi Biologics (2269) and Sinopharm Group (1177) rose over 3%. Power Assets (6) gained over 2%. Sun Hung Kai Properties (16), CATL (3750), and Towngas (3) rose over 1%. Lao Pu Gold (6181) and J&T Express (1519) dropped over 5%, the worst performers. Geely (175), China Hongqiao (1378), and Longfor Group (960) fell over 4%. Li Ning (2331) and Sinopharm Holdings (1099) dropped over 3%. Hansoh Pharma (3692) fell nearly 3%. ICBC (1398), China Construction Bank (939), China Overseas (688), China Resources Land (1109), Pop Mart (9992), Sands China (1928), and Galaxy Entertainment (27) declined over 2%. AIA (1299) fell nearly 2%.

The Hang Seng Tech Index was flat, closing at 4,731 points. Among constituents, 7 rose and 23 fell. Large tech stocks mostly declined: Tencent (700) and Xiaomi (1810) fell over 1%, Meituan (3690) and Baidu (9888) over 2%, and Kuaishou (1024) over 4%. Zhipu (2513) surged over 11%, the biggest gainer. SMIC (981) and Hua Hong Hongli (1347) rose over 10% and 8%. Lenovo (992) gained over 7%. Minimax (100) plunged over 17%, the biggest loser. NIO (9866), Leapmotor (9863), and Bilibili (9626) fell over 4%. BYD (1211), Li Auto (2015), and Tongcheng Travel (780) dropped over 3%. Haier Smart Home (6690), XPeng (9868), JD Health (6618), and Alibaba Health (241) declined over 2%.

By sector, chipmakers, brokers, and local utilities rose. SMIC (981) and Hua Hong Hongli (1347) gained over 10% and 8%. China Galaxy (6881) and CICC (3908) rose over 2% and 1%. Power Assets (6) and Towngas (3) gained over 2% and 1%.

Airlines, EVs, online healthcare, property developers, gold, and travel stocks fell sharply. Air China (753) and China Eastern (670) dropped over 6% and 5%. Geely (175), Leapmotor (9863), and NIO (9866) fell over 4%. Ping An Good Doctor (1833) dropped over 4%, JD Health (6618) and Alibaba Health (241) over 2%. Longfor Group (960) and Greentown China (3900) fell over 4%, China Overseas (688) over 2%. Shandong Gold (1787) and Zhaojin Mining (1818) dropped over 4% and 2%. Tongcheng Travel (780) and Huazhu Group (1179) fell over 3%.

On Thursday, the Shanghai Composite Index opened 0.2% higher, dipped early to down 0.8%, then recovered steadily, rising as much as 1.8%, and closed at 4,036.59, up 1.7%. The Shenzhen Component Index rose 3.1%. The STAR 50 Index surged 8.4%. Total turnover in Shanghai and Shenzhen markets reached approximately RMB 2.91 trillion, up RMB 350 billion from the previous day. The June daily average was about RMB 3.11 trillion.

3) Macro/Industry News

China's National Bureau of Statistics reported that in June, the national Consumer Price Index (CPI) rose 1.0% year-on-year, below the market expectation of 1.1%. The national Producer Price Index (PPI) rose 4.1% year-on-year, in line with expectations. (SinoPac)

4) Stock-Specific News

Zijin Mining (2899) expects its net profit attributable to shareholders to reach approximately RMB 39.1 billion in the first half of this year, representing a year-on-year increase of about 68%. (SinoPac)

For details on recommended stock performance, please visit our Hong Kong stock simulated trading portfolio: www.anuesec.com/zh-HK/Page/dt-model

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