The Hang Seng Index closed down 0.22%, with most of the technology stocks rising Xinyi Glass fell 9% to lead the blue-chip decline

Zhitong Financial APP learned that Hong Kong stocks opened high and went low today. The Hang Seng Index and the China National Index initially rushed higher, once again refreshing a new high for the year, but then fell back and stopped, and stopped three consecutive gains, and finally only the Hang Seng Index recorded a slight increase. At the close, the Hang Seng Index fell 0.22% or 41.35 points to 19,073.71 points, with a full-day turnover of HK$143.085 billion, the Hang Seng China Enterprises Index fell 0.3% to 6,741.41 points, and the Hang Seng Tech Index rose 0.57% to 4,041.45 points.

Guoyuan International pointed out that because the current valuation of Hong Kong stocks is at a relatively low level among the world's major assets, and the less than expected employment data has increased the market's expectations for the Federal Reserve to cut interest rates this year, Hong Kong stocks have the momentum of valuation repair in the medium term, and this momentum will exist before the external environment of the market changes significantly. Based on the judgment of the market environment, the bank believes that the current investment tone of Hong Kong stocks should be based on looking for structural opportunities.

Blue chip performance

Xinyi Glass (00868) led the decline in blue chips. As of the close, it fell 9.59% to HK$9.33, with a turnover of HK$335 million, dragging down the Hang Seng Index by 3.3 points. Da Mo pointed out that driven by the improvement of industry profitability since the second quarter of last year, the operating capacity of China's glass industry has returned to 173,000 tons per day, which can meet the needs of 1.5 billion square meters of building floor completion. However, based on the calculation of the forecast of the national statistics department, the unit area completed this year is only 900 million square meters. The widening gap between supply and demand will continue to put pressure on glass prices and industry profits, especially in the second half of the year, and hurt Xinyi Glass's profitability. The bank downgraded its rating to "underweight" with a target price of HK$7.8 from HK$9.5.

In terms of other blue chips, WuXi AppTec (02359) rose 3.77% to HK$41.3, contributing 0.86 points to the Hang Seng Index, Xiaomi Group-W (01810) rose 3.2% to HK$19.98, contributing 17.08 points to the Hang Seng Index, Galaxy Entertainment (00027) fell 3.92% to HK$36.8, dragging the Hang Seng Index by 5.16 points, and Hang Lung Properties (00101) fell 3.62% to HK$7.98, dragging the Hang Seng Index by 0.83 points.

In terms of popular sectors

On the market, most of the large technology stocks rose, Bilibili rose more than 4%, Xiaomi Group rose more than 3%, Alibaba and Baidu both rose more than 1%; There is room for the current valuation center of high-quality higher education enterprises to be repaired, and education stocks are strong today; The new version of the U.S. bill introduced an 8-year exemption period, and CRO concept stocks rose; Sales are expected to improve in May, and auto stocks have generally rebounded. On the other hand, the rising momentum of coal prices is insufficient, and coal stocks are among the top decliners; Gaming stocks, photovoltaic stocks, domestic insurance stocks, etc. have fallen.

1. Education stocks are strong. At the close, Scholar Education (01769) rose 9.94% to HK$5.42, China Education Holdings (00839) rose 6.01% to HK$5.47, New Oriental-S (09901) rose 3.87% to HK$69.8, and Zhonghui Group (00382) rose 3.77% to HK$2.75.

Caitong Securities pointed out that in terms of K12, the Ministry of Education's "Regulations on the Administration of Off-campus Training (Draft for Comments)" was issued, clarifying the basic positioning of off-campus training as a useful supplement to school education. Zheshang Securities said that the endogenous growth of private higher education assets has been steady, the certainty of performance has been strengthened, the valuation has experienced the overall suppression of the education sector by the double reduction policy in 2021, and the global macro environment and Hong Kong stock liquidity in the past two years have led to the continuous decline in the valuation of the sector. Under the recovery of Hong Kong stocks, there is room for the current valuation center of high-quality higher education enterprises to be repaired.

2. Auto stocks generally rebounded. At the close, Great Wall Motor (02333) rose 7.4% to HK$14.22, Leapmotor (09863) rose 6.85% to HK$31.2, NIO-SW (09866) rose 4.58% to HK$42.2 and Geely Automobile (00175) rose 2.82% to HK$10.22.

According to the latest data released by the Passenger Car Association, in April, the national passenger car market retailed 1.532 million units, down 5.7% year-on-year and 9.4% month-on-month. However, there is still no shortage of bright spots in the market. In April, the national passenger car production was 1.988 million units, 18,000 units higher than the historical high in the same period in 2018, a record high. In April, the domestic retail penetration rate of new energy vehicles was 43.7%, an increase of 11.7 percentage points from the 32% penetration rate in the same period last year.

BOCOM International pointed out that the Beijing Auto Show held in late April and the government's trade-in policy will release part of the demand for car purchases. With the active promotion of major automakers, the order data during the May Day period is relatively satisfactory, and if the recovery trend continues, it is expected that the sales volume in May will improve month-on-month. The bank pointed out that although factors such as April sales data and U.S. tariff increases have a short-term impact on the industry, it believes that the impact of U.S. tariffs is limited, and the improvement of May sales data is expected to drive the sector to usher in a new wave of upward opportunities.

