{Economic Information Daily, 28th} Watching for a new round of U.S.-Iran talks and several重磅 U.S. economic data releases, half-day turnover on the main board reached nearly HK$94.8 billion but fell short of HK$100 billion. Stock Connect trading resumed, with some China-related stocks gaining favor. The Hang Seng Index closed the morning session at 24,666, up 156 points or 0.6%. The Hang Seng China Enterprises Index stood at 8,212, up 46 points or 0.6%. The Hang Seng Tech Index was at 4,288, down 23 points or 0.5%.
*Cheung Chi Wai: Without clear direction, Hong Kong stocks may continue to 'drift lower'*
With long-term U.S. bond yields remaining high, the Hang Seng Index saw a rebound in the morning session, supported by the resumption of northbound flows. Meanwhile, the U.S. rejected Iran's proposal to reopen the Strait of Hormuz, but reports indicate that U.S.-Iran talks will resume within this week. Cheung Chi Wai, Joint Director at Sun Hung Kai Financial, told Economic Information Daily that the Hang Seng Index is expected to hover around the 24,700 level in the near term, showing a pattern of 'high volatility without significant gains or losses'. He explained that the yield on U.S. 30-year Treasury bonds has risen to a high level of around 5.5%, making risk-free investment returns quite attractive, thereby reducing investors' willingness to allocate funds into equities. Additionally, recently released U.S. economic data showed inflation remains above the Federal Reserve's target, increasing the likelihood of another rate hike in October. This has shifted market focus from a previously expected December rate hike to a potential October hike, pushing bond yields higher and exerting downward pressure on Hong Kong stocks.
However, Cheung noted that international oil prices have retreated somewhat, with Brent crude falling below $100 per barrel. Coupled with the resumption of northbound flows today, which boosted overall market turnover, Hong Kong stocks received some support. Although Trump rejected Iran's negotiation proposal, the U.S. willingness to restart talks within the week is widely seen by the market as a negotiating tactic, increasing the likelihood of Trump 'TACO'ing again, thus causing oil prices to retreat accordingly. This has created a tug-of-war situation for the Hang Seng Index, with 'bond yields pulling down, oil prices propping up'.
Cheung also warned that today's northbound flow in the morning session remained relatively weak, while the overall market saw nearly HK$1 billion in outflows, indicating insufficient investor appetite for Hong Kong stocks. Moreover, northbound trading will be suspended again after the National Day holiday, further weakening support for Hong Kong stocks. If the market continues to lack a clear direction, it may enter a pattern of repeated weakness and 'drifting lower'.
*Battery swap agreement unlikely to change weak fundamentals of automakers*
Following Li Auto (02015), Xiaomi (01810), and other new automakers launching in-house battery development projects with other battery manufacturers, sparking market speculation on 'de-Ningde era', NIO (09866) announced it has entered into a formal agreement with certain subsidiaries of Geely Holding Group on strategic transactions related to battery swapping and charging. Geely's (00175) subsidiaries will contribute all equity in Yiyi Interconnected Technology (Chongqing) plus RMB 640 million in cash to subscribe for newly issued equity in NIO Energy. CATL (03750) fell 1.1%, closing at HK$483.80; Geely Automobile (00175) rose 1.8% to HK$15.88; NIO (09866) gained 1.4% to HK$28.44; Li Auto (02015) rose 1.5% to HK$45.90; Xiaomi (01810) dropped 0.8% to HK$25.70.
Cheung stated that the battery swap agreement between NIO and Geely, along with other new automakers launching in-house battery projects, primarily aims to reduce reliance on CATL as a single battery supplier. This helps avoid risks of sudden price hikes or supply disruptions from CATL, thereby enhancing battery supply stability and capacity, and achieving diversification in battery sourcing.
However, while this news slightly improves the operational stability of new automakers, the fundamental challenges facing Chinese automakers—intense domestic competition, pressured gross margins, and insufficient market demand—remain unimproved. At the same time, automakers must continue investing heavily in R&D for charging speed, range, and AI technologies, making it difficult to reduce costs. Cheung believes the outlook for Chinese automakers remains weak, and related stocks are still not recommended for positions in the short term.
For CATL, Cheung believes automakers' 'de-Ningde era' initiatives will continue to hurt its business. The market will continue to assess the extent of the impact, and the process of valuation recovery is far from complete. As long as such news continues to emerge, CATL's share price is likely to keep seeking a bottom.
