The Hang Seng Index rose by over 2%, with northbound capital experiencing a net outflow of over 2.6 billion yuan, while technology stocks were favored

The United States and China agreed to hold a new round of economic and trade consultations as soon as possible. The mainland announced a third-quarter economic growth of 4.8%, slightly exceeding expectations. The market is watching the discussions on economic measures at the Fourth Plenary Session. Hong Kong stocks rebounded today (20th). U.S. President Trump confirmed that he will meet with Chinese President Xi Jinping in two weeks, easing market concerns about U.S.-China relations. The Dow Jones and Nasdaq both rose 0.5% last Friday (17th). At the time of writing, the yield on U.S. 2-year bonds rose to 3.47%, and the yield on U.S. 10-year bonds rose to 4.016%. The U.S. dollar index rose to 98.5. Dow futures rose 77 points or 0.17%, and Nasdaq futures rose 92 points or 0.38%. In the mainland, industrial production above designated size in September increased by 6.5% year-on-year (expected increase of 5%), retail sales of consumer goods in September increased by 3% year-on-year (in line with expectations), and fixed asset investment in the first three quarters decreased by 0.5% year-on-year (expected increase of 0.1%). The Shanghai Composite Index rose 24 points or 0.6% to close at 3,863 points, the Shenzhen Component Index rose nearly 1%, and the ChiNext Index rose 2%. The total transaction amount in the Shanghai and Shenzhen markets was nearly 1.74 trillion yuan.

The Hang Seng Index opened high at 637 points, once rising 665 points to a high of 25,912 points, closing up 611 points or 2.4% at 25,858 points; the Hang Seng China Enterprises Index rose 220 points or 2.5% to close at 9,232 points; the Hang Seng Tech Index rose 172 points or 3% to close at 5,933 points. The total transaction amount for the day was 239.16 billion yuan. The total transaction amount for northbound trading was 109.866 billion yuan, while southbound funds had a net outflow of 2.67 billion yuan today (net inflow of 6.303 billion yuan yesterday). SMIC (00981.HK) rose nearly 3.9%, and Hua Hong Semiconductor (01347.HK) rose 2.8%. However, Zijin Mining International (02259.HK) fell 5.4%.

【Supported by Alibaba, chip stocks perform well】

In the technology sector, Alibaba-W (09988.HK) rose 4.8% to close at 161.9 yuan, with a transaction amount of 15.83 billion yuan. NetEase-S (09999.HK) rose 5.2%, Baidu-SW (09888.HK) rose 3.7%, Tencent (00700.HK), JD-SW (09618.HK), and Xiaomi-W (01810.HK) rose between 2.6% and 3.2%. Meituan-W (03690.HK) and Bilibili-W (09626.HK) rose 2.3%, and Kuaishou-W (01024.HK) rose 1.6%.

According to domestic media reports, Alibaba Cloud's proposed computing pooling solution "Aegaeon" has recently been successfully selected for the top academic conference on Operating Systems Principles (SOSP) 2025. This solution addresses the common issue of GPU resource waste in AI model services, significantly improving GPU resource utilization. Currently, its core technology has been applied in Alibaba Cloud's Bailian platform. Data shows that during the more than three-month Beta testing period in Alibaba Cloud's model market, the Aegaeon system required the number of NVIDIA (NVDA.US) H20 GPUs to serve dozens of large models with up to 72 billion parameters from 1, The number decreased from 192 to 213, with a reduction ratio as high as 82%.

【Over 1,400 stocks rise, aviation stocks favored】

The Hong Kong stock market is slightly better, with a rise and fall ratio of 36 to 14 for main board stocks (compared to 8 to 44 the previous day). There are 1,492 rising stocks (up nearly 3%), with 78 stocks in the Hang Seng Index rising and 10 falling, resulting in a rise and fall ratio of 89 to 11 (compared to 10 to 88 the previous day). The market recorded short selling of HKD 34.392 billion today, accounting for 16.587% of the total turnover of shortable stocks at HKD 207.337 billion.

Aviation and tourism-related stocks performed well, with Sands China (01928.HK), Wynn Macau (01128.HK), and Melco International (00200.HK) rising by 4% to 4.4%, and Galaxy Entertainment (00027.HK) rising by 3.2%. China Eastern Airlines (00670.HK) rose by 9.8%, Air China (00753.HK) and China Southern Airlines (01055.HK) rose by 6.4% and 5.3%, respectively, while Trip.com (09961.HK) rose by 3.3%.

Morgan Stanley released a report on China's aviation industry, stating that it believes the industry's bull market cycle may be delayed but will not disappear. Ongoing supply constraints, potential recovery in business demand, and "anti-involution" measures support the bank's optimistic view. The bank's top pick in the industry is Air China H shares. The summer peak performance was below expectations but has been reflected in stock prices: according to the bank's estimates, domestic passenger revenue during the summer peak from July to August decreased by single digits year-on-year, despite a roughly 0.5 percentage point increase in load factor compared to the same period last year. The bank believes this is due to a further deterioration in demand structure, lacking support from business travel. Morgan Stanley believes this has been reflected in stock prices, as from early July to October 8, H shares and A shares lagged behind the Hang Seng Index and Shanghai Composite Index by 17 percentage points and 13 percentage points, respectively. Affected by the below-expectation summer performance, the bank expects the three major airlines' profits in the third quarter of 2025 to be flat or slightly increase year-on-year, benefiting from the expansion of international route capacity.

Morgan Stanley believes the dawn of the industry is beginning to appear: based on the bank's communication with airlines, business demand improved in September, benefiting from suppressed demand caused by frequent travel delays over the past three months. The bank believes domestic revenue turned positive year-on-year, indicating a slight improvement in profit margins. Demand during the October Golden Week grew moderately, but airlines successfully raised ticket prices despite weak demand, indicating that their self-rescue measures against involution were effective. According to DAST data, pricing at the beginning of October also showed year-on-year improvement, despite some base effect. The bank sees potential recovery opportunities for business demand supported by events such as the China International Import Expo, Canton Fair, and China Hi-Tech Fair, believing that Chinese-funded airlines have a high probability of continuing to achieve year-on-year profit improvement in the fourth quarter of 2025. The bank raised the target price for Air China from HKD 6.86 to HKD 8.11, increased the target price for China Eastern Airlines to HKD 4.31, and raised the target price for China Southern Airlines to HKD 5.33