[Anatomy of the Market]
Recently, the performance of A-shares has been stronger than that of Hong Kong stocks. Yesterday, there was an active offensive, but later it was dragged down by Hong Kong stocks. However, today it continued to rise, with the Shanghai Composite Index breaking through the 3,500-point mark, and Hong Kong stocks were also encouraged, rising 0.57% today.
The U.S. stock market is now immune to the Federal Reserve, as there is a general consensus that interest rates will be cut as early as September, followed by another cut in December, which is a relatively stable expectation. What everyone is more concerned about is Trump's stance: the Federal Reserve's interest rates are at least 3 percentage points too high.
After feeling the pressure from rare earths, the U.S. has turned its attention to Africa. On July 9, local time, Trump met with the leaders of Gabon, Guinea-Bissau, Liberia, Mauritania, and Senegal at the White House, stating that the U.S. would shift its attitude towards the African continent from aid to trade, claiming that the U.S. is a better partner for Africa than China. The five invited African countries are rich in natural resources, including manganese, iron ore, gold, diamonds, lithium, and cobalt, which are crucial for current technological applications. In simple terms, the U.S. is trying to expand its access to key mineral resources through agreements and counter China's influence on the African continent. It is a natural thought to try to break free from dependence on each other, but realizing this now is too late. It must be said that our early layout in Africa was a very wise move. Additionally, in Southeast Asia, in countries like Indonesia and the Philippines, the layout in the aluminum, nickel, and copper industries, such as China Aluminum (02600) and China Hongqiao (01378), is also noteworthy.
Why has CATL (03750) been so popular recently? Besides being a giant with core competitiveness, it is also related to its acquisitions and layouts of lithium mines overseas in North America, Africa, Bolivia, and Indonesia. Of course, there are other factors, such as the A-shares having reached their buying limit, and during the Hong Kong IPO, a large number of shares were locked by anchor investors until November, leading to limited circulating shares. At the same time, most of the circulating shares in the market have been borrowed for short selling, leaving almost no additional shares available for borrowing, forcing short sellers to cover their positions recently, creating a short squeeze effect that further drives up the stock price.
Regarding the U.S. Secretary of Commerce's statement that he may meet with Chinese negotiating representatives in early August, China has responded. On the 10th, He Yong, spokesperson for the Ministry of Commerce, stated at a press conference that currently, both sides maintain close communication on their respective concerns in the economic and trade fields at multiple levels. This indicates a significant possibility. Chinese Ambassador to the U.S. Xie Feng stated that both China and the U.S. are pursuing their respective dreams and should enhance communication and cooperation, eliminating interference and disruption. Overall, this releases goodwill.
Today, Hong Kong's real estate stocks have exploded again. From a broader perspective, the current economic shortcoming is real estate. If the real estate issue is not effectively resolved, the economy will struggle to see significant improvement, as there is too much capital tied up in it. If it cannot be turned over, consumption will find it difficult to improve significantly. The reason for the downgrade in consumption and the contraction in spending, moving towards self-indulgence, is fundamentally due to a lack of money. Therefore, the market is looking forward to favorable policies for real estate being introduced at the important meeting in July. A research team from the Ministry of Housing and Urban-Rural Development recently conducted research in Guangdong and Zhejiang provinces. These investigations should be aimed at gauging the situation. There are rumors that a city work conference will be held next week, focusing on urban renewal, leaning towards the concept of smart cities, rather than simple shantytown renovations
This topic is relatively broad, involving a wider range of areas and driving more industries. Of course, this news has not been confirmed, but the market has already reacted.
The stronger trends in real estate are those that have made progress in debt restructuring. For example, on the evening of July 9, Shenzhen Longguang Holdings Co., Ltd. (03380) announced that the voting for the domestic bond restructuring had been completed, with all 21 corporate bonds and asset-backed securities restructuring proposals approved by investors, involving a total principal balance of 21.96 billion yuan. Today, it surged nearly 21%; CIFI Holdings (00884) launched a comprehensive optimization plan for its domestic bond restructuring to its bondholders on July 8; on July 4, Sunac China (01918) announced on the Hong Kong Stock Exchange that it would allocate and issue 754 million new shares to repay approximately 5.6 billion yuan of domestic bonds with a &#34;stock option.&#34; The implementation of this stock option is the second key execution of the domestic debt restructuring plan, following the repurchase of approximately 4 billion yuan of domestic bonds for about 800 million yuan in April. The aforementioned varieties all rose over 13%.
Others such as R&amp;F Properties (02777), New World Development (01030), Shenzhen Holdings (00604), Yuexiu Property (00123), and Longfor Group (00960) also saw increases of over 7% in first-tier cities. State-owned enterprise China Resources Land (01109) has also entered an upward channel. Additionally, cement, building materials, and steel have also been lifted, with Huaxin Cement (06655) and China National Building Material (03323) both rising by 4%, as mentioned in yesterday's sector focus. Chongqing Iron &amp; Steel (01053) rose over 7%. Moreover, Mingyuan Cloud (00909), which is involved in real estate design management cloud services, should benefit significantly, rising over 9% today.
There is no doubt that if real estate can recover, banks will also have better days, directly providing a catalyst for banks. In the A-share market, the four major banks—Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank, and Bank of China—continue to set historical highs, while in the Hong Kong market, China Construction Bank (00939) has reached a historical high, with smaller banks like Zhengzhou Bank (06196) and Minsheng Bank (01977) rising over 5%.
