In the morning session of the Hong Kong stock market, the three major indexes rose collectively, with the Hang Seng Tech Index once rising by more than 1.6% and finally closing up 0.71%, while the Hang Seng Index ended up 0.77%. On the trading board, large-cap tech stocks, which serve as market bellwethers, collectively strengthened, contributing to the rise of the broader market. Meituan gained 2.43%, while JD.com and Alibaba rose by nearly 3%. Baidu and NetEase each gained more than 2%, and Kuaishou and Tencent each gained more than 1%.

Financials and China-backed stocks, which underperformed yesterday, collectively rebounded today, with AIA Group gaining nearly 4% and Agricultural Bank of China rising 2%. The CXO sector also rose collectively, with Citibank stating that the share prices of WuXi AppTec and WuXi Biologics are underestimated. The Macau Government Tourism Office hopes to attract an average of 100,000 visitors daily during the National Day Golden Week, boosting casino stocks. Construction materials and cement stocks, which have been declining consecutively, generally rose, while most oil stocks that fell sharply yesterday stabilized.

Baidu Group-SW closed up 1.43%. Xue Su, Baidu's Vice President and Head of AI Innovation Business, said that Wen Xiaoyan has a rich variety of intelligent agents, covering categories such as tools, companionship, games, and marketing. These intelligent agents, together with Wen Xiaoyan, constitute Baidu's robust AI ecosystem. He revealed that Wen Xiaoyan currently has over ten million monthly active users, with millions of intelligent agents distributed. Both user engagement time and call frequency have maintained rapid growth.

BYD Co., Ltd. closed down 0.58%. BYD disclosed an announcement regarding the shareholding increase in the company's shares by senior management and core personnel. According to the announcement, BYD's senior management and core personnel collectively increased their holdings of the company's A-shares by a total of 142,000 shares, with a total increase in value of RMB 35.4536 million. Among them, BYD's Senior Vice President Luo Hongbin, Senior Vice President and Chief Financial Officer Zhou Yalin, Senior Vice President Yang Dongsheng, Vice President Luo Zhongliang, and Vice President Li Wei collectively increased their holdings of the company's A-shares by a total of 58,100 shares through the Shenzhen Stock Exchange's centralized bidding trading system from September 2 to September 9, with a total increase in value of RMB 14.6572 million. Additionally, 33 other core personnel of BYD recently increased their holdings of the company's A-shares by a total of 83,900 shares through the Shenzhen Stock Exchange's centralized bidding trading system, with a total increase in value of RMB 20.7964 million.

Eastbuy closed down 3.97%. Eastbuy conducted its first live broadcast from SF Express's cold storage facility in Beijing, showcasing the cold chain distribution of its self-operated products. Currently, Eastbuy's self-operated products cover over 99% of domestic shipments at room temperature and over 97% of shipments via cold chain. In some regions of new first-tier cities, same-day or next-morning delivery is available. Eastbuy began launching self-operated products in 2022 and has now partnered with eight regional ambient and frozen warehouses, 28 provincial ambient and frozen warehouses, and 464 origin warehouses. The live broadcast venue, SF Express's cold storage facility, is one of Eastbuy's logistics partners.

Alibaba Group Holding Limited-W closed up 2.15%. JPMorgan Chase published a report stating that Alibaba was officially added to the Stock Connect program on Tuesday (October 10). On that day, Alibaba's Hong Kong shares rose by 4%, while the Hang Seng Index rose by 0.2%. Alibaba recorded an inflow of HK$8.4 billion, accounting for 90% of the total southbound capital inflow on that day. Its trading volume tripled to HK$16.9 billion, accounting for approximately 15% of the total trading volume of Hong Kong stocks on that day, which was HK$107 billion.

Although the bank expects that the full impact of Alibaba's inclusion in the Stock Connect program and southbound capital inflows will take several months to materialize, it believes that Alibaba's fundamental development in domestic e-commerce will be a key driver of its share price over the next 6 to 12 months. In addition, the bank expects traffic, gross merchandise volume (GMV), and monetization on Taobao and Tmall to continue improving in the coming quarters. With technical catalysts emerging, the bank maintains its "Overweight" rating on Alibaba with a target price of HK$106.

Lithium mining stocks, which surged yesterday, lost momentum today, with Ganfeng Lithium's H-shares falling by nearly 5%. Tianqi Lithium's H-shares declined by 1.67%. JPMorgan Chase issued a report stating that the price of lithium futures on the Guangzhou Futures Exchange rose by 6% to 8% yesterday (October 11) to approximately RMB 78,000 per ton. Market speculation centered on Contemporary Amperex Technology Co., Limited (CATL) suspending production at its mines, leading to a 10% to 14% surge in lithium mining stocks.

