According to the Zhongtong Financial APP, Hong Kong stocks failed to continue the strong upward trend from last Friday, and the three major indexes collectively declined under pressure. The Hang Seng Index and H shares both fell more than 1%, while the Hang Seng Tech Index fell more than 2%. At the close, the Hang Seng Index fell 1.65% or 297.1 points to 17,691.97 points, with a total daily turnover of HKD 112.889 billion; the Hang Seng China Enterprises Index fell 1.89% to 6,211.61 points; and the Hang Seng Tech Index fell 2.08% to 3,486.4 points.

CICC pointed out that market opportunities in a certain stage do not mean a trend reversal. In the medium and long term, the decisive factors for the trend of A-shares and Hong Kong stocks still depend on whether the domestic fundamentals and policies can make greater progress. Under the current situation, although there may be marginal improvements in policies in the third quarter, the focus of the year may still be on implementing existing policies. The Ministry of Finance recently emphasized the need to "strongly prevent policies and new projects that exceed fiscal capacity". Although the endogenous driving force of economic growth is still weak, expecting "strong stimulus" is still not realistic.

Blue chip performance

Xinyi Solar (00968) led the blue chips higher. At the close, it rose 2.95% to HKD 3.14, with a turnover of HKD 0.192 billion, contributing 0.69 points to the Hang Seng Index. The company achieved an income of approximately HKD 12.687 billion in the first half of the year, a year-on-year increase of 4.5%; attributable net profit to shareholders was approximately HKD 1.963 billion, a year-on-year increase of 41.0%; and the interim dividend per share was 10 Hong Kong cents, with a payout ratio of 45.4%. The gross margin of the company's photovoltaic glass in the period was 21.5%, an increase of 6.3 percentage points compared to the same period last year.

In other blue-chip news, Zhongsheng Holdings (00881) rose 2.79% to HKD 9.2, contributing 0.35 points to the Hang Seng Index; China Resources Power (00836) rose 1.18% to HKD 21.45, contributing 0.78 points to the Hang Seng Index; Wharf Real Estate (01997) fell 5.05% to HKD 21.6, dragging down the Hang Seng Index by 3.09 points; and Bud Apac (01876) fell 4.58% to HKD 8.55, dragging down the Hang Seng Index by 1.32 points.

Hot sectors

On the market, large technology stocks are all down, with Alibaba falling more than 2% and Tencent falling more than 1%. State-owned construction enterprises' net profit attributable to the parent company in the second quarter is mostly under pressure, with infrastructure stocks leading the decline; the sales of the top 100 real estate companies continue to bottom out in August, with mainland real estate and property management stocks plunging; spot gold has fallen below the $2500 mark, and gold stocks have collectively fallen; CRO concepts, beer stocks, semiconductor stocks, nonferrous metal stocks, and auto stocks have all declined. On the other hand, the electric two-wheeler concept is positively affected by policies, and Tianneng Power has risen more than 17%; some education stocks, photovoltaic stocks, and coal stocks have risen.

1. Infrastructure stocks lead the decline. As of the close, China Communications Construction (01800) fell 7.59% to HKD 4.38; China Railway Construction (01186) fell 6.8% to HKD 4.66; China Railway (00390) fell 5.52% to HKD 3.42; Metallurgical Corporation of China (01618) fell 2.92% to HKD 1.33.

Gtja pointed out that the net income of the parent companies of construction in the second quarter was mostly under pressure, and the decrease widened compared to the previous quarter. The bank pointed out that in the second quarter, the profit of China State Construction Engineering Corporation is growing and accelerating compared to the previous quarter, while the net income of other central enterprises in the second quarter has decreased year-on-year and the decline has widened. Improvement in funding is expected to bring about improved performance in the third quarter.

Soochow Securities stated that the PMI of the construction industry in August decreased by 0.6 percentage points month-on-month to 50.6%, still in the expansion range. On the one hand, it was affected by weather factors such as high temperature and heavy rain during the summer, which slowed down construction activities. On the other hand, it was also affected by the adjustment of the real estate cycle. In recent months, high-frequency data has shown a decline in real estate sales, which has to some extent affected the performance of the construction industry. The slow pace of fiscal policy has also affected the growth of infrastructure investment.

2. Mainland real estate and property management stocks significantly declined. As of the close, Sino-Ocean Group (03377) fell 14.55% to HKD 0.235; C&D International Group (01908) fell 6.97% to HKD 11.74; CG Services (06098) fell 6.94% to HKD 4.16; Sunac China (01918) fell 4.9% to HKD 0.97.

According to data from the China Index Research Institute, the sales of the top 100 real estate companies from January to August this year totaled 2683.24 billion yuan, a year-on-year decrease of 38.5%, narrowing by 1.6 percentage points from the previous month. In August, the monthly sales of the top 100 real estate companies decreased by 22.1% year-on-year, a decrease of 2.43% from the previous month. According to data from CREIS, in August, the top 100 real estate companies achieved a total contract sales amount of 251.2 billion yuan, a 10% decrease from the previous month, and the monthly performance continued to be at a historically low level.

