Hong Kong Stock Market Closing (02.09) | Hang Seng Index hits bottom and rebounds, closing down 0.83%. Positive news stimulates the rise of education stocks, while shipping stocks and domestic real estate stocks lead the decline.

Zhitong App learned that the Hang Seng Index opened 1.06% lower in the morning, and continued to fall during the session, with a temporary decline of more than 2%. Subsequently, the Hang Seng Index rebounded. At the close, the Hang Seng Index fell 0.83% or 131.49 points to 15,746.58 points, with a turnover of HKD 31.282 billion; the Hang Seng China Enterprises Index fell 0.99% to 5,306.79 points; the Hang Seng Technology Index fell 1.3% to 3,127.22 points.

CICC pointed out that the current fundamentals in the United States do not support a rapid and premature interest rate cut, but it does not mean that the path for an early rate cut is completely blocked. For assets, whether the interest rate cut happens in March or May may not make a big difference. For China, even if the interest rate cut is implemented, the domestic policy is still a prerequisite for the market to continue to rebound. Looking ahead, the reserve requirement ratio cut by the central bank on February 5th, whether the loan prime rate will be lowered at the end of the month, and the National People's Congress in early March are all important policy windows to watch.

Performance of blue-chip stocks

CG SERVICES (06098) fell today, closing down 6.69% at HKD 5.3, with a turnover of HKD 32.8659 million, dragging the Hang Seng Index down by 1 point. In terms of news, CG SERVICES and Hop Hing Group jointly announced that on February 7th, after considering the current market conditions, recent capital market fluctuations, changes in the expected implementation timetable for the target transaction by the contracting parties, potential strategic and cooperative objectives, and other factors, the parties have terminated the strategic cooperation agreement, and therefore the subscription will not proceed.

In other blue-chip stocks, ANTA Sports (02020) rose 1.58% to HKD 70.65, contributing 2 points to the Hang Seng Index; Hansoh Pharmaceutical (03692) fell 4.09% to HKD 12.2, dragging the Hang Seng Index down by 1 point; Xinyi Glass (00868) fell 3.45% to HKD 6.43, dragging the Hang Seng Index down by 1 point; Alibaba-SW (09988) fell 1.42% to HKD 69.3, dragging the Hang Seng Index down by 19 points.

Popular sectors

On the market, education stocks rose against the trend due to positive news, while gaming stocks and others rebounded after hitting bottom during the session. On the other hand, shipping stocks, real estate stocks, and Chinese brokerage stocks all fell collectively, and the automotive industry chain performed weakly.

1. Education stocks rose against the trend. At the close, China Excellent Education Group (03978) rose 6.49% to HKD 1.64; New Oriental-S (09901) rose 5.85% to HKD 67.85; China YuHua Education (06169) rose 2.5% to HKD 0.41; TAL Education Group (01773) rose 1.67% to HKD 3.05. On February 8th, the Ministry of Education released the "Regulations on the Management of Extracurricular Training (Draft for Solicitation of Comments)", and is now soliciting public opinions. Anxin International pointed out that in the past two years, the Civil Promotion Law and the policy of reducing the burden on students have had a huge impact on the development of the K12 and education and training industries. As we enter the fourth quarter of 2022, investors' views on vocational education have changed, and concerns and panic are gradually dissipating. Daiwa recently pointed out that investors seem to prefer industry recovery after regulation and improvement in industry growth prospects. The rapid expansion of production capacity and the profit surprises driven by operational leverage this year will be the main catalyst for the sector's stock prices.

2. Casino stocks hit bottom and rebounded. At the close, MGM China (02282) rose 2.74% to HKD 11.24; Sands China (01928) rose 1.56% to HKD 22.85; Wynn Macau (01128) rose 1.33% to HKD 6.85; Melco International Development (00200) rose 1.25% to HKD 5.68.

On February 6th, the Macau SAR government decided to exempt six concessionaires from the supplementary tax on gaming profits, starting from January 1, 2023, until December 31, 2027, for a total of five years. During this period, the profits generated from their gaming operations will be exempt from the supplementary tax. In addition, JPMorgan released a research report stating that the forecasted gaming revenue for the first four days of February is MOP 2.5 billion, with a daily average of MOP 625 million, surpassing the daily average of MOP 624 million in January. Considering the seasonal factors before the Lunar New Year, the bank believes that this number leaves a deep impression.

3. Shipping stocks fell the most today. At the close, Sinotrans Shipping (01308) fell 8.96% to HKD 12.4; Orient Overseas International (00316) fell 8.5% to HKD 105.5; COSCO Shipping Holdings (01919) fell 6.66% to HKD 7.71; Pacific Basin Shipping (02343) fell 5% to HKD 2.09.

