01138 Overview

Market Overview: The Hong Kong stock market experienced significant declines, with the HSI dropping as much as 804 points, closing down 717 points or 2.8% by midday, influenced by geopolitical tensions and a downturn in financial stocks.

Financial Sector Impact: Major financial institutions like HSBC and AIA saw substantial losses, with declines of 3.7% and 5.5% respectively, contributing to the overall market downturn.

Commodity and Shipping Stocks: Commodity stocks and shipping companies faced steep declines, with notable drops in companies like SD Gold and COSCO Ship Energy, reflecting broader market pressures.

Tech Sector Performance: The tech sector also struggled, with significant losses from major players like Tencent and Alibaba, although Netease saw a slight increase, indicating mixed performance within the industry.

Market Opening: Hong Kong stocks opened lower, with the HSI down 1.2% at 25,469, the HSCEI down 1.1% at 8,516, and the HSTECH down 1.2% at 4,816.

Commodity Prices Impact: Declines in gold and silver prices led to lower openings for commodities stocks, with significant drops in companies like SD GOLD and ZHAOJIN MINING.

Company Performance: MMG reported a significant increase in annual net profit but saw its stock price fall by 4%, while PACIFIC BASIN's net profit fell 56%, causing its stock to drop 2%.

Mixed Results: TECHTRONIC IND announced a record high net profit but experienced a 4.9% decline in stock price, while SINO BIOPHARM's subsidiary secured a licensing agreement but also saw a slight decrease in share price.

Market Overview: The US-Iran war escalation negatively impacted global stock markets, with the Hong Kong stock market closing lower; the HSI fell by 1.1% to 25,768 points.

Gas and Oil Stocks Performance: KUNLUN ENERGY rose by 1.7%, while SINOPEC CORP dropped by 2.7%. PETROCHINA and CNOOC saw significant gains of 5% and 3.2%, respectively.

Decline in Gold and Lithium Stocks: Gold and silver stocks experienced substantial losses, with companies like SD GOLD and ZHAOJIN MINING falling between 5-6.3%. Lithium stocks also plummeted, with TIANQI LITHIUM and GANFENGLITHIUM down by 8.1% and 10.9%.

Tech Sector Movements: Major tech stocks like TENCENT and BABA-W saw slight declines, while NTES-S gained 1.4%, potentially benefiting from its inclusion in the Southbound Stock Connect.

Southbound Capital Inflows: Southbound capital inflows into Hong Kong stocks slowed last week, with a net inflow of HK$6.7 billion, primarily in the information technology, consumer discretionary, and real estate sectors, while telecoms and utilities experienced net outflows.

Top Net Buys: The top net buys included MEITUAN-W, XIAOMI-W, and TENCENT, with significant short selling activity reported for these stocks.

ETF Inflows: There was an acceleration in net inflows into ETFs investing in the Hong Kong market, totaling HK$444.26 billion, with Southbound Stock Connect ETFs seeing a net inflow of HK$1.9 billion.

Top Net Sells: The top net sells over the past two weeks included ZIJIN MINING, CHINA LIFE, and POP MART, indicating a trend of capital outflow from these stocks.

Market Performance: The Hang Seng Index (HSI) fell by 74 points (0.3%) to 25,985, while the Hang Seng Tech Index (HSTI) and the Hang Seng China Enterprises Index (HSCEI) also experienced declines.

Active Heavyweights: Notable stock movements included Xiaomi and Meituan, which saw declines of 3% and 1.2% respectively, while Tencent and Alibaba experienced slight gains.

Significant Declines: Xinyi Solar, Pop Mart, and XPeng faced substantial drops, with declines of 5.4%, 4.7%, and 4.6% respectively, indicating a challenging day for these companies.

Top Gainers: Companies like PetroChina and CNOOC saw positive movements, with PetroChina rising 4% to a new high, while other stocks like Hao Tian International and Zhongyu Energy experienced significant increases.

JPMorgan's Upgrade: JPMorgan upgraded COSCO SHIPPING ENERGY's A-shares from Neutral to Overweight and maintained an Overweight rating for its H-shares, reflecting a positive outlook on the company's performance.

Valuation Method Change: The brokerage changed its valuation approach from price-to-book (PB) ratio to price-to-earnings (PE) ratio, applying target PE ratios of 15x for H-shares and 21x for A-shares for 2026.

Target Price Increase: Following the upgrade, JPMorgan raised the target prices for COSCO SHIP ENGY's H- and A-shares significantly, from $12/RMB13 to $24/RMB28, due to anticipated structural shocks in the market.

Market Factors: The report highlights three key factors—escalation of the Iran conflict, tightening compliant capacity, and market consolidation—that are expected to enhance the profitability of Very Large Crude Carriers (VLCCs).