Hong Kong Stock Market Closing (01.12) | Hang Seng Index fell by 0.35%, shipping stocks rose against the trend, and automotive stocks remained under pressure throughout the day.

Zhitong App learned that the three major stock indexes in Hong Kong opened lower in the morning session, briefly rose and turned positive, but then fell back and weakened in the afternoon. At the close, the Hang Seng Index fell 0.35% or 57.46 points to 16,244.58 points, with a cumulative decline of 1.76% this week and a total turnover of HKD 69.483 billion. The Hang Seng China Enterprises Index fell 0.23% to 5,481.94 points, and the Hang Seng Technology Index fell 0.92% to 3,470.64 points.

CICC International pointed out that Hong Kong stocks have continued their weakness since the beginning of 2024, with the Hang Seng Index falling for 7 consecutive days and experiencing a decline of about a thousand points. The market is also prepared for the possibility of falling below the low point of 2023. It is advisable to increase risk tolerance in positions and guard against extreme trends. On the other hand, the trading volume of Hong Kong stocks remains at a low level, reflecting investors' wait-and-see attitude towards the inflation data to be released this week, which may provide clearer directional guidance for Hong Kong stocks.

Performance of blue-chip stocks

Oriental Overseas International (00316) led the gains in blue-chip stocks. At the close, it rose 4.27% to HKD 112.3, with a turnover of HKD 95.9072 million, contributing 0.97 points to the Hang Seng Index. Morgan Stanley previously pointed out that considering the restrictions on the Panama Canal due to drought, the latest developments are expected to further exacerbate the supply chain crisis. Container shipping will be the biggest beneficiary, followed by tankers and bulk carriers. The bank reiterated its positive view on Asian shipping companies, including Oriental Overseas.

In other blue-chip stocks, China Gas Holdings (00881) rose 2.9% to HKD 16.3, contributing 0.62 points to the Hang Seng Index; China Hongqiao (01378) rose 2.39% to HKD 6, contributing 0.62 points to the Hang Seng Index; Li Auto-W (02015) fell 3.52% to HKD 126.1, dragging down the Hang Seng Index by 9.98 points; Bank of Communications (02388) fell 3.13% to HKD 19.22, dragging down the Hang Seng Index by 3.62 points.

Hot sectors

On the market, most large technology stocks declined; blockchain concept stocks fell sharply; biopharmaceuticals, Hong Kong banks, automobile stocks, real estate stocks, property management stocks, and others were among the top decliners; on the other hand, water utilities, shipping stocks, and power stocks rose; some coal stocks showed strong performance.

1. Automotive dealers lead the gains. At the close, Harmony Auto (03836) rose 5.56% to HKD 0.57; Meidong Auto (01268) rose 4.68% to HKD 4.92; China Gas Holdings (00881) rose 2.9% to HKD 16.3. On January 10th, the China Automobile Dealers Association released the "Automobile Dealer Inventory" survey results for December 2023: the comprehensive inventory coefficient of automobile dealers in December was 1.20, a decrease of 16.1% MoM and an increase of 12.1% YoY. The inventory level is below the warning line, indicating an upward trend in the automotive circulation industry. The survey shows that some dealers have made preparations for brand adjustments and increased efforts to clear inventory. It is expected that brand adjustments such as dealer withdrawals and rebranding will continue until the end of the first quarter. The inventory coefficient for high-end luxury and imported brands was 0.97, a decrease of 11.8% MoM; the inventory coefficient for joint venture brands was 1.18, a decrease of 24.8% MoM; and the inventory coefficient for independent brands was 1.39, a decrease of 0.7% MoM.

2. Shipping stocks rose across the board today. At the close, SeaKing International (01308) rose 4.51% to HKD 13.44; Orient Overseas International (00316) rose 4.27% to HKD 112.3; China COSCO Holdings (01919) rose 3.15% to HKD 7.87.

Due to the escalating conflict between Houthi rebels in Yemen and the United States, the situation in the Middle East has become tense again. The freight index (Europe route) closed up more than 19% today, reaching the daily limit of 20% at one point. On Wednesday, the United Nations Security Council passed a resolution explicitly calling for Houthi rebels in Yemen to immediately stop attacking commercial shipping in the Red Sea, and emphasized that member states have the right to "protect their vessels from attack, including attacks that undermine the right to navigate and freedom of navigation" under international law. The United States and the United Kingdom have begun targeting Houthi-related targets within Yemen. In addition, Maersk CEO Søren Skou told the media that the closure of the Red Sea to container ships is "bad" following a series of attacks by Houthi rebels in Yemen. He pointed out that reopening the Red Sea trade route could take months, which could have economic and inflationary impacts on the global economy, businesses, and consumers.

3. Some coal stocks showed strength. At the close, Mongolian Energy (00276) rose 22.06% to HKD 0.83; South Gobi Energy Resources (01878) rose 9.79% to HKD 4.26; Mongolian Mining Corporation (00975) rose 8.9% to HKD 8.32.

