[Market Dissection]
Today, Hong Kong stocks gapped up again, with a lot of recent gaps and significant gains, leading to a considerable amount of profit-taking, resulting in a sharp drop towards the end of the market, closing down 0.2%, with trading volume rapidly increasing to HKD 379.4 billion.
It's understandable to release some risk in advance, as the high point in October last year was 23,241 points, and today’s high reached 22,523 points. Moreover, there has been a lot of trapped positions accumulated earlier, making it difficult to break through directly.
U.S. inflation remains persistently high, with the seasonally adjusted CPI year-on-year recorded at 3% in January, the largest increase since June 2024, exceeding the market expectation of 2.9%. The core CPI, excluding food and energy costs, rose 3.3% year-on-year, higher than the expected 3.1%. On February 12, Federal Reserve Chairman Jerome Powell stated during a congressional hearing that the latest CPI data exceeded &#34;almost all expectations,&#34; and the Federal Reserve still has more work to do. He hinted that interest rates would remain high for the foreseeable future. Powell also directly mentioned that tariffs could influence the Federal Reserve's decisions. The latest market expectation is that there will only be one rate cut in the second half of the year. It is estimated that the U.S. stock market will also face difficulties in the coming days.
To address the inflation issue, on February 12, U.S. President Trump had phone calls with Russian President Putin and Ukrainian President Zelensky. After the calls, Trump stated that Ukraine joining NATO is unrealistic. Russian presidential spokesman Peskov indicated that Putin and Trump have instructed their working teams to begin preparations for a meeting between the two sides, with the time and place to be announced after progress is made. Peskov also stated that sanctions were not mentioned during the talks, and Putin's invitation for Trump to visit Russia does not mean Trump will participate in Russia's Victory Day events. This indicates that Trump is eager to resolve the Russia-Ukraine conflict, sidelining Europe and Ukraine, negotiating unilaterally with Russia. Trump's strategy is to negotiate with Ukraine to use its mineral resources in exchange for security guarantees, while giving up on territories occupied by Russia. On the other hand, he aims to win over Russia to gain control of the Nord Stream 2 pipeline, jointly dominate the energy landscape, control prices, and thus reduce inflation pressure. Meanwhile, he leaves the cleanup to Europe, such as asking Europe to send troops for security guarantees. This strategy seems well-calculated, effectively putting Ukraine and Europe on the table. Europe ends up as the big loser. The benefit for Russia is the lifting of U.S. sanctions and gaining land, but the major trade partner is Europe. Will European sanctions be lifted? It's all uncertain, and there are too many variables involved, making it a tough challenge for Trump to navigate.
At the World Governments Summit 2025 held in Dubai, UAE, on February 13, Alibaba co-founder and chairman Joseph Tsai confirmed the rumors of collaboration between Alibaba and Apple. Yesterday, I mentioned that the mystery has been unveiled. The market's performance speaks for itself; today, Alibaba's stocks continued to rise, with Alibaba (09988) up nearly 4% during the session, reaching a three-year high. Alibaba Health (00241) surged over 8% during the session, although both later retraced as the positive news was partially realized. Alibaba Pictures (01060) also saw a rise of over 7% due to the continued success of the &#34;Nezha&#34; box office
Under the strong offensive of DeepSeek, the AI industry in the United States can no longer sit still and has begun to unveil its own strategies. OpenAI has hinted at the launch of GPT-5, and Elon Musk has announced that Grok 3 may be released in the next week or two. On Thursday, at the 12th World Government Summit (WGS 2025) held in Dubai, Musk stated that Grok 3 is &#34;scarily smart&#34; and is currently in the &#34;final stage&#34; before release. The current situation is that if the U.S. does not come up with something substantial soon, investors may stop investing, and without follow-up funding, there will be no further developments. The story must continue.
Domestically, the competition is also heating up. Baidu (09888) announced today that Wenxin Yiyan will be fully free starting from midnight on April 1, allowing all PC and app users to experience the latest models in the Wenxin series. Additionally, Wenxin Yiyan will launch a &#34;deep search&#34; feature, which will also be available for free starting in April. Furthermore, there are rumors that Baidu plans to launch a new generation of AI large model &#34;Wenxin Large Model 5.0&#34; in the second half of this year. Under pressure, there is no way out without reform; Baidu's large model can only hope to find new profit models by allowing free usage. Today, it rose by 5.74%.
