Zhitong Decision Reference | Hong Kong stocks have further upward momentum, focusing on real estate.

Editor's Market Insights

During the Chinese New Year holiday when the A-share market was closed, the Hong Kong stock market consecutively closed with gains for three days, with the Hang Seng Index accumulating a 3.77% increase. Overseas Chinese assets saw a significant rise during the Chinese New Year period.

This week, the A-share market resumed trading, opening significantly higher driven by the strong performance of the Hong Kong stock market. The key factors to watch are trading volume and new market directions.

On Tuesday, February 20th, the People's Bank of China will announce the February Loan Prime Rate (LPR). Despite the unchanged Medium-term Lending Facility (MLF) rate in February, some optimistic individuals believe that the LPR may decrease, possibly leading to an asymmetric rate cut, with the 5-year LPR rate potentially decreasing more than the 1-year LPR rate. If the rates do decrease, it will undoubtedly boost the market sentiment, providing further momentum for the Hong Kong stock market, with a focus on real estate stocks.

On Thursday, February 22nd, the Federal Reserve will release the minutes of the January monetary policy meeting. Due to the year-on-year and month-on-month Consumer Price Index (CPI) in January exceeding expectations, with the core CPI showing the largest monthly increase in eight months, the external outlook is not particularly strong.

A positive aspect is the vibrant growth in domestic consumption. According to data from the Lighthouse Professional Edition, the total box office revenue during the 2024 Chinese New Year holiday reached 78.44 billion, surpassing the 2021 Chinese New Year box office record of 78.43 billion, breaking the record for the highest box office revenue in Chinese New Year film history. Additionally, during the Chinese New Year period, the tourism market in various regions across the country remained hot, with the potential for cultural and tourism consumption being fully unleashed, resulting in significant growth. Consumer-related sectors in the Hong Kong stock market have shown relatively strong performance.

Of note, OpenAI released its first video generation model, Sora, which perfectly inherits the image quality and instruction-following capabilities of DALL·E 3, capable of generating high-definition videos lasting up to 1 minute. In addition, NVIDIA will announce its latest quarterly earnings report this week. In the previous 20 quarters, NVIDIA's performance exceeded market expectations in 19 quarters. If the results exceed expectations, there may be developments in large models, computing power, optical modules, and packaging.

Stock Picks of the Week

Li Auto (02015)

The "ID photo" of the Li Auto L6 was unveiled for the first time. It is understood that the new car is positioned as a medium-sized five-seater SUV, slightly smaller than the Li Auto L7, and is set to be launched in April this year. In January, Li Auto delivered a total of 31,165 new vehicles, a year-on-year increase of 105.8%.

Li Auto's delivery performance improved in the second half of January, showing impressive results. Since the start of deliveries, Li Auto has delivered a total of 664,529 vehicles.

Last year, both automobile production and sales exceeded 30 million vehicles for the first time, reaching a historical high, with exports totaling 4.91 million vehicles, potentially becoming the world's largest automobile exporting country. The company's vehicles have been exported to more than 200 countries and regions. The continuous growth in exports of new energy vehicles contributed to an increase in market share, with a 52% retail share of domestic brand passenger cars in 2023. Throughout 2023, with three SUV models, Li Auto secured the top spot in sales of SUVs priced above 300,000 RMB in the Chinese market, as well as the champion in sales of new energy vehicles priced above 300,000 RMB. In 2024, there will be 4 extended-range models and 4 pure electric models, totaling 8 highly competitive products to meet the needs of family users. This March, the flagship family tech MPV, the Ideal MEGA, will be launched and delivered, while the Ideal L7, L8, and L9 will also debut in the 2024 lineup. Ideal will significantly increase its R&D investment to enhance its technical capabilities in intelligent driving, smart space, and smart electric fields. Sales trends for Ideal have weakened this year, mainly due to a slowing market and intensified competition, resulting in a price reduction of 8% to 10% for its products. Ideal has stated that the discounts on the 2023 models are to address the escalating price competition from the three luxury brands (Mercedes-Benz, BMW, Audi) and to kickstart product updates through limited-time Chinese New Year promotions. The company aims to challenge delivering 800,000 vehicles annually and achieve the goal of becoming the top-selling luxury car brand in the Chinese market.

[Industry Insights]

The total box office revenue during the 2024 Spring Festival hit a historical high of 8.016 billion yuan, a 18.49% increase compared to the 6.765 billion yuan in the 2023 Spring Festival.

The 2024 Spring Festival lasted for 8 days, 2 days longer than in 2023. If we compare the box office revenue on the same basis, the total box office revenue from the first to the sixth day of the 2024 Spring Festival was 6.464 billion yuan, a decrease of about 4.15% compared to the 6.745 billion yuan in 2023. Additionally, several films during the Spring Festival offered ticket subsidies, reducing movie tickets priced below 50 yuan to 19.9 yuan, resulting in an average ticket price of around 47.7 yuan in 2024, a decrease of nearly 4 yuan compared to 2023. The lower ticket prices attracted more viewers, with a total of 164 million viewers in 2024, setting a new record for the Spring Festival box office.

In terms of box office performance, "Hot Hot Hot" earned 2.724 billion yuan, "Pegasus: Pony with a Broken Wing 2" earned 2.404 billion yuan, and "Boonie Bears: The Wild Life" earned 1.392 billion yuan, ranking 1st to 3rd in the Spring Festival box office, accounting for 81% of the total box office, continuing the trend of significant box office concentration. In terms of film quality, the top 5 films had an average Douban rating of 7.7, higher than the 7.2 in 2023.

Continuing the warming trend in the 2023 film market, the New Year's Day and Spring Festival box office in 2024 both broke historical records. Looking ahead to the 2024 film market, with abundant film reserves and distribution reforms, box office revenue is expected to continue to grow. Keep an eye on companies listed on the Hong Kong Stock Exchange such as China Literature (00772), Alibaba Pictures (01060), and Maoyan Entertainment (01896).

[Market Data Analysis]

Data from the Hong Kong Stock Exchange shows that the total number of open contracts for Hang Seng Index Futures (February) is 130,424 contracts, with a net open position of 36,105 contracts. The settlement date for Hang Seng Index Futures is February 28, 2024.

Looking at the distribution of bullish and bearish positions in the Hang Seng Index, at the 16,340 level, there is a concentration of bearish warrants near the midpoint. With the end of the Spring Festival holiday approaching, the impressive holiday consumer performance is bringing the holiday season to a successful close. The Hang Seng Index is expected to continue to rise this week.

【Editor's Note】

During the holiday, A-shares did not start trading, while Hong Kong stocks bucked the trend and rose continuously, with some stocks hitting high levels. Don't rush to chase after the market without careful consideration. It's better to observe more and understand whether it's a reversal or a rebound before taking action.

【Disclaimer】This VIP information product is for communication and discussion purposes only, and does not constitute any investment advice. Reproduction without authorization is strictly prohibited. For more high-quality information and data products, please visit the Zhitong App.