The Hang Seng Index declines, with net inflow from northbound capital exceeding 9.6 billion; Alibaba and NetEase weaken

Affected by the decline of Chinese technology stocks, the Hang Seng Index fell today (30th). The U.S. Federal Appeals Court approved the Trump administration's request to suspend a lower court ruling, temporarily restoring Trump tariffs. The Dow Jones and Nasdaq rose 0.3% and 0.4% respectively on the night of the 29th. At the time of writing, the yield on U.S. 2-year bonds rose to 3.949%, the yield on U.S. 10-year bonds rose to 4.438%, and the U.S. dollar index rose 0.31% to 99.59. Dow futures fell 26 points or 0.06%, and Nasdaq futures fell 0.2%. The Shanghai Composite Index fell 15 points or 0.47% to close at 3,347 points, while the Shenzhen Component Index fell 0.9%. The total trading volume of the Shanghai and Shenzhen stock markets reached nearly 1.14 trillion yuan.

Hong Kong stocks fell throughout the day, with the Hang Seng Index opening down 233 points and dropping 410 points before noon, reaching a low of 23,163 points. It closed at 23,289 points, down 283 points or 1.2%; the Hang Seng China Enterprises Index fell 127 points or 1.49% to close at 8,432 points; the Hang Seng Tech Index fell 131 points or 2.48% to close at 5,170 points. The total trading volume for the market increased nearly 20% day-on-day to 271.563 billion yuan. The MSCI index quarterly review will take effect after today's market close. Southbound funds had a net purchase of 9.647 billion yuan today (compared to a net purchase of 4.382 billion yuan the previous day). Apple concept stocks were sold off, with BYD Electronics (00285.HK) falling 6% for the day, and Sunny Optical (02382.HK) and AAC Technologies (02018.HK) falling 4.7% and 4.3% respectively. BYD (01211.HK) fell nearly 3.3%.

The Hang Seng Index has fallen a total of 311 points or 1.3% this week, the Hang Seng China Enterprises Index has fallen a total of 151 points or 1.8%, and the Hang Seng Tech Index has fallen a total of 76 points or 1.5%. In May, the Hang Seng Index rose a total of 1,170 points or 5.3%, the Hang Seng China Enterprises Index rose a total of 355 points or 4.4%, and the Hang Seng Tech Index rose a total of 83 points or 1.6%. The market is focused on developments regarding U.S. President Trump's "reciprocal tariffs" and the progress of trade negotiations between the U.S. and China, as well as other countries.

【Tech Stocks Down, Alibaba and NetEase Weak】

Tech stocks fell, with Alibaba (09988.HK) declining 3.6% to close at 113.9 yuan, and Tencent (00700.HK) falling 2.4%. NetEase (09999.HK) fell 4.7%. The adjustment of the MSCI China Index will take effect after the market close, with CICC indicating that NetEase's index weight will decrease by 0.175%, likely resulting in significant outflows of passive funds. Additionally, Baidu (09888.HK) is expected to see its index weight decrease by 0.03%, with Baidu's stock price falling 3.7% for the day.

Goldman Sachs published a report on the Chinese internet industry, stating that recent investors have mainly focused on food delivery competition, e-commerce reinvestment, and beneficiaries of AI applications. Regarding the competition in the domestic food delivery industry, what will be the future development path and final landscape? The bank estimates that the incremental subsidies from JD-SW (09618.HK), Meituan-W (03690.HK), and Alibaba's Ele.me have pushed the order volume growth in the food delivery industry from single digits to over 30% year-on-year, enhancing service consumption (along with the government's "trade-in" plan boosting product consumption) and created hundreds of thousands of new daily rider job opportunities. The bank estimates that JD.com's new business EBIT loss in the second quarter of this year will be RMB 10 billion (previously forecasted at RMB 7 billion), and expects Meituan's food delivery business profit to decline by RMB 5 billion to 6 billion year-on-year (indicating a year-on-year drop of about 53%).

The bank believes that the market may underestimate JD.com's determination to use food delivery as a new source of traffic acquisition (relative to its annual marketing budget of RMB 50 billion, most of which is used for customer acquisition, as JD.com's daily active user scale and frequency are relatively disadvantaged compared to peers), as well as Alibaba's investment scale in this business, thus underestimating the potential duration of competition in the mainland food delivery market.

【Over 1,200 stocks fell, with CSPC Pharmaceutical in demand】

The Hong Kong stock market turned weak today, with a rise and fall ratio of 17 to 29 for main board stocks (compared to 32 to 15 yesterday), with 1,209 stocks declining (a drop of 2.5%). Today, 21 constituent stocks of the Hang Seng Index rose, while 60 fell, with a rise and fall ratio of 25 to 72 (compared to 78 to 18 yesterday). The market recorded short selling of HKD 37.553 billion today, accounting for 14.883% of the total turnover of shortable stocks of HKD 252.321 billion (compared to 16.909% yesterday).

CSPC Pharmaceutical (01093.HK) is negotiating three potential transactions, with a total potential down payment of about USD 5 billion, and its stock price rose 6.3% throughout the day, making it the best-performing blue-chip stock.

Citigroup released a report stating that CSPC's performance in the first quarter was weak, with revenue down 21.9% year-on-year and profit down 8.4%. Management expects to achieve quarter-on-quarter growth in the remaining quarters of this year. The group announced that it is negotiating with independent third parties regarding three potential transactions involving the development, production, and commercialization licensing and cooperation of its products. Based on its reasonable valuation and the continuous re-evaluation potential of its high-quality innovative drug pipeline, Citigroup believes that these transactions could become important catalysts for CSPC, expecting more product licensing collaborations in the future, raising revenue forecasts for 2026 and 2027 by 3% and 2%, respectively. Due to the expected decline in sales expenses, it raised the earnings per share forecasts for 2025 to 2027 by 4%, 5%, and 5%, respectively, and raised the target price from HKD 9 to HKD 9.2, maintaining a "Buy" rating