Citi Expects High Demand for AI Cloud Services, Names TENCENT, Alibaba, Trip.com, NetEase, and CENTURY HUATONG as Leading Internet Sector Choices
Impact of Consumer Sentiment: Weak consumer sentiment has negatively affected the growth of e-commerce platforms' gross merchandise volume (GMV) in China, with expectations of a continued soft macroeconomic environment into 2026.
Regulatory Challenges: Tightened regulations and the introduction of e-commerce value-added tax are pressuring the profitability of small and medium-sized merchants, impacting the monetization capabilities and profit margins of e-commerce platforms.
AI Cloud Services Demand: Despite challenges, demand for AI cloud services remains strong, with expectations that supply constraints will ease as domestic chip production improves and high-end foreign chips receive approval.
Citi's Top Picks: Citi's top stock picks in the internet industry include Tencent, Alibaba, Trip.com, NetEase, and Century Huatong, reflecting a focus on companies positioned to benefit from the evolving market landscape.
Trade with 70% Backtested Accuracy
Analyst Views on 00700
About the author
HKD4.6B Net Outflow from TRACKER FUND in Southbound Trading
Southbound Trading Inflows: TENCENT (00700.HK) saw significant net inflows of HKD1.8 billion, while YOFC (06869.HK) and SMIC (00981.HK) also experienced positive trading activity.
Southbound Trading Outflows: TRACKER FUND (02800.HK) and KUAISHOU-W (01024.HK) faced substantial net outflows, totaling HKD4.6 billion and HKD568.6 million, respectively.
Short Selling Activity: TENCENT had a short selling amount of $1.33 billion with a ratio of 9.036%, while KUAISHOU-W had a higher short selling ratio of 21.451%.
Market Overview: Overall, Southbound Trading net outflow was zero, accounting for 39.36% of the total transaction amount of HKD100.43 billion.
HSI Rises by 467 Points as Chinese Insurers, Commodities, and AI Stocks Perform Well; KNOWLEDGE ATLAS Surges 36%
Market Performance: The HSI rose by 1.8% to close at 27,027, with significant gains in the HSCEI and HSTECH, while total market turnover reached $255.142 billion.
Insurance Sector Gains: Chinese insurers, particularly CHINA LIFE and PING AN, saw substantial increases of 4% and 4.9%, respectively, following PING AN's stake increase in CHINA LIFE.
Financial Stocks Rise: Major financial institutions like HSBC and HKEX experienced gains between 2.6% and 3.4%, contributing to a positive trend in the financial sector.
Tech and AI Stocks Surge: Tech stocks rebounded, with TENCENT and BIDU-SW rising over 2%, while AI-related stocks like KNOWLEDGE ATLAS soared by 36.2%, reflecting strong investor interest.
<Full-day Summary> HSI Gains 467 Points; HSTI Rises 71 Points; PING AN Surges Over 4%; SHK PPT, HSBC HOLDINGS, YUM CHINA, GALAXY ENT, HENDERSON LAND Reach New Peaks; Market Turnover Increases
Market Performance: The Hang Seng Index (HSI) rose by 467 points (1.8%) to close at 27,027, while the Hang Seng Tech Index (HSTI) and the Hang Seng China Enterprises Index (HSCEI) also saw gains, closing at 5,417 and 9,168 respectively, with a total market turnover of $255.14 billion.
Active Heavyweights: Notable stocks included PING AN, which increased by 4.9% to $73, and HKEX, which rose by 2.7% to $418.6. Other significant movers were TENCENT (+2.3%) and BABA (+1.9%), while MEITUAN experienced a slight decline of 0.4%.
Top Gainers: Among HSI and HSCEI constituents, INNOVENT BIO surged by 7.4%, POP MART by 5.8%, and ZIJIN MINING by 5.6%. Other notable gainers included SMIC and CHINA LIFE, both showing significant increases.
Decliners and High Performers: REALORD GROUP saw a sharp decline of 15.5%, while FIT HON TENG and CHINA EAST EDU experienced substantial gains of 14.1% and 13.3%, respectively, indicating a mixed performance across different sectors.
JPM: It's Premature to Identify Final Leaders in AI Applications, Favors BABA-W, BIDU-SW, and KUAISHOU-W
Changing Consumer Behavior: JPMorgan's research indicates a shift in consumer behavior towards using chatbots as primary tools for search, recommendations, and task execution, prompting large internet platforms to invest heavily in marketing to boost adoption and increase token consumption.