International shipping giant Maersk released its financial report, showing that it achieved a revenue of USD 51.065 billion for the full year of 2023, a year-on-year decrease of 37.4%; its pre-tax net profit decreased by 87.25% to USD 3.934 billion. Maersk expects that the shipping industry will face severe overcapacity in 2024, and stated that the duration and extent of the interruption in the red sea still remain uncertain, which may have an impact on the full-year performance. In addition, due to increased uncertainty, Maersk's board of directors has decided to immediately suspend the share buyback program and restart it when the shipping market conditions stabilize. After the financial report was announced, Maersk's stock price fell nearly 16% on the Copenhagen Stock Exchange.

4. Real estate stocks collectively declined. At the close, Sunac China (01918) fell 7.2% to HKD 1.16; China Vanke (02022) fell 6.98% to HKD 5.86; Country Garden (01030) fell 6.48% to HKD 1.01; Agile Property (02777) fell 5.66% to HKD 1. China United Securities pointed out that the sales of real estate companies will continue to be under pressure in 2023, and the cash flow of real estate companies still faces certain pressures. Financing still requires continuous policy support. The bank pointed out that the real estate industry is still a pillar industry in China, and regulatory authorities attach importance to improving the financing environment for real estate companies and preventing industry risks. It is expected that there will be continued loose financing policies for real estate companies in the future. It is recommended to focus on state-owned enterprises with strong financial strength and abundant high-quality land reserves, as well as high-quality private enterprises that have completed credit repair in this round of industry consolidation.

Hot Stocks

1. OSL Group (00863) continues its recent upward trend. As of the close, it rose by 15.08% to HKD 7.86.

UBS will launch Hong Kong's first Ethereum network tokenized warrant. OSL Group announced that the company participated in UBS Group's pilot issuance of investment-grade tokenized warrants in Hong Kong, covering the entire product issuance cycle. In addition, there are reports that the Hong Kong Securities and Futures Commission is accelerating the review of the first Hong Kong Bitcoin spot ETF and plans to list it on the Hong Kong Stock Exchange after the Spring Festival. It is worth noting that BC Technology Group announced that starting from 9:00 am on February 5, 2024, the Chinese abbreviation of the company's stock traded on the Stock Exchange of Hong Kong will be officially changed to "OSL Group".

2. Sinobioway (01801) continues to rise. As of the close, it rose by 3.75% to HKD 36.

Sinobioway recently announced that the first new drug application for its dual agonist of glucagon-like peptide-1 receptor (GLP-1R)/glucagon receptor (GCGR), masitinib, has been accepted by the National Medical Products Administration Drug Evaluation Center for long-term weight control in adult obese or overweight patients. CITIC Securities Research Report pointed out that Sinobioway achieved product revenue of over RMB 1.6 billion in the fourth quarter of 2023, a year-on-year increase of over 65%, maintaining a strong growth momentum. In the company's subsequent pipeline, the heavyweight drug masitinib is about to enter the NDA stage, and the POC data for the investigational products IBI343 and IBI363 are expected to be released within the year.

3. China Literature (00772) faces another sell-off, down nearly 30% this year. As of the close, it fell by 4.82% to HKD 20.75.

Everbright Securities released a research report stating that it is expected that China Literature's revenue in 2023 will be RMB 7.05 billion, a year-on-year decrease of 7.6%. The decline is mainly due to the increased proportion of customized dramas produced by New Classics Media, the delayed launch of film and television projects, and the optimization and contraction of distribution channels, which have put pressure on the online reading business. It is expected that the company's adjusted net profit attributable to shareholders will be RMB 1.12 billion, a year-on-year decrease of 16.9%, due to the decline in revenue and increased investment in AI research and new businesses. Nomura, on the other hand, stated that the company's non-IFRS net profit is expected to decrease by 25% to RMB 514 million, while the market generally expects a year-on-year growth of 40%, with NCM contributing approximately RMB 269 million.

4. United Energy Group (00467) experienced a sharp intraday plunge of over 35%. As of the close, it fell by 22.5% to HKD 0.62. CITIC Securities International previously pointed out that United Energy Group's average extraction cost in the first half of 2023 remained the same as the same period last year, at $4.1 per barrel, higher than the bank's expectations. Due to inflationary pressures, the bank has raised its assumptions for the company's average extraction cost in 2023/2024 by 5%/9%. The bank still expects the company to maintain robust net profit growth from 2023 to 2025, with a compound annual growth rate of 31% during this period, assuming no mergers and acquisitions. CITIC Securities International stated that the company has scarce overseas oil and gas assets and new energy targets in the Hong Kong stock market. Its existing oil and gas business focuses on three strategic regions: Pakistan, Iraq, and Egypt, with the Iraq B9 block showing high production growth and still having strong growth potential.