Competition is a good thing; large models will only get better and cheaper. The beneficiaries will be the application side. The U.S. company Applovin's Q4 2024 financial report is nearly perfect, with advertising revenue soaring by 73%, and the revenue guidance for Q1 2025 is better than expected. Similarly, HuiLiang Technology (01860) received a boost today by being included in the MSCI Global Small Cap Index, with the adjustment results effective after the close on February 28, 2025. Today, it surged over 12%. At the same time, the data center sector will also rise, with New Idea Network Group (01686) set to release its financial results for the first half of 2025 on February 25, 2025. Institutions expect the company's revenue to achieve high single-digit year-on-year growth, and EBITDA to achieve low double-digit year-on-year growth, mainly due to the contribution of the MEGA IDC project, with leasing demand for the MEGA IDC project being a key focus for the future.
Foreign Ministry spokesperson Guo Jia Kun stated that during the Year of the Snake Spring Festival, China's consumer market is bustling: the popularity of national trends, intangible cultural heritage experiences, the ice and snow economy, and the exchange of old consumer goods for new ones are unprecedented. Digital transformation and technological empowerment are giving rise to new consumption formats, and China's consumer market is achieving a transformation from &#34;quantity&#34; to &#34;quality.&#34; The supply and demand for &#34;foreign New Year goods&#34; are thriving, with tourists from both China and abroad &#34;heading in both directions.&#34; China's super-large-scale consumer market provides tremendous cooperation opportunities for countries. Guo pointed out that the prosperity of China's consumer market reflects not only a rebound in demand but also an increase in confidence in China's economic development from all sectors, reflecting the continuous optimization of China's economic structure, significant enhancement of internal driving forces, and increasing resilience in development. With the implementation of a package of incremental policies, China will inject stronger confidence and momentum into global economic growth through its own high-quality development and high-level opening up. Today, consumer-related stocks collectively strengthened, such as travel company Tongcheng Travel (00780), beverage company China Resources Beer (00291), and liquor company Zhenjiu Lidu (06979); as well as dairy company Mengniu Dairy (02319), among others
In terms of sectors, Macau's gaming stocks collectively strengthened. Leading player MGM China (02282) announced that in the fourth quarter of 2024, net revenue will be USD 1 billion, an increase of 4% from USD 983 million in the same quarter last year, mainly due to an increase in win rates leading to higher casino revenues compared to last year. For the entire year of 2024, net revenue is expected to be USD 4 billion, up 28% from last year's USD 3.2 billion; and the adjusted EBITDAR for this year is projected to be USD 1.1 billion, an increase of 25% from last year's USD 867 million. Given the poor performance last year, this result is considered better than expected, with a rise of over 6% today; it has directly changed the market's perception of gaming, with other companies like Melco International Development (00200) and Wynn Macau (01128) also rising over 3%.
In recent days, Meituan (03690) has been under pressure due to JD-SW (09618) announcing a &#34;zero commission&#34; recruitment of food and beverage merchants, directly competing for Meituan's delivery market share. In the short term, JD may attract attention through lower merchant commission fees and higher user subsidies, but referencing Douyin's previous attempt at food delivery, which ultimately did not succeed, it is evident that it is difficult to shake the market, as the food delivery market has already shown a duopoly structure, with Meituan holding about 70% to 80% market share, while the remainder is occupied by Alibaba's Ele.me. Moreover, Meituan is actively expanding its business footprint, with its KeeTa brand being the first to enter the Hong Kong and Middle Eastern markets. Today, Meituan rose nearly 3%.
The central bank released the 2024 fourth quarter report on China's monetary policy implementation. The report mentioned the need to implement a moderately loose monetary policy. It emphasized the comprehensive use of various monetary policy tools, adjusting and optimizing policy intensity and rhythm based on domestic and international economic and financial conditions and financial market operations, maintaining ample liquidity, and ensuring that the growth of social financing scale and money supply aligns with economic growth and overall price level expectations. We look forward to subsequent policy benefits being introduced.
