Hong Kong stock review: Hengke index fell 1.92%, technology stocks generally fell, and restaurant stocks performed poorly

Net inflow of capital to the south was HK$1,822 billion throughout the day, with a market turnover of HK$108 billion

On April 12, Hong Kong stocks showed a one-sided decline throughout the day. The Hang Seng Technology Index fell 2.5% at the end of the session and closed down 1.92%. The Hang Seng Index and China Index fell 0.86% and 1.21% respectively. Market sentiment was relatively sluggish. The net daily inflow of capital from the South was HK$1,822 billion, and the market turnover was HK$108 billion.

On the market, large technology stocks generally fell, with Tencent falling more than 5%, Kuaishou falling nearly 4%, and JD, Meituan, and Alibaba falling more than 3%; the decline in mobile game stocks widened further in the afternoon. The NDRC plans to focus on supervising banquet packages of 1,500 yuan or more for a single table, and the performance of restaurant stocks was sluggish; as Ruisheng Technology's sharp decline dragged down Apple concept stocks, automobile stocks, lithium battery stocks, home appliance stocks, and photovoltaic stocks all fell. On the other hand, consumer electronics demand for chips has increased, and semiconductor stocks have performed well in the midst of weakness. SMIC surged about 6%, the property market picked up, domestic housing stocks continued to rise, and most of the heavy infrastructure stocks, petroleum stocks, and port shipping stocks rose, and all three barrels of oil rose.

Let's take a look specifically:

Technology stocks were sluggish across the board. Tencent Holdings plummeted by more than 5%, Kuaishou, JD, Ali, and Meituan fell more than 3%, and Bilibili, Xiaomi, and Baidu all closed down. According to the news, Prosus, the majority shareholder of Tencent, issued an announcement stating that it plans to carry out another repurchase. As part of the repurchase plan, Prosus will take action this week to move 96 million shares of Tencent shares into the Hong Kong Central Clearing System in the form of certificates, so that these stocks can be traded on the market in an orderly manner.

Mobile game stocks fell collectively, with Tencent falling more than 5%, Ober China and Hometown Interactive falling by more than 4%, and Tiange Interactive and Bilibili.

Catering stocks plummeted, with Helen's and Lippo China Resources falling more than 6%, Cuihua Holdings, Tehai International, and Jiumaojiu falling more than 4%, and Haidilao, Xiapu Xiapu, and Nai Xue's tea falling. However, Goldman Sachs believes that the March data was not as weak as some bearish investors feared. Additionally, the upcoming Labor Day holiday remains a key positive catalyst for the industry.

Semiconductor stocks strengthened. Jingyang Group rose 8%, SMIC and Jingmen Semiconductor rose more than 5%, and Huahong Semiconductor followed suit. Tianfeng Securities said that the large pre-trained model represented by GPT-4/ChatGPT may spur demand for AI server expansion in the future. In the future, with the market share of ChatGPT and the development of the application side, the demand for ChatGPT-like chips will be large and highly sustainable. In advanced manufacturing and packaging, it is recommended to focus on SMIC and others.

Heavy infrastructure stocks had the highest gains. Zhejiang Joint Investment rose more than 18%, Huazi International Marine rose more than 17%, and China Communications Construction and China Railway followed suit. According to the CITIC Securities Report, state-owned enterprises are the backbone and ballast stone of the national economy. The Chinese economy has entered a stage of high-quality development, and the valuation system also needs to adapt to the development of the times: (1) adjust industrial institutions, the “old economy” gradually decelerate, and the “new economy” gradually rise; (2) integrated development and security should be the foothold for constructing a valuation system with Chinese characteristics; (3) emphasize fair competition, develop multi-level capital markets, and create a favorable valuation environment for all kinds of enterprises.

Steel stocks strengthened. Angang Steel shares rose more than 5%, Maanshan Iron and Steel shares rose more than 3%, and Chongqing Iron and Steel shares and China Iron and Titanium followed suit. According to the CITIC Construction Investment Research Report, the profit situation of steel mills is expected to change in 2023Q2. First, expectations of strong raw materials are being reversed, and downward cost increases the profitability of steel mills. Second, the area of economic recovery is expanding, and endogenous momentum is gradually increasing. Third, under the low base effect, profit readings will clearly pick up year over year. Overall, the industry is currently at the bottom of profit and valuation, and there is plenty of room for upward recovery.

Ports and shipping stocks generally rose. Energy logistics in Asia rose by more than 16%, Tianjin Port Development rose by more than 5%, and COSCO Marine Energy and Qingdao Port followed suit. According to the latest Shanghai Container Export Index (SCFI) released by the Shanghai Shipping Exchange, the freight rate index for major east-west routes has rebounded. Shipping giant Evergreen further pointed out that with changes in international economic and trade relations, European freight volume has recently increased, while China's shipments on the eve of the May 1st holiday are expected to increase overall freight volume, which will help strengthen the market's revenue performance after shipping. COSCO Maritime Control pointed out that freight rates on some major routes in the shipping market have stabilized recently, but challenges and uncertainties still exist.

Looking ahead to the future market, I personally believe that due to the recent recovery in China's real estate market performance, the main investment line for economic recovery is expected to return to the market. Based on further verification of potential macroeconomic data, it is recommended to focus on: Internet, food and beverage, social services, medicine; real estate, banking, non-banking, building materials, home appliances, light industry, and non-ferrous metals.