Technically, Cheung believes CATL's share price has support around HK$447 to HK$450, the low level seen in late January this year. Investors looking to bottom-fish could consider accumulating shares gradually at this level. However, he cautioned that CATL is still in a 'passing the baton' phase, and its share price is unlikely to stabilize until news related to 'de-Ningde era' significantly diminishes. (am)
*Cheung Chi Wai: Without clear direction, Hong Kong stocks may continue to 'drift lower'*
With long-term U.S. bond yields remaining high, the Hang Seng Index saw a rebound in the morning session, supported by the resumption of northbound flows. Meanwhile, the U.S. rejected Iran's proposal to reopen the Strait of Hormuz, but reports indicate that U.S.-Iran talks will resume within this week. Cheung Chi Wai, Joint Director at Sun Hung Kai Financial, told Economic Information Daily that the Hang Seng Index is expected to hover around the 24,700 level in the near term, showing a pattern of 'high volatility without significant gains or losses'. He explained that the yield on U.S. 30-year Treasury bonds has risen to a high level of around 5.5%, making risk-free investment returns quite attractive, thereby reducing investors' willingness to allocate funds into equities. Additionally, recently released U.S. economic data showed inflation remains above the Federal Reserve's target, increasing the likelihood of another rate hike in October. This has shifted market focus from a previously expected December rate hike to a potential October hike, pushing bond yields higher and exerting downward pressure on Hong Kong stocks.
However, Cheung noted that international oil prices have retreated somewhat, with Brent crude falling below $100 per barrel. Coupled with the resumption of northbound flows today, which boosted overall market turnover, Hong Kong stocks received some support. Although Trump rejected Iran's negotiation proposal, the U.S. willingness to restart talks within the week is widely seen by the market as a negotiating tactic, increasing the likelihood of Trump 'TACO'ing again, thus causing oil prices to retreat accordingly. This has created a tug-of-war situation for the Hang Seng Index, with 'bond yields pulling down, oil prices propping up'.
Cheung also warned that today's northbound flow in the morning session remained relatively weak, while the overall market saw nearly HK$1 billion in outflows, indicating insufficient investor appetite for Hong Kong stocks. Moreover, northbound trading will be suspended again after the National Day holiday, further weakening support for Hong Kong stocks. If the market continues to lack a clear direction, it may enter a pattern of repeated weakness and 'drifting lower'.
*Battery swap agreement unlikely to change weak fundamentals of automakers*
Following Li Auto (02015), Xiaomi (01810), and other new automakers launching in-house battery development projects with other battery manufacturers, sparking market speculation on 'de-Ningde era', NIO (09866) announced it has entered into a formal agreement with certain subsidiaries of Geely Holding Group on strategic transactions related to battery swapping and charging. Geely's (00175) subsidiaries will contribute all equity in Yiyi Interconnected Technology (Chongqing) plus RMB 640 million in cash to subscribe for newly issued equity in NIO Energy. CATL (03750) fell 1.1%, closing at HK$483.80; Geely Automobile (00175) rose 1.8% to HK$15.88; NIO (09866) gained 1.4% to HK$28.44; Li Auto (02015) rose 1.5% to HK$45.90; Xiaomi (01810) dropped 0.8% to HK$25.70.
Cheung stated that the battery swap agreement between NIO and Geely, along with other new automakers launching in-house battery projects, primarily aims to reduce reliance on CATL as a single battery supplier. This helps avoid risks of sudden price hikes or supply disruptions from CATL, thereby enhancing battery supply stability and capacity, and achieving diversification in battery sourcing.
However, while this news slightly improves the operational stability of new automakers, the fundamental challenges facing Chinese automakers—intense domestic competition, pressured gross margins, and insufficient market demand—remain unimproved. At the same time, automakers must continue investing heavily in R&D for charging speed, range, and AI technologies, making it difficult to reduce costs. Cheung believes the outlook for Chinese automakers remains weak, and related stocks are still not recommended for positions in the short term.
For CATL, Cheung believes automakers' 'de-Ningde era' initiatives will continue to hurt its business. The market will continue to assess the extent of the impact, and the process of valuation recovery is far from complete. As long as such news continues to emerge, CATL's share price is likely to keep seeking a bottom.
Technically, Cheung believes CATL's share price has support around HK$447 to HK$450, the low level seen in late January this year. Investors looking to bottom-fish could consider accumulating shares gradually at this level. However, he cautioned that CATL is still in a 'passing the baton' phase, and its share price is unlikely to stabilize until news related to 'de-Ningde era' significantly diminishes. (am)