The bank noted that similar speculation had emerged earlier this year in February, when lithium prices surged by approximately 30% in two weeks to RMB 120,000 per ton. However, this uptrend was short-lived due to stagnant fundamentals, and the industry began to hedge against high prices. The bank believes that the current uptrend is similar to the previous one and expects it to be short-lived. The bank maintains its "Underweight" ratings on Ganfeng Lithium and Tianqi Lithium, with target prices revised downwards to HK$13.5 and HK$16, respectively, implying downside potential of 20% to 24%.

AAC Technologies closed down 0.17%. Goldman Sachs published a report expressing optimism about AAC Technologies and anticipating its continued recovery. Based on a price-to-earnings ratio of 21.4 times for 2025, the target price is set at HK$42.1, maintaining a "Buy" rating. The report stated that AAC Technologies is currently supplying hinges for Honor's foldable phones and expects to penetrate more brand customers by 2025 with the launch of more new models.

In terms of thermal solutions, AAC Technologies has provided copper and stainless steel vapor chambers (VCs) for Xiaomi Ultra13 and OnePlus Ace2 and has penetrated overseas customers. Benefiting from upgrades in the specifications of mid-to-high-end smartphone cameras, hinges, and haptics, management remains positive about revenue growth and margin improvement in the second half of 2024. For 2025, management expects the trend of smartphone content upgrades to continue, and the acquisition of PSS will bring synergies to the automotive acoustics business.

Sunny Optical Technology (Group) Company Limited closed down 1.79%. Goldman Sachs published a report stating that Sunny Optical's shipments of mobile phone camera lenses in August increased by 15% year-on-year to 124 million units, compared to a 54% year-on-year increase for Largan Precision at the same time. Sunny Optical's shipments of mobile phone camera modules decreased by 25% year-on-year to 40 million units, compared to a 1% year-on-year increase for Q Technology at the same time. Shipments of automotive camera lenses increased by 4% year-on-year to 8 million units, compared to a 9% year-on-year increase in July.

Regarding Sunny Optical's shipments of mobile phone camera lenses, automotive camera lenses, and mobile phone camera modules in the first eight months, they reached 874 million, 70 million, and 373 million units, respectively, accounting for 68%, 69%, and 66% of the bank's full-year forecasts for the company, largely in line with expectations. The bank downgraded its earnings forecasts for Sunny Optical by 1% each for this year and next, and its revenue forecasts by 1% and 2%, respectively, primarily due to the decline in camera module shipments. The bank also downgraded its 2025 forecast price-to-earnings ratio for the company from 23.9 times to 23.3 times, with the target price revised downwards from HK$65.8 to HK$63.5. The bank remains cautious about the intense competition in the camera market and expects the company's blended gross margin to stabilize at 17% to 18% from 2024 to 2026, maintaining a "Neutral" rating.

Helen's (09869) fell more than 8%, hitting a new low since its listing. Its share price has cumulatively declined by over 90% in the three years since its listing. As of press time, it was down 8.16% at HK$1.35, with a trading volume of HK$4.8689 million. In terms of news, Helen's mid-year results for 2024 showed that the company achieved revenue of RMB 441 million in the first half of the year, a year-on-year decrease of 37.85%. Net profit attributable to shareholders was RMB 69.677 million, a year-on-year decrease of 55.76%. Adjusted net profit was RMB 90.278 million, a year-on-year decrease of 51.89%.

During the reporting period, the company's own beverage products generated revenue of RMB 223 million from directly operated stores, a year-on-year decrease of 58.89%, with a gross margin decrease of 2.7%. Additionally, the number of Helen's stores decreased from 653 in the same period last year to 537, with the number of directly operated stores decreasing from 515 to 187, a reduction of 328 stores. The number of pubs in first- and second-tier cities decreased significantly, while 49 pubs were added in third-tier and lower-tier cities.

POP MART (09992) rose more than 2% again. In terms of news, POP MART previously announced its financial results, achieving revenue of RMB 4.56 billion in the first half of the year, an increase of 62% year-on-year. Net profit attributable to shareholders was RMB 920 million, an increase of 93.3% year-on-year. Regionally, revenue and profit from Hong Kong, Macau, Taiwan, and overseas markets accounted for approximately 30% each. Domestically, 20 new stores were opened offline, bringing the total to 374, with same-store sales growth of 14%. Online, sales on Douyin continued to surge, and the blind box machine channel turned positive. Overseas, the number of offline stores has exceeded 100, and it is estimated that the average store performance in the first half of the year was RMB 11.68 million. The company continues to focus on expanding in Southeast Asia and Europe and the United States.

Guoyuan International pointed out that as a leading IP toy company, POP MART has unique competitiveness and barriers in original IP and IP operations. POP MART's overseas business is in rapid development, and its DTC model has gradually verified the overseas marketability of its IP products since 2023. Currently, the average store performance of overseas stores is twice that of domestic stores, and the overseas OPM is better than that in mainland China, supporting long-term growth potential. The company is optimistic about the continuous development and validation of POP MART's overseas expansion strategy.

