Mainland China released heavy macroeconomic data for July, and the three major indexes of Hong Kong stocks once opened lower and then rose more than 1% during the morning session, but they began to dive after the lunch break, and the Hang Seng Index finally closed down 0.02%. There are still uncertainties in the market pricing of the Fed's interest rate cut, and Hong Kong stocks are still waiting for news.

On the trading floor, some of the large technology stocks that fell at the beginning of the session rose from their lows. NetEase rose 3.89%, Xiaomi rose 2.14%, Meituan rose 0.29%, Alibaba fell more than 2%, and JD.com fell more than 1%. Large financial stocks (securities firms, insurance companies, banks), centrally-administered state-owned enterprises, and high-interest concept stocks helped boost the overall market. Coal sales in July increased by 5.3% year-on-year, and coal stocks generally rose.

Hedge fund tycoon David Tepper's holdings in Chinese companies remain stable. He reduced his stakes in Alibaba, Pinduoduo, and Baidu but increased his holdings in JD.com and KE Holdings. Chinese stocks and ETFs account for 26% of his fund's equity portfolio. According to a Wednesday report from Tepper's Appaloosa Management, the firm reduced its Alibaba stake by about 7% in the second quarter of 2024, but Alibaba remains its largest holding, accounting for 12% of its $6.2 billion equity portfolio.

Tepper also adjusted his investments in other Chinese companies. He increased his holdings in JD.com (JD.com Inc.), KE Holdings (KE Holdings Inc.), and two Chinese exchange-traded funds while reducing his stakes in Pinduoduo (PDD Holdings) and Baidu (Baidu Inc.). In summary, Chinese stocks and ETFs account for 26% of his fund's equity portfolio.

HHLR Advisors, an independent fund management platform focused on secondary market investments under Hillhouse Capital, announced its U.S. stock holdings as of the end of the second quarter of 2024. The 13F report on institutional investors' quarterly holdings revealed that HHLR Advisors significantly increased its holdings of Alibaba (BABA.US) by 5.24 million shares in the second quarter, making it the third-largest holding in its portfolio or accounting for 9.55% of its total holdings, up from just 0.23% in the first quarter.

HHLR Advisors also substantially increased its holdings in Vipshop (VIPS.US) by 14.61 million shares, as well as in internet Chinese stocks such as NetEase (NTES.US) and Ctrip (TCOM.US). Its increase in holdings of Futu Holdings (FUTU.US) also ranked among the top five on the list. Notably, Ctrip's share price performed well in the second quarter, with a peak increase of nearly 30%.

Although HHLR Advisors reduced its holdings in Pinduoduo (PDD.US) by 2.9 million shares in the second quarter, Pinduoduo remained its largest holding. It also reduced its holdings in KE Holdings (BEKE.US) by over 6 million shares, but KE Holdings still ranked as its fourth-largest holding. Additionally, Baidu (BIDU.US) and Full Truck Alliance (YMM.US), which were reduced in the first quarter, were liquidated in the second quarter.

An analysis of Scion Asset Management LLC's 13F filing by Bloomberg revealed that Michael Burry, the protagonist of the movie "The Big Short," increased his holdings in Alibaba by 30,000 shares and Baidu by 35,000 shares in the second quarter through Scion Asset Management. However, he reduced his JD.com stake by 30% to 250,000 shares. Notably, Alibaba remains his largest holding, accounting for 21% of his portfolio. As of the end of the second quarter, Scion Asset Management's portfolio was valued at $52.5 million, halving from the previous quarter.

Alibaba Group Holding Ltd. closed down 2.43%. Multiple sources reported that Ant Group is planning to acquire Haodaifu Online. Previously, Ant Group's sister company, Ali Health, had been in talks to acquire Haodaifu Online, but recently, sources close to Ant Group revealed that the negotiating party has shifted from Ali Health to Ant Group. Over the past two years, rumors have frequently circulated in the industry that internet giants were interested in acquiring Haodaifu Online. According to insiders, Haodaifu Online's valuation has steadily declined over the past year, and the final acquisition price may be in the hundreds of millions of yuan.

Lenovo Group closed down 0.99%. Lenovo Group announced its financial results for the first quarter of fiscal year 2024/25, ending June 30, 2024: revenue reached RMB 111.9 billion, an increase of 20% year-on-year. Net profit, based on non-IFRS, was nearly RMB 2.3 billion, a significant increase of 65% year-on-year. Non-PC businesses accounted for nearly 47% of total revenue, setting a new high. Additionally, according to the latest Canalys statistics, Lenovo's AI PC shipments increased by 228% quarter-on-quarter.