Investment Recommendations: The broker favors companies benefiting from China's AI infrastructure, such as Alibaba (BABA-W) and Baidu (BIDU-SW), as well as online advertising firms like Kuaishou (KUAISHOU-W), while noting the uncertainty in identifying long-term AI winners.
Tencent's AI Strategy: Concerns have been raised about Tencent's cautious approach to AI advancements compared to competitors, with the stock trading at a valuation that reflects some market apprehension, yet the broker believes its core earnings outlook remains strong.
Tencent's Competitive Edge: JPMorgan emphasizes that Tencent's greatest asset lies in its distribution and user engagement capabilities, which can enhance the scalability of new technologies, including AI, at a lower user acquisition cost than its peers.
<Midday Update> HSI Rises by 385 Points; HSTI Gains 55 Points; PING AN Surges Over 4%; YUM CHINA, LI NING, SHK PPT, BOC HONG KONG, and ZTO EXPRESS-W Reach New Peaks
Market Performance: The HSI rose by 385 points (1.5%) to 26,945, while the HSTI and HSCEI also saw gains of 55 points (1.0%) and 111 points (1.2%) respectively.
Active Heavyweights: Notable stocks included PING AN (+4.1%), HKEX (+2.8%), and BABA (+1.9%), with significant short selling activity reported for each.
Top Gainers: INNOVENT BIO and POP MART led the gains among HSI & HSCEI constituents, rising by 5.9% and 5.8% respectively, while KUAISHOU-W experienced a notable decline of 4.3%.
Significant Movements: CHINA EAST EDU and CHINA LIT saw substantial increases of 11.9% and 10.1%, while REALORD GROUP faced a significant drop of 10%.
HSI Starts 422 Points Up; HSBC HOLDINGS Gains 3%; Strong Performance in Chips and Commodities
Market Performance: The HSI opened 1.6% higher at 26,982, with significant gains in the HSCEI and HSTECH, reflecting a positive trend in the Hong Kong stock market.
Tech Sector Highlights: Major tech stocks like TENCENT and JD-SW saw increases, while KUAISHOU-W experienced a decline; overall, tech stocks showed a mixed performance with varying short selling ratios.
Automotive and Commodity Stocks: BYD COMPANY and other automotive stocks like NIO-SW and XPENG-W reported gains, alongside a rebound in commodity prices benefiting gold and mining stocks.
Financial Sector Gains: Financial stocks, including HSBC HOLDINGS and HKEX, opened higher, indicating a positive sentiment in the financial market amidst broader market gains.
HKD4.6B Net Outflow from TRACKER FUND in Southbound Trading
Southbound Trading Inflows: TENCENT (00700.HK) saw significant net inflows of HKD1.8 billion, while YOFC (06869.HK) and SMIC (00981.HK) also experienced positive trading activity.
Southbound Trading Outflows: TRACKER FUND (02800.HK) and KUAISHOU-W (01024.HK) faced substantial net outflows, totaling HKD4.6 billion and HKD568.6 million, respectively.
Short Selling Activity: TENCENT had a short selling amount of $1.33 billion with a ratio of 9.036%, while KUAISHOU-W had a higher short selling ratio of 21.451%.
Market Overview: Overall, Southbound Trading net outflow was zero, accounting for 39.36% of the total transaction amount of HKD100.43 billion.
HSI Rises by 467 Points as Chinese Insurers, Commodities, and AI Stocks Perform Well; KNOWLEDGE ATLAS Surges 36%
Market Performance: The HSI rose by 1.8% to close at 27,027, with significant gains in the HSCEI and HSTECH, while total market turnover reached $255.142 billion.
Insurance Sector Gains: Chinese insurers, particularly CHINA LIFE and PING AN, saw substantial increases of 4% and 4.9%, respectively, following PING AN's stake increase in CHINA LIFE.
Financial Stocks Rise: Major financial institutions like HSBC and HKEX experienced gains between 2.6% and 3.4%, contributing to a positive trend in the financial sector.
Tech and AI Stocks Surge: Tech stocks rebounded, with TENCENT and BIDU-SW rising over 2%, while AI-related stocks like KNOWLEDGE ATLAS soared by 36.2%, reflecting strong investor interest.
