"Market Review" Hong Kong stocks retreat, net inflow of Northbound funds decreases by 70%, KUAISHOU-W rebounds nearly 6% after earnings

Hong Kong stocks fell today. The market is focused on the progress of trade negotiations between Europe and the United States. The Dow Jones and Nasdaq rose 1.8% and 2.5% respectively overnight. At the time of writing, the yield on the 2-year U.S. Treasury bond fell to 3.959%, while the yield on the 10-year U.S. Treasury bond rose to 4.471%. The U.S. dollar index rose 0.04% to 99.56. The latest Dow futures fell 94 points or 0.22%, and Nasdaq futures fell 0.2%. The Shanghai Composite Index closed down less than 1 point or 0.02% at 3,339 points, while the Shenzhen Component Index fell 0.26%. The total trading volume of the Shanghai and Shenzhen stock markets was 1.01 trillion yuan.

Hong Kong stocks were slightly weaker today, with the Hang Seng Index opening up 3 points, initially rising 94 points to a high of 23,476 points before retreating. In the afternoon, it fell 201 points to a low of 23,180 points, closing down 123 points or 0.5% at 23,258 points. The Hang Seng China Enterprises Index fell 26 points or 0.3% to close at 8,443 points, and the Hang Seng Tech Index fell 7 points or 0.2% to close at 5,174 points. The total trading volume for the day was 180.816 billion yuan. Meanwhile, southbound funds recorded a net purchase of 3.578 billion yuan today (compared to a net purchase of 11.975 billion yuan the previous day), a decrease of 70% from the previous day's inflow. Hong Kong Exchanges and Clearing (00388.HK) fell 1.8%.

MIXUE (02097.HK) and Pop Mart (09992.HK) saw their stock prices drop sharply by 5.5% and 7.1% respectively, while Alibaba Pictures (01060.HK) surged by 11.5%. The newly listed stock Hengrui Medicine (01276.HK) rose 4.7% to 57.5 yuan, and CATL (03750.HK) increased by nearly 1% to close at 312 yuan.

【Northbound Capital Inflow Decreases, Pop Mart Drops】

Pinduoduo (PDD.US) reported a 10% year-on-year increase in revenue for the first quarter to 95.67 billion yuan, far below the market expectation of 103.13 billion yuan. Net profit fell 47% to 14.74 billion yuan, leading to a 13.6% drop in Pinduoduo's stock price overnight. Alibaba (09988.HK) saw its stock price decline by 1.9% today (28th), closing at 115.7 yuan.

Bank of China International released a report stating that Pinduoduo's first-quarter performance was below expectations, with net profit under non-GAAP accounting standards falling 45% year-on-year, lower than the bank's and market's general expectations. This is believed to be due to intensified market competition and Pinduoduo providing substantial support measures to merchants, resulting in a short-term decline in profit margins. With the annual 618 shopping festival approaching, the bank expects Pinduoduo's profit margins to continue to be under pressure in the second quarter, downgrading its investment rating to "Hold" and lowering the target price from $150 to $98, while also reducing profit forecasts for 2025 to 2027.

【Short Selling Rate Falls, KUAISHOU-W Rises After Earnings】

The Hong Kong stock market showed slight weakness today, with a rise-and-fall ratio of main board stocks at 21 to 24 (compared to 26 to 20 the previous day). Among the constituent stocks of the Hang Seng Index, 40 stocks rose and 40 fell, with a rise-and-fall ratio of 48 to 48 (compared to 62 to 34 the previous day) The market recorded short selling of HKD 29.335 billion today, accounting for 18.405% of the total turnover of shortable stocks at HKD 159.38 billion (compared to 20.709% the previous day).

Xiaomi (01810.HK) reported a 65% increase in non-International Financial Reporting Standards net profit for the first quarter, exceeding expectations, with the stock price rising 0.4% to HKD 51.75. KUAISHOU-W (01024.HK) saw a 4% increase in non-International Financial Reporting Standards net profit for the first quarter, and the company is confident of double-digit growth in online advertising revenue in the second quarter, with the stock price rising 5.9% to HKD 51.65.

Goldman Sachs released a report stating that KUAISHOU-W's first-quarter performance met expectations and believes that the growth momentum for the remainder of the year remains positive. Its advertising and GMV growth rates outpace the industry, the trend is gradually improving in the second quarter, and its solid position in the field of artificial intelligence applications may become potential drivers for stock price revaluation. The firm raised KUAISHOU-W's target price from HKD 62 to HKD 63, maintaining a "Buy" rating. The firm indicated that due to better performance reflecting live streaming business and other service revenues, as well as being driven by monetization of generative AI, it slightly raised its revenue forecasts for KUAISHOU-W from 2025 to 2027 by 0.7% to 1.1%. Additionally, considering AI-related investments (including R&D and sales and marketing expenses), it lowered its net profit margin forecasts for 2025 to 2027 by 0.5 to 0.3 percentage points