ISG performed strongly, with revenue increasing by 65% year-on-year. High-performance computing revenue grew by 30% year-on-year, while Poseidon liquid-cooled server revenue increased by 50% (this is the first time the company has disclosed this data). Liquid cooling is primarily used in high-performance computing data centers. According to Sina Technology, Lenovo Chairman and CEO Yang Yuanqing sent an internal letter stating that the company's vision of hybrid artificial intelligence, which it pioneered and established, is now widely recognized in the industry. Hybrid AI represents the coexistence and complementarity of public, personal, and enterprise AI.

AI PCs are just the beginning. Our ultimate goal is to create personal intelligent agents for individuals that can be embedded in various devices and enterprise intelligent agents supported by hybrid infrastructure. While efficiently helping customers and various industries improve productivity, we will also protect data privacy and security. The era of hybrid AI has dawned, transforming traditional ecosystems and reshaping our industry landscape.

Meituan closed up 0.29%. Newswise, Midea Group and Meituan have reached a strategic partnership, with plans for all 25,000 of Midea's self-owned retail stores to join Meituan by 2024. The two companies will explore innovative collaborations in both online and offline settings, establishing new digital pathways for home appliance consumption, smart kitchens, and localized renovations.

Xiaomi Group closed up 2.14%. Xiaomi recently issued an internal appointment document announcing personnel adjustments to its Brand Management Committee. Lu Weibing, President of Xiaomi Group, was appointed Chairman of the Brand Management Committee, with Senior Vice President Zeng Xuezhong, Vice President Wang Xiaoyan, and Vice President Xu Fei serving as Vice Chairmen, responsible for major strategic discussions and decisions regarding the group's core brand architecture and assets.

Wang Shiwei, Deputy General Manager of the Group's Strategic Marketing Department and General Manager of the Group's Brand Department, was appointed Secretary-General of the Brand Management Committee. Pan Jiutang, Chief of Staff of the Group, and Xu Jieyun, Deputy General Manager of the Group's Strategic Marketing Department, were appointed Deputy Secretaries-General, responsible for the committee's daily operations. Additionally, Xiaomi appointed several mid-to-high-level executives from various departments as standing members and members of the Brand Management Committee, covering almost all core business lines and functions.

Fuyao Glass closed up 1.52%. Ye Shu, General Manager of Fuyao Glass, stated at the 2024 Mid-Year Results Briefing held in the morning that the production and operations of Fuyao Glass's U.S. subsidiary are normal, and the expansion investment in its U.S. plant is progressing as planned, with an expected completion by the end of this year, followed by a ramp-up period for mass production. In the first half of 2024, Fuyao Glass's Russian plant generated revenue equivalent to RMB 199 million, and it remains profitable. Note: In 2022, Fuyao Glass increased its investment in Fuyao Glass America by USD 300 million to fund projects such as the construction of coated automotive glass production lines and tempered laminated side window production lines.

Tencent Holdings closed down 1.44%. Morgan Stanley published a research report stating that it expects Tencent's revenue for the third quarter to increase by 7% year-on-year, with strong game growth accelerating in the second half of the year. Profit expansion remains solid, with non-GAAP operating profit expected to increase by 19% year-on-year in the third quarter. Tencent is expected to achieve its buyback target of over RMB 100 billion for fiscal year 2024. The bank rates Tencent as the sector's top pick with an "Overweight" rating and a target price of HKD 450.

Morgan Stanley noted that while Tencent did not disclose its total revenue for the second quarter, it estimates that international game revenue in the second quarter was similar to the momentum seen in the first quarter, and domestic game revenue may also have recorded double-digit year-on-year growth. The bank expects international game revenue to accelerate significantly in the fourth quarter and next year, with game revenue expected to grow by 12% year-on-year in the third quarter. Tencent's vast advertising inventory will continue to drive advertising growth, with the advertising business expected to grow by 15% year-on-year in the third quarter. The bank raised its forecast for adjusted net profit from 2024 to 2025 by 2% to 6%, reflecting the expansion of associate income contributions.

UBS issued a report stating that Tencent's second-quarter revenue and adjusted operating profit met expectations, with adjusted net profit exceeding expectations by 19%. Overall, UBS considers the results to have a neutral impact. Considering stronger game revenue in 2025, UBS raised its forecast for adjusted net profit for 2025 and 2026 by 3%, maintained its target price of HKD 483, and reiterated its "Buy" rating.