<Full-day Summary> HSI Gains 467 Points; HSTI Rises 71 Points; PING AN Surges Over 4%; SHK PPT, HSBC HOLDINGS, YUM CHINA, GALAXY ENT, HENDERSON LAND Reach New Peaks; Market Turnover Increases
Market Performance: The Hang Seng Index (HSI) rose by 467 points (1.8%) to close at 27,027, while the Hang Seng Tech Index (HSTI) and the Hang Seng China Enterprises Index (HSCEI) also saw gains, closing at 5,417 and 9,168 respectively, with a total market turnover of $255.14 billion.
Active Heavyweights: Notable stocks included PING AN, which increased by 4.9% to $73, and HKEX, which rose by 2.7% to $418.6. Other significant movers were TENCENT (+2.3%) and BABA (+1.9%), while MEITUAN experienced a slight decline of 0.4%.
Top Gainers: Among HSI and HSCEI constituents, INNOVENT BIO surged by 7.4%, POP MART by 5.8%, and ZIJIN MINING by 5.6%. Other notable gainers included SMIC and CHINA LIFE, both showing significant increases.
Decliners and High Performers: REALORD GROUP saw a sharp decline of 15.5%, while FIT HON TENG and CHINA EAST EDU experienced substantial gains of 14.1% and 13.3%, respectively, indicating a mixed performance across different sectors.
JPM: It's Premature to Identify Final Leaders in AI Applications, Favors BABA-W, BIDU-SW, and KUAISHOU-W
Changing Consumer Behavior: JPMorgan's research indicates a shift in consumer behavior towards using chatbots as primary tools for search, recommendations, and task execution, prompting large internet platforms to invest heavily in marketing to boost adoption and increase token consumption.
Investment Recommendations: The broker favors companies benefiting from China's AI infrastructure, such as Alibaba (BABA-W) and Baidu (BIDU-SW), as well as online advertising firms like Kuaishou (KUAISHOU-W), while noting the uncertainty in identifying long-term AI winners.
Tencent's AI Strategy: Concerns have been raised about Tencent's cautious approach to AI advancements compared to competitors, with the stock trading at a valuation that reflects some market apprehension, yet the broker believes its core earnings outlook remains strong.
Tencent's Competitive Edge: JPMorgan emphasizes that Tencent's greatest asset lies in its distribution and user engagement capabilities, which can enhance the scalability of new technologies, including AI, at a lower user acquisition cost than its peers.
<Midday Update> HSI Rises by 385 Points; HSTI Gains 55 Points; PING AN Surges Over 4%; YUM CHINA, LI NING, SHK PPT, BOC HONG KONG, and ZTO EXPRESS-W Reach New Peaks
Market Performance: The HSI rose by 385 points (1.5%) to 26,945, while the HSTI and HSCEI also saw gains of 55 points (1.0%) and 111 points (1.2%) respectively.
Active Heavyweights: Notable stocks included PING AN (+4.1%), HKEX (+2.8%), and BABA (+1.9%), with significant short selling activity reported for each.
Top Gainers: INNOVENT BIO and POP MART led the gains among HSI & HSCEI constituents, rising by 5.9% and 5.8% respectively, while KUAISHOU-W experienced a notable decline of 4.3%.
Significant Movements: CHINA EAST EDU and CHINA LIT saw substantial increases of 11.9% and 10.1%, while REALORD GROUP faced a significant drop of 10%.
HSI Starts 422 Points Up; HSBC HOLDINGS Gains 3%; Strong Performance in Chips and Commodities
Market Performance: The HSI opened 1.6% higher at 26,982, with significant gains in the HSCEI and HSTECH, reflecting a positive trend in the Hong Kong stock market.
Tech Sector Highlights: Major tech stocks like TENCENT and JD-SW saw increases, while KUAISHOU-W experienced a decline; overall, tech stocks showed a mixed performance with varying short selling ratios.
Automotive and Commodity Stocks: BYD COMPANY and other automotive stocks like NIO-SW and XPENG-W reported gains, alongside a rebound in commodity prices benefiting gold and mining stocks.
Financial Sector Gains: Financial stocks, including HSBC HOLDINGS and HKEX, opened higher, indicating a positive sentiment in the financial market amidst broader market gains.