【Sector Focus】
On February 12 local time, Mark Wilson, a partner and managing director at Goldman Sachs, published an article stating that investment opportunities in AI are shifting from the infrastructure level to the application level, and investment perspectives should break through the limitations of the US stock market's Magnificent Seven and American tech stocks, with China's robotics sector potentially becoming a new focus. Goldman Sachs holds this view for several reasons: 1. The Chinese robotics sector has performed exceptionally well, with the Chinese robotics stock portfolio soaring 39% over the past year, while the US robotics stock portfolio has only increased by 3% during the same period. 2. The application demand for AI is developing, as AI gradually enters the reasoning era, shifting investment opportunities from infrastructure to applications. Robotics, as one of the most commercially viable carriers of AI, is expected to benefit as AI applications become widespread. 3. Policy support is evident, as the National Development and Reform Commission has explicitly stated in the &#34;14th Five-Year Plan&#34; that it aims to break through key technologies in intelligent robotics, strengthen core technology breakthroughs, and accelerate the promotion and application of intelligent manufacturing equipment and systems. The Ministry of Industry and Information Technology has also released policies indicating that humanoid robots should achieve mass production by 2025. 4. The market potential is enormous, with Goldman Sachs predicting that by 2035, global shipments of humanoid robots will reach 1.4 million units, with a market size of approximately USD 38 billion. China holds 70% of the world's industrial robots, possessing a certain industrial foundation and development advantage in the robotics field
Main varieties of the Hong Kong stock market: UBTECH (09880), SOTON (02498), MicroPort (02252).
【Stock Picking】
China Literature Group (00772): Integration of DeepSeek will enhance creative capabilities and significant progress in IP business
China Literature Group announced that its writer assistance product, Writer Assistant, has integrated the independently deployed DeepSeek-R1 large model, marking the first application of DeepSeek in the online literature field. After integration, Writer Assistant will upgrade in three areas: intelligent Q&amp;A, inspiration acquisition, and description refinement.
Comment: The introduction of DeepSeek will further enhance the technological strength and service capabilities of the China Literature platform. The IP business has made significant progress, and the online reading business remains stable, leading to a substantial increase in overall revenue and profitability for China Literature Group. The company is committed to building a card ecosystem for the China Literature IP universe, with the card series launched in film and television, such as &#34;With the Phoenix&#34; and &#34;Celebrating More Years,&#34; achieving good results. The company also has a pipeline for anime card development and the capability for global card distribution. In the first half of 2024, the GMV of China Literature Group's IP cards totaled approximately RMB 100 million. In terms of business layout, China Literature Group mainly has three business segments: online reading (including self-owned platform products and self-operated channel online reading, as well as online reading on third-party platforms), copyright operation, and others. In the first half of 2024, these three segments accounted for 46.30%, 52.56%, and 1.14% of the company's revenue, respectively. In terms of copyright operation, China Literature Group launched many popular film and television works in the first half of 2024, achieving commercial success, such as the movie &#34;Hot and Spicy,&#34; the TV series &#34;With the Phoenix,&#34; &#34;Celebrating More Years Season 2,&#34; and &#34;The Story of Roses.&#34; In 2024, the number of new writers on the China Literature platform with annual income exceeding 500,000 increased significantly, by over 70%; at the same time, new books with 50,000 subscriptions saw a year-on-year increase of 50%, and new books with annual income exceeding 1 million grew by 14% year-on-year. In 2025, China Literature Group is expected to achieve a valuation reassessment in the continuously growing content market, leveraging the synergistic development of multiple businesses such as film and television, anime, and derivatives, along with its deep accumulation in content creation and IP development.
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Today, the Hong Kong stock market opened with a gap and closed down 0.2%, with a trading volume of HKD 379.4 billion. The market is facing profit-taking pressure, and the previous high of 23,241 points is difficult to break through. U.S. inflation remains high, with the CPI annual rate reaching 3%. Federal Reserve Chairman Jerome Powell stated that interest rates will remain high. Trump spoke with Putin and Zelensky, attempting to resolve the Russia-Ukraine conflict, hinting at his diplomatic strategy

- Hong Kong stocks experienced a gap down today, closing down 0.2% with trading volume increasing to 379.4 billion.  
- U.S. inflation remains high, with January's CPI at 3%, prompting Fed Chair Powell to indicate that interest rates will stay elevated for the foreseeable future.  
- In the U.S., President Trump is seeking to resolve the Russia-Ukraine conflict while aiming to control energy prices, which could impact global economic dynamics.

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