【Yuan Zhifeng Column】Hong Kong Stock Market Rally Nears Its End

Today's Recommendation - Anta Sports (2020, HK$77.05), Target Price HK$85.0, Stop-Loss Price HK$74.0

1) Market Outlook

Hong Kong stocks rose on Tuesday with increased turnover, but southbound funds recorded net outflows for the fourth consecutive day. The market rebound appears to be nearing its end, and a wait-and-see approach is advised.

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

The Hang Seng Index opened 65 points higher on Tuesday, initially rising to a peak gain of 234 points at 25,441—the highest level this month—before reversing to fall 137 points. It traded narrowly in the afternoon and recovered slightly at the close, ending at 25,310, up 103 points or 0.4%. Daily turnover increased 19% to HK$250.6 billion, compared to an average of HK$319 billion in June.

Southbound funds via Stock Connect recorded net outflows of approximately HK$2.5 billion. Xiaomi (1810) and Zhipu (2513) saw net inflows of HK$360 million and HK$270 million respectively. Meituan (3690), Hua Hong Hong Kong (1347), and SMIC (981) recorded net outflows of HK$920 million, HK$880 million, and HK$680 million respectively. Cumulative net inflows since July amount to approximately HK$77.5 billion, compared to HK$27.1 billion in June.

The Hang Seng Index rose 0.4%, with 56 components up, 32 down, and 5 unchanged. NetEase (9999) and JD.com (9618) gained over 4%, leading the blue chips. Nongfu Spring (9633), Budweiser APAC (1876), Master Kong (322), and Hengan International (1044) rose over 3%. China Resources Beer (291), Mengniu Dairy (2319), China Resources Land (1109), CSPC Pharmaceutical (1093), and JD Logistics (2618) gained over 2%. China Construction Bank (939) and Bank of China (3988) rose over 1%. Lao Pui Gold (6181) plunged over 23%, the worst performer among blue chips. CATL (3750) and Chow Tai Fook (1929) fell over 4%. China Life (2628), Chalco (2600), BeiGene (6160), and洛阳Molybdenum (3993) dropped over 2%. Techtronic Industries (669) and Pop Mart (9992) declined over 1%.

The Hang Seng Tech Index rose 0.6% to close at 4,730, with 20 components up and 10 down. Large tech stocks were mixed: Baidu (9888) fell over 2%, while Meituan (3690) and Xiaomi (1810) rose over 1% and 2% respectively. JD.com (9618) and NetEase (9999) gained over 4%. Horizon Robotics (9660) surged over 8%, the best performer. Leapmotor (9863), Li Auto (2015), and SenseTime (20) rose over 3%. Tencent Music (1698), Trip.com (780), and NIO (9866) gained over 2%. BYD (1211) rose over 1%. Zhipu (2513) and Minimax (100) plunged over 18% and 14%, the worst performers. Hua Hong Hong Kong (1347) fell over 6%. Lenovo (992) and SMIC (981) dropped over 3% and 2% respectively. Ctrip (9961) fell over 1%.

By sector, electric vehicles, food, beer, and restaurant stocks outperformed the broader market. Li Auto (2015) and Leapmotor (9863) rose over 3%. Nongfu Spring (9633) and Master Kong (322) gained over 3%, while Mengniu Dairy (2319) rose over 2%. Budweiser APAC (1876) and China Resources Beer (291) rose over 3% and 2% respectively. Yum China (9987) and Haidilao (6862) gained over 3% and 1% respectively.

Conversely, AI, semiconductor, lithium battery, securities, and mining stocks declined. Zhipu (2513) and Minimax (100) plunged over 18% and 14%. Hua Hong Hong Kong (1347) and SMIC (981) fell over 6% and 2%. CATL (3750) dropped nearly 5%, while Ganfeng Lithium (1772) and Tianqi Lithium (9696) fell over 5% and 2%. CICC (3908) dropped over 3%, while CITIC Securities (6030) and Guotai Junan (2611) fell over 2%. MMG (1208),洛阳Molybdenum (3993), and Jiangxi Copper (358) declined over 2%.

On the mainland, the Shanghai Composite Index opened 0.9% lower, briefly narrowing losses to 0.4%, but then continued to slide, falling as much as 1.6% in the afternoon. It closed at 3,813.31, down 1.2%. The Shenzhen Component Index fell 4.5%. The STAR 50 Index dropped 6.3%. Total turnover in Shanghai and Shenzhen was approximately RMB 2.03 trillion, down RMB 50 billion from the previous day. The June daily average was around RMB 3.11 trillion.

3) Stock-Specific News

Regarding humanoid robot development, BYD (1211) responded to mainland media that it plans to unveil its robot at the 'Di Space' in August. This will be BYD's first official public display of a physical humanoid robot. (Sing Pao)

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