The RWA theme has been explored again, with Hong Kong China Travel Service (00308) experiencing a surge yesterday due to tourism tickets, and today it is real estate. Derun Holdings (01709) announced that, according to preliminary plans, it intends to tokenize assets with a total value of up to HKD 500 million, including several rights related to &#34;Derun Building&#34; located at 92 Wellington Street, Central, Hong Kong; and three asset rights managed by the group. Today, it rose over 18%. The more scenarios that increase, the more licensed stablecoin concept stocks will benefit.
Guotai Junan International (01788) also performed well, announcing today that it expects a net profit of HKD 515 million to HKD 595 million for the six months ending June 30, 2025, an increase of 161% to 202% compared to HKD 197 million in the same period of 2024. It directly rose over 10%, while other varieties like OK Blockchain (01499) rose over 8%.
In the face of the intensifying competition among giants, the People's Daily commented on the &#34;takeaway war&#34;: there are no winners in a price war, only innovation has a future. We hope it can end soon. The anti-involution trend has spread to the express delivery industry today. According to news from the State Post Bureau today, on July 8, the Party Group of the State Post Bureau held a meeting, clearly opposing &#34;involution-style&#34; competition and regulating end-service quality issues in accordance with laws and regulations, contributing to the construction of a unified national market
Yesterday, Jitu Express-W (01519), mentioned in the stock picking, rose nearly 8% again. I didn't expect this golden stock from June to surge in July, mainly due to timing. ZTO Express-W (02057) at the bottom also rose over 7%.
[Sector Focus]
On July 10th, the China Construction Machinery Industry Association reported that the total sales of excavators reached 120,500 units in the first half of this year, a year-on-year increase of 16.8%. According to Liugong, benefiting from mining, water conservancy projects, and equipment renewal policies, domestic demand for earthmoving equipment is expected to maintain stable positive growth in the second half of the year, with an annual growth rate likely to remain above double digits; overall overseas demand is expected to decline this year, but there are regional differences.
A relevant person from Zoomlion stated that the recovery trend in the industry has begun to transmit from excavators to non-excavators. Against the backdrop of strengthening domestic demand, domestic sales are expected to enter a growth track for the whole year. The company's mining sector capacity has tripled since the beginning of the year, and the company is optimistic about the overseas growth potential of emerging industries such as agricultural machinery and mining machinery.
The recent strength in real estate has also provided significant stimulus to construction machinery, with major Hong Kong stocks including Sany International (00631), Weichai Power (02338), China Longgong (03339), and Zoomlion (01157).
[Stock Picking]
China Shipbuilding Defense (00317): Rising profitability with ample orders on hand
In the first quarter of this year, China Shipbuilding Defense achieved operating revenue of 3.641 billion yuan, a year-on-year increase of 29.73%; the net profit attributable to shareholders of the listed company was 184 million yuan, a year-on-year increase of 1099.85%. The net profit after deducting non-recurring gains and losses increased by 605.35% year-on-year.
Comment: The company's Q1 2025 performance exceeded expectations, with the significant increase in net profit in the first quarter mainly due to increased revenue from ship products, improved production efficiency, and increased investment income. China Shipbuilding Defense's profitability has risen, with a year-on-year increase of 18.39% in gross margin and a year-on-year increase of 590.03% in net margin. China Shipbuilding Defense is a large backbone shipbuilding enterprise under China Shipbuilding Group and a core military industrial production enterprise of the state, with ample orders on hand, and profitability will gradually be realized with the delivery of high-priced ships. The company's revenue from ship products and production efficiency are steadily improving, with product gross margins improving year-on-year, while the operating performance of joint ventures is also positive, confirming an increase in investment income year-on-year.
In the first quarter of 2025, the company achieved new orders of 12.502 billion yuan, completing 71.64% of the annual plan, mainly including contracts for the construction of 9200TEU container ships, 1900TEU container ships, special ships, and 20,000 cubic meter LNG refueling ships. The fulfillment of these orders is expected to have a positive impact on the company's cash flow and subsequent operating performance. The military industry’s internal and external demand is expected to grow significantly from 2025 to 2027, making military industry development a key direction. The integration of assembly assets under China Shipbuilding Group is expected to further strengthen internal collaboration, enhance scale effects, and improve lean management

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Recently, the A-shares have outperformed the Hong Kong stocks, with the Shanghai Composite Index breaking through 3,500 points, and the Hong Kong stocks rising by 0.57%. The U.S. stock market has stable expectations for the Federal Reserve's interest rate cuts, while Trump is turning to Africa, emphasizing trade relations and aiming to expand access to key mineral resources to counter China's influence. China's resource layout in Africa and Southeast Asia is considered a wise move. CATL has attracted attention due to its overseas lithium mine acquisitions, with limited circulating shares in the market, leading to a short squeeze effect as short sellers cover their positions

- Recent performance of A-shares has outpaced Hong Kong stocks, with the Shanghai Composite Index surpassing 3,500 points.  
- The U.S. market anticipates interest rate cuts by the Federal Reserve in September and December, while Trump shifts U.S. focus on Africa from aid to trade, aiming to counter China's influence.  
- The real estate sector's recovery is crucial for economic improvement, with expectations for favorable policies from upcoming meetings, as debt restructuring progresses for several companies.

Zhitong Hong Kong Stock Analysis | Urban Renewal Rumors Ignite Real Estate Chain RWA Theme Fermentation Again Stimulating Stablecoins