UBS stated that Tencent's management expressed a positive outlook on the acceleration of total cash flow in the second quarter, but it will take some time for this to translate into revenue growth, especially for overseas games, which have a longer lag time. The bank expects local and overseas game revenue to increase by 10% and 14%, respectively, in the third quarter. As for the advertising business, the company is expected to continue to increase its market share, with revenue expected to increase by 12% year-on-year in the third quarter. Additionally, the bank expects financial technology revenue to increase by 2% year-on-year in the third quarter.

Zhou Heiya closed flat at 0.00%. The company issued a profit warning today, forecasting revenue of approximately RMB 1.25 billion for the first half of 2024, compared to RMB 1.41 billion in the same period last year. During the reporting period, net profit is expected to range from RMB 30 million to RMB 35 million. Zhou Heiya noted in its announcement that on the one hand, consumer demand has not improved significantly in the first half of this year, and the increase in the number of directly operated stores has led to a year-on-year increase in rigid expenses such as labor and rent. On the other hand, due to fair value changes incurred by affiliated companies, it is expected that the company will share losses of no more than RMB 34 million from its affiliated companies.

Fit Hon Teng (06088) rebounded by more than 4%. Newswise, UBS noted that NVIDIA's first batch of Blackwell chips is expected to be delayed by up to 4-6 weeks (i.e., until the end of January 2025), prompting many customers to switch to purchasing more H200 chips with very short delivery times. Customers are expected to first activate the first batch of Blackwell products in April 2025. Morgan Stanley, on the other hand, expects no changes to NVIDIA's fourth-quarter 2024 shipment plans for Blackwell GPUs and related server components.

China Merchants Securities International issued a research report stating that Fit Hon Teng's second-quarter results were strong, in line with the company's previous earnings guidance. The strong revenue in the second quarter was driven by the networking business and Voltaira. Overall, the bank expects the company's revenue/net profit to rebound by 12%/42% in fiscal year 2024, and its earnings per share forecast for fiscal years 2025-2026 is 13-23% higher than the market consensus. The bank reiterated its "Buy" rating with a new target price of HKD 4.25.

The uptrend in Apple concept stocks continued. As of press time, AAC Technologies (02018) rose 3.86%, Truly Semiconductors (01478) rose 1.73%, and Sunny Optical (02382) rose 1.13%. Newswise, on August 15, market sources reported that Apple will begin allowing third parties to use the iPhone's payment chip to process transactions. This move will enable banks and other services to compete with Apple Pay.

This move was announced on Wednesday after years of pressure from regulators, including those in the European Union. Apple stated that developers will be allowed to use the component starting with iOS 18.1, the upcoming iPhone software update. This change will allow external providers to use the NFC chip for in-store payments, public transportation ticketing, work badges, home and hotel keys, and reward cards.

Additionally, according to the latest reports, the iPhone 16 is expected to be officially announced on September 10, followed by pre-sales on September 13 and a full launch on September 20. China Merchants Securities International expressed optimism about the AI-driven upgrade cycle for Apple's iPhone. China Securities believes that as August enters the peak season for stocking components for the new iPhone models, production and delivery are expected to accelerate, and the market remains highly focused on the launch of the iPhone 16 series in September.

China Merchants Bank closed up 2.16%. Today, rumors circulated that a certain bank had received window guidance from the regulatory authority, limiting the scale of its in-house SPV + public fund investments to no more than 2.5% of its total assets, while joint-stock banks were limited to 5%. In response, reporters learned from industry insiders that currently, financial regulatory authorities in some provinces require public funds to be included in SPVs. A 2.5% threshold for public funds, asset management plans, etc., as a percentage of total assets, serves as a warning line, while 5% is a key warning line, monitored on a quarterly basis.

UBS issued a report stating that mainland Chinese banks will successively announce their second-quarter results. According to data from the National Financial Regulatory Administration, the net profits of state-owned banks, joint-stock banks, and city's commercial banks decreased by 1%, increased by 1.7%, and increased by 4.6% year-on-year, respectively. UBS believes that the second-quarter results of mainland Chinese banks may exceed expectations, primarily benefiting from a stabilizing net interest margin, improving revenue trends, and relatively faster profit growth. The bank expects Agricultural Bank of China (01288.HK), China CITIC Bank (00998.HK), Bank of Nanjing (601009.SH), and China Agricultural Bank of Chongqing (03618.HK) to outperform, while Postal Savings Bank of China (01658.HK), Ping An Bank (000001.SZ), and Bank of Changsha (601577.SH) are expected to lag behind. As a defensive sector, mainland Chinese banks continued to see strong capital inflows in the second quarter, outperforming both the Hong Kong and mainland Chinese stock markets. The bank believes they will maintain their outperformance in the future.

Source: Hong Kong Stock Research Society