The Market Review: Hang Seng Index Stops Rising, Trading Volume Drops 39%, Kuaishou and BYD Under Pressure

After the Hang Seng Index rose for three consecutive trading days (a cumulative increase of 1,158 points or 4.4%), it retreated today (3rd). The market estimates that the U.S. government shutdown is only temporary, and the three major U.S. stock indices reached new closing highs overnight (2nd), with the Dow Jones, Nasdaq, and S&P 500 indices rising by 0.2%, 0.4%, and 0.06%, respectively. At the time of writing, the yield on U.S. 2-year bonds rose to 3.555%, the yield on U.S. 10-year bonds rose to 4.1%, and the U.S. dollar index rose to 97.89. Dow futures rose by 95 points or 0.2%, and Nasdaq futures rose by 68 points or 0.27%. During the National Day and Mid-Autumn Festival holiday (Super Golden Week), the A-shares will be closed for 8 consecutive days from October 1 to October 8, during which the Hong Kong Stock Connect under the Shanghai-Hong Kong Stock Connect will not provide services, resuming normal trading on October 9.

After opening 65 points lower, the Hang Seng Index's decline widened, dropping 314 points in the afternoon to a low of 26,972 points. The decline later narrowed, closing down 146 points or 0.5% at 27,140 points; the National Index fell 66 points or 0.7% to close at 9,658 points; the Hang Seng Tech Index fell 60 points or 0.9% to close at 6,622 points. The total turnover of the market for the day fell by over 39% to HKD 134.781 billion.

The Hang Seng Index has risen a cumulative 1,012 points or 3.9% this week, the National Index has risen a cumulative 355 points or 3.8% this week, and the Hang Seng Tech Index has risen a cumulative 427 points or 6.9% this week. The market is optimistic that the China-U.S. economic and trade negotiations may make progress, and Alibaba-W (09988.HK) and chip stocks continue to attract capital.

【Alibaba rises against the trend, Kuaishou retreats】

Gaode's street-sweeping app has accumulated over 400 million users in just 23 days, and Alibaba's stock price rose 1.1% to HKD 185.1. Meituan-W (03690.HK) rose 0.3%, Tencent (00700.HK) fell 0.4%, Baidu-SW (09888.HK) and Bilibili-W (09626.HK) fell 0.7% and 1.2%, respectively, while NetEase-S (09999.HK) and JD-SW (09618.HK) fell 1.6% and 1.8%.

Kuaishou (01024.HK) topped the global video generation model rankings with its Keling 2.5 Turbo model, and its stock price retreated 3.4% to close at HKD 88.7. JP Morgan released a report stating that Kuaishou simultaneously owns China's mainstream short video platform and the globally leading AI video generation model "Keling," and is expected to launch an AI social video platform similar to the Sora application in the future. The firm reiterated Kuaishou as its preferred stock in China's digital entertainment sector, believing that the accelerated development of its core advertising business and the value driven by AI technology in advertising have not yet been fully reflected, continuing to view it as one of the most undervalued AI stocks globally, with an "overweight" rating and a target price of HKD 89.

【Short selling rate rises, BYD under pressure】 The market breadth weakened, with the rise and fall ratio of main board stocks at 22 to 29 (compared to 31 to 20 the previous day). There were 1,183 declining stocks (a drop of 2.1%). Today, 24 stocks in the Hang Seng Index rose, while 63 fell, with a rise and fall ratio of 27 to 72 (compared to 68 to 28 the previous day). The market recorded short selling of HKD 21.687 billion today, accounting for 19.77% of the total turnover of shortable stocks at HKD 109.698 billion (compared to 16.47% the previous day).

Car stocks retreated, with BYD (01211.HK) experiencing its first year-on-year decline in quarterly sales in five years, closing down nearly 4% at HKD 109.4. XPeng-W (09868.HK), Geely (00175.HK), Li Auto-W (02015.HK), and Nio-SW (09866.HK) fell between 1.9% and 2.8%, while Xiaomi-W (01810.HK) dropped 1.4%.

Dongfeng (00489.HK) subsidiary Voyah has submitted an application for listing on the Hong Kong Stock Exchange, with Dongfeng rising 4.7%. Morgan Stanley released a report stating that Voyah, a pure electric vehicle startup under Dongfeng Group, has recently submitted detailed listing application documents rapidly. The bank believes this indicates that the group is accelerating the process of spin-off listing, which is positive for the stock price. As an independently operated new car-making force, Voyah's business progress is healthy, and its overall revenue performance exceeds previous market expectations. The bank maintains an "overweight" rating on Dongfeng