China Merchants Securities International issued a report stating that despite the overall weakness in the stock market recently, the share prices of leading mainland internet platforms have demonstrated resilience, which the report attributes to improved competitive environments and brighter earnings prospects. Following this quarter's earnings results, companies that have seen significant declines are still worth keeping an eye on, such as Pinduoduo, Tencent Music, and NetEase, which remain attractive in terms of their business strength, market position, and valuation.

The bank noted that the overall market position and profitability of leading mainland internet platforms remain solid. The bank's top picks in the sector are Tencent, Alibaba, and Bilibili, all of which are rated "Overweight" with target prices of HK$474, US$126, and US$21, respectively. The bank pointed out that leading mainland internet platforms such as Alibaba, Tencent, and Meituan demonstrated resilience in their second-quarter earnings results, with share prices fluctuating within a range. The median valuation of the bank's covered companies has continued to remain at historical lows (9.8x and 9.9x P/E for fiscal years 2024 and 2025, respectively).

While macroeconomic pressures have yet to subside, the continuous rollout of supportive policies (such as appliance trade-ins) and positive developments at the individual stock level (such as Alibaba and Cloud Village's dual primary listings in Hong Kong) remain positive catalysts. The bank remains optimistic about the sector and favors companies with the following characteristics: stable revenue growth achieved through efficiency improvements and loss reduction, leading to stable or improved earnings growth; high visibility of shareholder returns through cash dividends and share repurchases; and valuation support.

JPMorgan Chase maintains its forecast that the Federal Reserve will cut interest rates by 50 basis points next week. The bank stated that the CPI report may lead some FOMC members to favor a 25 basis point rate cut, but they still find a 50 basis point cut compelling due to the current focus on labor market weakness. However, JPMorgan Asset Management believes that the Federal Reserve will cut rates by 25 basis points next week. The firm stated that inflation has now cooled, and there is no longer a serious inflation problem. The CPI data does not require aggressive action from the Federal Reserve, and it is pleased to see a 25 basis point rate cut next week.

Market research firm Rho Motion stated that global sales of fully electric and plug-in hybrid vehicles increased by 20% year-on-year in August, reaching 1.47 million units, driven by record-high sales in China. Specifically, sales in China surged by 42% to an all-time high of over 1 million units, while sales in the United States and Canada increased by 8% to 160,000 units. In contrast, sales in Europe decreased by 33%, marking the lowest level since January 2023. Overall, new energy vehicle sales in Europe have declined by 4% year-to-date, dragged down by a 23% decrease in Germany following subsidy cuts. Charles Lester, Data Manager at Rho Motion, stated that the firm expects sales in China, the world's largest electric vehicle market, to increase by one-third year-on-year to 10.5 million units this year. Sales in Europe are expected to remain roughly flat at 3.1 million units compared to last year.

Sergio Ermotti, CEO of UBS Group, said in an interview on Thursday that markets may have overestimated the likelihood of a significant interest rate cut by the Federal Reserve this month. The most important issue the Fed needs to consider remains inflation, which has not yet been "fully contained," he said. "I think there will be a rate cut, but not as much as the market expects," Ermotti added. He also shared his optimistic view on China's market prospects. "We have been in China for over 50 years, and we will be there for another 100 or 200 years," he said. "Overall, our two real opportunities and growth engines remain the United States and Asia, with China as a key driver within that."

Wang Zonghao, Head of UBS China Equity Strategy Research, recently issued his latest view, forecasting a 7% year-on-year increase in earnings per share for the MSCI China Index for the full year. Wang noted that based on the first-half 2024 earnings reports, the net profit of MSCI China Index constituents increased by 4% year-on-year, while revenue growth remained flat, indicating that earnings growth outpaced revenue growth. In the second quarter, capital expenditure control emerged as a significant highlight, with MSCI China non-financial companies' capital expenditure declining by 4% year-on-year in the first half, marking the lowest growth rate since 2017. The industrial and renewable energy sectors experienced the largest declines. Downstream industries (excluding real estate) demonstrated remarkable revenue and profit growth, benefiting from better cost control and improved revenue structure (e.g., increased proportion of overseas revenue).

UBS Wealth Management stated that the recent correction in technology stocks was primarily driven by rising macroeconomic uncertainty rather than deteriorating AI fundamentals. The firm expects large technology companies to achieve 15-20% earnings growth over the next few quarters as AI monetization accelerates, supporting robust capital expenditure. Comments from the firm's Asia-Pacific Investment Office noted that the recent second-quarter earnings season revealed no signs of slowing AI spending by large technology companies. Executives emphasized the greater risk of underspending rather than overspending. As competition intensifies in the AI space among large technology companies, their overall capital expenditures for this year and 2025 are expected to increase by 47% and 16.5% to US$218 billion and US$254 billion, respectively. The combined capital expenditure intensity (capital expenditures divided by sales) remains below historical peaks.

Source: Hong Kong Stock Research Institute