[Editor's View]

Due to the lack of groundbreaking bullish news in the market, the Hang Seng Index could only maintain a sideways trend last week.

According to CCTV reports: Israel launched a second round of attacks on Iran, mainly targeting military targets and power plants, without hitting Iran's oil fields and nuclear facilities, indicating a desire to avoid escalation. Subsequent developments will depend on Iran's response.

Investors' reduced expectations of a Fed rate cut have sparked a fierce selling spree in the U.S. bond market. This week, yields on 2-year, 5-year, 10-year, and 30-year U.S. Treasuries have all risen, with the 10-year yield reaching its highest point since July, causing a significant impact on global markets.

Central Huijin increased its holdings of 4 Shanghai and Shenzhen 300 ETFs by over 270 billion yuan in the third quarter. On the first day of issuance, the ZC-A500 offline fund sold over 20 billion yuan, clearly showing an important force in maintaining market stability. However, recent outflows of foreign capital should also be noted.

In terms of data, the National Bureau of Statistics reported a 3.5% decline in profits for national industrial enterprises above a designated size from January to September. This indicates that the economy has not yet shown signs of improvement. Deputy Minister of Finance Liao Min stated that China is confident in achieving an annual economic growth target of around 5%.

It's sensitive time again at the end of the month, often a turning point, pay attention to China's official PMI and Caixin PMI this week, as well as the key US non-farm data on Friday, which has a significant impact on the interest rate cut in November.

Currently, there are relatively few speculative themes in the market, apart from restructuring and fundamentally improving photovoltaics, lithium batteries, new energy, and pharmaceuticals at low levels. Stimulating news includes autos and low altitude.

[This week's hot stocks]

Aluminum Corporation of China (02600)

Recently, China Aluminum Shandong and China Aluminum International and Shandong Engineering have signed a capital increase agreement, whereby China Aluminum International and China Aluminum Shandong agreed to increase capital to Shandong Engineering by a total of 0.5 billion yuan in cash, with China Aluminum International contributing 0.3 billion yuan and China Aluminum Shandong contributing 0.2 billion yuan. Aluminum Corporation of China's half-year net profit increased by 105% to 7.02 billion yuan.

Through this capital increase, the company has maintained its leading advantage in the industry for fine alumina products, enhancing product competitiveness. From this year's performance, the company has achieved its best historical levels, with various business sectors such as alumina, primary aluminum, marketing, and energy generation showing growth. Aluminum Corporation of China's half-year net profit far exceeded expectations, mainly due to increased profits from alumina. Second-quarter net profit of Aluminum is expected to increase by 166% year-on-year to 4.3 billion to 5.1 billion yuan, with a quarterly growth of 91% to 127%. Tight supplies of aluminum ore in Shanxi and Henan, and falling raw material inventory levels at smelters provide support for alumina prices, with aluminum prices expected to fluctuate at high levels. Aluminum Corporation of China's profits in the second half of the year are expected to improve.

The company's main products have seen a significant increase in production, with metallurgical grade alumina at 8.2 million tons, fine alumina at 2.07 million tons, and primary aluminum at 3.63 million tons, among others. Equipment operation rates and cost control have both significantly improved, with cost control within budget levels. The company's future capital expenditure is expected to be between 10 billion and 20 billion over the next three years, prioritizing financial resources for strategic investment projects. The company places a high importance on shareholder returns, aiming to increase profitability and dividends. The mid-term dividend in 2024 will be 0.82 yuan per 10 shares, with dividends expected to continue to increase.

[Industry Observations]

On October 22, Huawei officially released HarmonyOS 5.0 (HarmonyOS NEXT). In addition to the three models tested on October 8, three more models are now added to support the public test, and more models will be added in 2025. HarmonyOS 5.0 improves fluency by 30% over 4.2, extends battery life by 56 minutes; through a new distributed soft bus, it achieves 3 times the connection speed, 4 times the number of connected devices, and 20% power optimization.

Harmony 5.0's ecosystem is accelerating into the fast lane. The Harmony development kit improves developer efficiency, deep integration and optimization with native intelligence and app stores. As of October 22, 2024, there are already over 0.015 million applications and meta-services available on the native Harmony app market.

HongmengOS 5.0 has evolved comprehensively, achieving its biggest upgrade since its inception. Since 2019, HarmonyOS has gone through 4 generations, and is about to usher in the biggest revolution - HarmonyOS 5.0 truly achieves native delicacy, native interconnectivity, native intelligence, native security, and native fluency.

The penetration rate of HarmonyOS is increasing and the software ecosystem is accelerating, bringing development opportunities to Harmony partners. It is recommended to pay attention to ChinaSoft International (00354) and others in the Hong Kong Stock Exchange.

[Data Review]

Data released by the Hong Kong Stock Exchange shows that the total number of open contracts for Hang Seng Index (October) is 87,591 contracts, with a net open interest of 29,737 contracts. The settlement date for the Hang Seng Index is October 30, 2024, for this settlement period.

Looking at the distribution of long and short positions in the Hang Seng Index, at the 20,590 point level, the area of long and short warrants is close to the axis, and the Hang Seng Index is gathering momentum around 0.02 million points. Trump's trade war has heated up, with the yield on the U.S. ten-year Treasury bonds skyrocketing from 3.74% at the beginning of October to 4.20%, questioning the need for the Federal Reserve to continue lowering interest rates. The Hang Seng Index is bearish this week.

Editor's Note:

The performance of QDII funds focusing on Hong Kong stocks in the third quarter was generally good. QDII funds with a year-to-date return of over 30% mainly held shares in internet and new consumer sectors such as Meituan, Alibaba, Tencent, PDD Holdings, Ctrip, and Pop Mart. The underperforming QDII funds this year were mainly due to excessive concentration in sectors such as pharmaceuticals and new energy autos. In terms of portfolio adjustments, Zhang Kun, the manager of E Fund Blue Chip Select, bought Alibaba (09988) into the top ten holdings in the third quarter, ranking as the second largest heavy-weight stock. After the market reversal, the proportion of fund managers holding optimistic views on the future of Hong Kong stocks significantly increased, while the focus on Hang Seng Technology Internet-related stocks also increased, with a marginal decline in interest towards high-yield and dividend stocks.