Guotai Junan Securities pointed out that the bottom of coal prices has been confirmed, ensuring the profitability of coal companies, and the value of high dividend and high dividend coal listed companies is highlighted, helping to reshape the valuation of the coal sector. In addition, as a pro-cyclical industry, the coal sector will benefit from the economic recovery and increased demand, making it an offensive and defensive investment. Recommendations: 1) Long-term contract coking coal; 2) High dividend thermal coal; 3) Undervalued stocks with room for recovery; 4) Growth and transformation. First Securities predicts that in 2024, due to the slow release of new production capacity and the lack of elasticity in supply under safety supervision pressure, the increase in output will be limited. With steady growth in electricity consumption and continuous improvement in policies for real estate and infrastructure construction, demand will continue to remain robust. The current inventory of thermal coal has started to decline from a high level, while the inventory of coking coal is currently at a historically low level for the same period. Coal prices will continue to fluctuate at high levels within a medium to high price range. 4. Auto stocks weaken throughout the day. As of the close, Xpeng Motors-W (09868) fell 5.21% to HKD 47.35; Li Auto-W (02015) fell 3.52% to HKD 126.1; Brilliance China Automotive (01114) fell 0.89% to HKD 4.46.

On January 12th, Tesla China launched another round of price wars. Its official website shows that the price of the new Model 3 has been reduced. The rear-wheel drive version of the Model 3 has been reduced by RMB 15,500, and the long-range version has been reduced by RMB 11,500. The rear-wheel drive version of the Model Y has been reduced by RMB 7,500, and the long-range version has been reduced by RMB 6,500. It is reported that as of January 10th, about 20 car companies have announced New Year promotions. Tesla is still leading the pack, announcing the launch of a New Year low-interest financial policy and limited-time insurance subsidies. NIO has announced that customers who place orders for the NIO AYA/NIO X/NIO S/NIO GT can enjoy a RMB 5,000 New Year exclusive red envelope gift. Rating agency Fitch Ratings believes that as domestic car brands accelerate the promotion of high-level autonomous driving and global car brands accelerate the electrification process, competition in the Chinese car market will continue to intensify by 2024. Fitch Ratings believes that intensified competition may put pressure on car companies' market share and profitability in the short term, leading to weakened cash generation capabilities while facing higher investment demands.

5. Blockchain concept stocks fall back. As of the close, BC Technology Group (00863) fell 25.36% to HKD 6.68; Xiongan Technology (01647) fell 14.47% to HKD 0.065; Meitu (01357) fell 12.46% to HKD 3.02.

Yesterday, the U.S. Securities and Exchange Commission approved the listing and trading of 11 Bitcoin spot ETFs, but the price of BTC did not strengthen as a result. SEC Chairman Gary Gensler recently stated that although we approved the listing and trading of some Bitcoin spot ETFs on Wednesday, we did not approve or endorse Bitcoin itself. Bitcoin is a speculative asset with high volatility. The approval of Bitcoin spot ETFs will bring more regulation. However, Guosen Securities (Hong Kong) believes that the approval of Bitcoin spot ETF applications indicates the recognition of cryptocurrencies by the traditional financial world and is expected to bring incremental funds. At the same time, in 2024, the Bitcoin halving cycle will overlap with the latest December meeting minutes of the Federal Reserve, which hinted at completed rate hikes and potential rate cuts in 2024. Under multiple favorable factors, it is expected that the cryptocurrency market, including Bitcoin, will perform well in 2024.

Hot stocks

1. China Aoyuan (03883) rises significantly. As of the close, it rose 10.53% to HKD 0.21. China Aoyuan announced that its overseas debt restructuring plan has been approved by the relevant court. According to the approved restructuring plan, China Aoyuan will issue new financing instruments to replace the existing approximately $6.1 billion of overseas debt, including 4 new debt instruments totaling $2.3 billion, as well as 1.4 billion ordinary shares, $143 million interest-free mandatory convertible bonds, and $1.6 billion perpetual bonds.

2. China Literature (00772) rose throughout the day. At the close, it was up 8.9% at HKD 30.6.

Jia Ling released the official poster for her new film "Hot and Spicy" yesterday morning, announcing that it will be released on the first day of the Chinese New Year, February 10th. As soon as this news came out, topics such as "Jia Ling loses 100 pounds," "Hot and Spicy release date," and others surged on the hot search list. It is reported that the production companies involved in this film include Tianjin China Literature Film and Television Culture Media Co., Ltd. and New Classics Media Group, a subsidiary of China Literature.

3. Suning.com (06288) rose slightly. At the close, it was up 2.02% at HKD 20.2.

Suning.com announced its performance for the first quarter of the fiscal year 2024. The total comprehensive income for the quarter was JPY 810.8 billion, a year-on-year increase of 13.2%; the total comprehensive operating profit was JPY 146.6 billion, a year-on-year increase of 25.3%. Suning.com stated that the company's revenue and profit from its business in mainland China have both increased significantly as of the end of November.

New Listing

EWT Holdings (02477) soared in its debut. At the close, it was up 164% at HKD 2.64.

EWT Holdings issued 125 million shares in its IPO, priced at HKD 1 per share, with a board lot size of 4,000 shares, resulting in net proceeds of HKD 62.67 million. EWT Holdings is a provider of telecommunications network support and information and communication technology (ICT) integration services and software development. The group initially focused on developing telecommunications network performance analysis software when it started its business in 2003, and later expanded its business scope to provide telecommunications network support services and ICT integration services.