3. CRO concept stocks rose. At the close, GenScript Biotech (01548) was up 4.02% at HK$12.42, WuXi AppTec (02359) was up 3.77% at HK$41.3, WuXi Biologics (02269) was up 2.55% at HK$14.5 and Pharmaron (03759) was up 1.64% at HK$11.14.

Last Friday, local time, Brad R. Wenstrup, a Republican member of the U.S. House of Representatives, initiated a new version of the "Biosecurity Act" (H.R. 8333), and the U.S. House Oversight and Accountability Committee plans to hold a hearing on the evening of May 15 to discuss and vote on a number of bills, including the "Biosecurity Act" (H.R. 8333). It is worth noting that the new version of the Biosafety Act has added an 8-year exemption period.

Minsheng Securities believes that the updated version of the House of Representatives biosecurity bill sets an 8-year exemption period, and the negative risks of short-term overseas policies have landed. The bank believes that the addition of grandfathering clauses is conducive to the soft landing of CXO's overseas supply chain risks, and the sector may usher in valuation repair, coupled with the global investment and financing Q1 boost and domestic innovation policy support, the performance of the CXO sector will recover quarter by quarter in 2024.

4. Coal stocks were among the top decliners. At the close, Yankuang Energy (01171) fell 7.28% to HK$18.08, Shougang Resources (00639) fell 5.39% to HK$3.16, Yancoal Australia (03668) fell 4.4% to HK$30.4, and China Coal Energy (01898) fell 3.5% to HK$8.54.

Huatai Futures said that due to the impact of environmental protection and safety inspections, the production capacity of coal mines in the origin has shrunk, and coal prices have risen slightly. However, from the perspective of downstream demand, it is still in the off-season of coal consumption, the daily consumption continues to be low, the coal inventory of power plants is at the upper middle level, and the price of coal is not enough. In the medium and long term, it is necessary to pay attention to the degree of supply disruption under safety requirements, and at the same time pay attention to the consumption of non-thermal coal replenishment.

5. Domestic real estate stocks are lower across the board. At the close, Sunac China (01918) fell 3.62% to HK$1.33, Seazen Development (01030) fell 3.25% to HK$1.49, and R&F Properties (02777) fell 2.73% to HK$1.07.

China Securities Construction Investment pointed out that the full-caliber sales of the top 100 real estate companies in April were 340.1 billion yuan, down 13.3% month-on-month and 47.0% year-on-year, and the decline was slightly narrower than that of the previous month. Among the mainstream real estate companies, only Sunac achieved positive year-on-year sales growth, with a total of 8 positive month-on-month growth, a decrease of 21 from the previous month. The bank pointed out that the intensive relaxation of purchase restrictions is expected to provide strong support for demand, and the core cities and second-hand housing markets are expected to take the lead in recovery. Kaiyuan Securities also said that real estate sales and investment data have continued to be under pressure since 2023, the market is still in the process of adjustment, and the current home buyer confidence has not yet recovered.

Popular abnormal stocks

1. ESR (01821) resumed trading and rose sharply, up 26% to HK$12.6 as of the close.

ESR announced that on April 25, it received a non-binding conditional offer from a consortium, namely Starwood Capital Operations, L.L.C. (on behalf of Starwood), Sixth Street Partners, LLC (on behalf of certain of its affiliated investment funds and companies) and SSW Partners LP (on behalf of itself and its affiliated funds and entities) in connection with the possible privatization of the Company. Shareholders are expected to be able to choose to receive cash or transfer their shares to a future private company.

2. Tencent Music-SW (01698) strengthened after the results, up 7.93% to HK$59.2 as of the close.

Daiwa Research pointed out that the company's first-quarter earnings were 10% higher than market expectations, while gross margins were higher than expected and operating expenses were lower than expected. It is pleasing to note that the Group has declared its first annual dividend of US$0.0685 per ordinary share, or US$0.137 per ADS, representing a non-GAAP earnings payout ratio of 26% and a dividend yield of 1% last year, further enhancing shareholder returns.

3. Great Wall Motor (02333) extended its rally, up 7.4% to HK$14.22 as of the close.

Great Wall Motor's new energy vehicle brand Wei brand Mocha Hi4 was officially launched, and a total of one model was launched, with a price of 238,800 yuan. The new model is positioned as a mid-size new energy SUV and is equipped with a Hi4 electric four-wheel drive system, with a 0-100 km acceleration time of 4.7 seconds, a feed fuel consumption of 5.96 liters/100 km, and a CLTC pure electric range of 200 km.

4. CGN Mining (01164) continued to hit a new high, up 4.94% to HK$2.55 as of the close.

U.S. President Joe Biden signed a bill on the 13th to ban the United States from importing unirradiated low-enriched uranium produced in Russia. The market expects that the import ban signed by Biden may further stimulate the price of related products to continue to rise. According to the latest data from the Global Economic Indicators Network, on May 14, the international uranium price has risen above $92 per pound, a cumulative increase of 88.7% compared with the beginning of 2023.