02600 Overview

Market Opening: The HSI opened 1.9% lower at 24,789, with the HSCEI down 1.6% at 8,433 and HSTECH down 1.9% at 4,780.

Tech Stock Performance: Major tech stocks like TENCENT, BABA-W, and JD-SW experienced declines, with short selling ratios indicating significant market pressure.

Commodities Stocks Decline: Commodities stocks, including ZHAOJIN MINING and CHINAGOLDINTL, saw notable decreases, despite some companies reporting increased profits.

Short Selling Trends: A variety of stocks faced heavy short selling, with ratios for several companies exceeding 15%, reflecting bearish sentiment in the market.

JP Morgan Report: JP Morgan identified resilient Hong Kong stocks benefiting from the current oil price rally, all rated as Overweight.

Stock Performance: The report includes stocks like PetroChina, China Hongqiao, Chalco, and Yankuang Energy, with varying short selling ratios and price targets.

Short Selling Data: The short selling data indicates significant activity, with PetroChina and China Hongqiao having the highest short selling amounts and ratios.

Oil Price Forecast: CICC predicts that Brent oil prices could exceed US$120 per barrel if disruptions in the Strait of Hormuz continue into the second quarter.

Market Response to Middle East Tensions: Aluminum and coal stocks surged on the 12th, with notable increases in companies like CHALCO and CHINAHONGQIAO, driven by heightened supply risks due to the ongoing conflict in the Middle East.

Impact on Commodity Prices: UBS reported that the conflict has elevated international prices for aluminum and thermal coal, with significant supply disruptions already affecting aluminum and potential future impacts on smelting capacity.

Forecast Adjustments: UBS raised its aluminum price forecast for 2026 by 13% to $3,250 per ton, while also increasing its thermal coal price forecast for the same year by 10% to $126 per ton, reflecting the ongoing energy price risks.

Natural Gas and Coal Price Dynamics: The rise in natural gas prices, influenced by the Iran conflict, has supported coal prices, with European natural gas prices increasing by about 50% and Brent crude oil prices by about 30%.

Force Majeure Declaration: Qatalum and Alba, two major Middle Eastern aluminum companies, declared force majeure on March 3-4, impacting their annual production capacities of 636,000 and 1.62 million tons, which represent 0.8% and 2.0% of the global aluminum market, respectively.

Price Surge: Following the force majeure announcement, LME aluminum prices increased by 2.5% on March 3 and 5% on March 4, reaching USD3,418 per ton, the highest level since 2022.

Market Outlook: CICC predicts that aluminum prices may continue to rise due to a growing supply-demand gap, geopolitical tensions from the US-Iran conflict, and the effects of global fiscal and monetary policies.

Investment Recommendations: CICC advises investors to focus on companies like NANSHAN AL INTL, CHINAHONGQIAO, CHALCO, TIANSHAN ALUMINUM, and HUATONG WIRES AND CABLES, highlighting their potential in the current market environment.

Aluminum Price Surge: Aluminum prices have reached a nearly four-year high, climbing to USD3,499.5 per ton due to disruptions in shipments caused by the ongoing conflict in the Persian Gulf.

Impact on Supply: The Middle East, which supplies about 9% of the world's aluminum, has seen major smelters halt operations, prompting U.S. buyers to seek alternative sources from Asia.

Market Reaction to Geopolitical Tensions: Chinese metal stocks experienced a sell-off due to risk-aversion stemming from the conflict involving the US, Israel, and Iran, while coal stocks performed well due to rising price expectations and low investor positions.

JPMorgan's Insights on Metal Stocks: JPMorgan remains optimistic about gold and copper stocks, recommending quality mining shares during market dips, with ZIJIN MINING identified as a top pick.

Coal Price Projections: The firm anticipates that geopolitical tensions will elevate coal prices in the short term, driven by increased demand as crude oil and natural gas prices rise, although sustainability depends on potential disruptions in the Strait of Hormuz.

Aluminum Price Forecast: JPMorgan's global commodities team predicts that aluminum prices could surge towards USD4,000 per ton if significant supply disruptions occur, influenced by higher energy and freight costs.