In addition, as of August 30, 2024, more than 100 A-share and H-share real estate companies have released their mid-year performance announcements. According to monitoring data from the China Index Research Institute, in the first half of the year, the average operating income of 105 A-share and H-share real estate companies was 11.591 billion yuan, a year-on-year decrease of 13.00%; the average net profit was 0.145 billion yuan, a year-on-year decrease of 82.05%. The operating income of 72 companies decreased year-on-year, the net profit of 87 companies decreased year-on-year, and 50 real estate companies had losses, of which 24 had losses for the first time since the epidemic.

3. Gold stocks collectively declined. As of the close, China Gold International (02099) fell 7.87% to HKD 34.55; Lingbao Gold (03330) fell 3.04% to HKD 2.87; Shandong Gold (01787) fell 2.52% to HKD 14.7; Zijin Mining Group (02899) fell 1.52% to HKD 15.58.

Spot gold fell below the $2500 mark. Last Friday, the US core PCE price index for July was released, showing a year-on-year increase of 2.6%, consistent with the previous month, slightly below the market expectation of 2.7%; a 0.2% increase from the previous month, in line with expectations. Expectations for a significant rate cut by the Fed in September weakened, leading to a rebound in the US dollar index and putting pressure on precious metals. Minmetals Futures believes that the current market expectations for Fed monetary policy have been fully reflected in gold and silver prices. As of the current pricing, the market foresees a total rate cut of 100 basis points by the Fed by the end of the year, which Minmetals considers relatively high. There is potential for gold prices to decline based on expectations regarding monetary policy.

4. The electric two-wheeler concept receives policy support. As of the time of this report, Tianneng Power (00819) rose by 14.18% to HK$6.36; Chaowei Power (00951) rose by 4.41% to HK$1.42. Yadea Holdings (01585) surged over 6% in early trading.

The Ministry of Commerce and 5 other departments have issued the 'Implementation Plan for Promoting the Replacement of Old Electric Bicycles with New Ones,' organizing compliant electric bicycle manufacturers to participate in the trade-in program for consumer goods. In addition, considering that lead-acid batteries account for nearly 80% of electric bicycle batteries in recent years, and they have good safety and low prices, this policy will provide additional subsidies to consumers who replace old lithium-ion battery-powered bicycles with lead-acid battery-powered ones.

According to Bocom International, batteries are the largest cost component of electric two-wheelers, accounting for around 30% of manufacturing costs, with a relatively concentrated supply chain. The market share of the two leading suppliers, Chaowei and Tianneng, exceeds 70%. Guolian Securities stated that the industry is beginning to implement a white list system, with only 6 out of over a hundred manufacturing companies making it to the initial white list, including 3 Yadea entities. In addition, starting in August, the nationwide phased implementation of the old-for-new policy is expected to stimulate demand, with subsidies likely to be biased towards white-listed companies.

Popular fluctuating stocks

1. Greentown Management soared throughout the day, closing with a 7.83% increase at HK$3.03.

Greentown Management announced that recently, the company's joint chairmen and non-executive directors Guo Jiafeng and Zhang Yadong, executive director and CEO Wang Junfeng, and several other mid- to high-level management members informed the board and management that they collectively purchased a total of 15.452 million shares of the company's common stock on the open market with their own funds from the 26th to the 30th of last month.

2. China Resources Gas showed strength after its performance, closing with a strong 7.79% increase at HK$28.35.

Citi's research report pointed out, reiterating a 'buy' rating on China Resources Gas, and continues to rank it as the preferred choice in China's gas industry. The report stated that the net profit of China Resources Gas in the first half of the year fell by 2.5% year-on-year to 3.457 billion yuan; excluding the 0.694 billion yuan in discontinued profit from the first half of last year, the net profit for the first half of this year increased by 21.2% year-on-year. First-half profits exceeded market expectations. Due to more cash flow, the target price was raised by 1.6% to 32.5 Hong Kong dollars.

3. Zeros Run Auto (09863) continued its upward trend, closing up 5.57% at 22.75 Hong Kong dollars.

Zeros Run Auto recently announced delivery data for August. Deliveries in August reached 30,305 units, hitting a historical high, with a year-on-year growth of over 113% and a month-on-month growth of over 37%; among them, SUV family deliveries accounted for over 72% of Zeros Run Auto, and C16 deliveries exceeded 8,000 units; with strong product strength and a steady development strategy, Zeros Run quickly became the third new car force to break monthly sales of 0.03 million units.

4. China Merchants Port (00144) significantly rose, closing up 5.3% at 12.32 Hong Kong dollars.

China Merchants Port announced its interim performance for 2024, with revenue of 5.795 billion Hong Kong dollars, a decrease of 0.17% year-on-year; profit attributable to equity holders of the company increased by 32.9% to 4.452 billion Hong Kong dollars; interim dividend of 25 Hong Kong cents per share, compared to 22 Hong Kong cents in the same period last year. During the period, the group's port projects handled a total container throughput of 71.77 million TEU, a year-on-year increase of 7.9%.