【Column by Yuan Zhifeng】Hong Kong Stocks Lose Upward Momentum

Stock Pick of the Day - PetroChina (857, $9.81), Target Price $10.80, Stop-Loss $9.40

1) Market Outlook

The Hang Seng Index rose 0.5% on Monday, primarily driven by Alibaba (9988) surging over 7%. Excluding Alibaba’s contribution, the index would have declined. Market turnover dropped significantly, while southbound funds turned net buyers of over HK$10 billion, mainly increasing positions in Tracker Fund (2800) and Alibaba (9988). The July rebound in Hong Kong stocks was a technical recovery following a sharp sell-off, with no clear improvement in macroeconomic or corporate fundamentals. The upside potential for the Hang Seng Index appears limited. August marks the peak of quarterly earnings announcements, which will be a key driver for individual stock performance.

2) Summary of Monday’s China and Hong Kong Market

The Hang Seng Index opened 103 points higher on Monday, rising as much as 249 points to 26,134 before reversing to fall 73 points. It later recovered and closed at 26,009, up 125 points or 0.5%. Turnover declined 22% from the previous day to HK$255.2 billion. The average daily turnover in July was HK$307.2 billion.

Southbound funds via Stock Connect turned net buyers of approximately HK$11 billion. Tracker Fund (2800), Alibaba (9988), and Tencent (700) saw net inflows of HK$4.75 billion, HK$4.17 billion, and HK$2.43 billion respectively. Semiconductor firms SMIC (981), Hua Hong Semiconductor (1347), and Kingboard Laminates (1888) recorded net outflows of HK$1.06 billion, HK$400 million, and HK$310 million. July’s total net inflow was around HK$62.9 billion.

The Hang Seng Index rose 0.5%, with 30 gainers and 61 decliners among constituents. Sunny Optical (968) and Alibaba (9988) surged over 13% and 7% respectively, leading blue-chip gains. New Oriental (9901) and Hang Lung Properties (101) rose over 4%. ZTO Express (2057) and J&T Express (1519) gained over 2%. Xinyi Glass (868), JD Logistics (2618), WuXi AppTec (2359), and Techtronic Industries (669) rose over 1%. China Hongqiao (1378) and Shenzhou International (2313) fell over 6% and 3%, the worst among blue chips. Anta Sports (2020), Chalco (2600), Hansoh Pharma (3692), and Orient Overseas (316) declined over 2%. BOCHK (2388), CITIC (267), BeiGene (6160), Geely (175), PetroChina (857), China Shenhua (1088), Pop Mart (9992), and MTR (66) fell over 1%.

The Hang Seng Tech Index rose 1.0% to close at 4,875, with 17 gainers and 13 decliners. Large tech stocks mostly rose, though Xiaomi (1810) fell over 2%. Meituan (3690) and JD.com (9618) gained over 1%. Tencent (700), Kuaishou (1024), and Baidu (9888) rose over 3%, while Alibaba (9988) surged over 7%. Minimax (100) rose over 7%, the largest gain. SenseTime (20), Lenovo (992), and BYD Electronics (285) gained over 3%. JD Health (6618) rose over 1%. Zhipu AI (2513) fell over 4%, the largest drop. XPeng (9868) and Tencent Music (1698) declined over 3%. Li Auto (2015) fell over 2%. SMIC (981), Hua Hong (1347), Midea (300), and Haier Smart Home (6690) dropped over 1%.

By sector, large tech, solar, and logistics stocks outperformed. Sunny Optical (968) and GCL Technology (3800) rose over 13% and 11%. ZTO (2057) and J&T (1519) gained over 2%. Shipping and coal stocks declined. Orient Overseas (316) and COSCO Shipping (1919) fell over 2%. Yankuang Energy (1171) dropped over 2%, while China Shenhua (1088) and China Coal (1898) fell nearly 2%.

The Shanghai Composite Index opened 0.5% lower on Monday, narrowed losses to 0.1% early, then slid further to a maximum 0.9% decline, closing at 3,809.66, down 0.6%. The Shenzhen Component fell 1.0%. The STAR 50 Index plunged 5.1%. Total turnover in Shanghai and Shenzhen was about RMB 2 trillion, down RMB 540 billion from the previous day. July’s average daily turnover was around RMB 2.68 trillion.

3) Stock-Specific News

Bloomberg, citing sources, reported that China Mobile (941) is considering selling its minority stake in Thai telecom True Corp. According to True’s latest annual report, China Mobile holds about 7.8% of the company. True’s Bangkok-listed shares have risen 28% year-to-date, with a market cap of about USD 14.5 billion. Based on this, China Mobile’s stake is worth approximately USD 1.1 billion. (HK Economic Times)

WuXi AppTec (2359) announced a first-half net profit attributable to shareholders of RMB 11.08 billion, up 33.7% year-on-year. Basic EPS was RMB 3.80. An interim dividend of RMB 0.51 per share will be paid. Revenue for the period was RMB 28.898 billion, up 38.9% year-on-year. (HK Economic Times)

Alibaba (9988) officially launched its flagship AI model Qwen 3.8-Max, a MoE model with 2.4 trillion parameters and 95 billion active parameters, calling it “the most powerful model in the Qwen family.” It also marks the first time Qwen-Max level model weights will be open-sourced, to be released next week on Hugging Face and ModelScope. (HK Economic Times)

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