"Market Review" Hong Kong stocks retreat, northbound capital net inflow of 10 billion yuan, LAOPU GOLD drops 8%

Market attention is focused on the developments in the China-U.S. trade negotiations, and Hong Kong stocks retreated today. U.S. stocks had mixed developments overnight, with the Dow Jones Industrial Average rising 0.5% to a new closing high, while the Nasdaq fell nearly 0.2%. At the time of writing, the yield on the U.S. 2-year Treasury bond fell to 3.453%, and the yield on the U.S. 10-year Treasury bond fell to 3.959%. The U.S. dollar index rose to 98.99. Dow futures were last down 22 points or 0.05%, and Nasdaq futures were last down 46 points or 0.18%. The Shanghai Composite Index fell 2 points or 0.07% to close at 3,913 points, while the Shenzhen Component Index fell 0.6%. The total trading volume of the Shanghai and Shenzhen stock markets was 1.67 trillion yuan.

The Hang Seng Index opened down 129 points, with the initial decline narrowing to 79 points at 25,947 points before moving downward. Before noon, it had fallen 373 points to 25,653 points, closing down 245 points or 0.9% at 25,781 points; the Hang Seng China Enterprises Index fell 78 points or 0.8% to close at 9,223 points; the Hang Seng Tech Index fell 84 points or 1.4% to close at 5,923 points. The total trading volume for the day decreased by 14% to 227.536 billion yuan. The total trading volume of northbound trading was 106.582 billion yuan, while southbound funds had a net inflow of 10.018 billion yuan today (compared to a net inflow of 1.171 billion yuan yesterday). Hong Kong Exchanges and Clearing Limited (00388.HK) fell 1.6% to close at 422.4 yuan.

LAOPU GOLD (06181.HK) had a 4.5% discount in its placement, raising a net of 2.707 billion yuan, with its stock price dropping 8.2% to close at 704 yuan. Other jewelry stocks were also under pressure, with CHOW TAI FOOK (01929.HK) declining 5.7% to close at 15.69 yuan. Additionally, Guanghetong (00638.HK) debuted today, closing at 18.98 yuan, down 11.7% from its listing price of 21.5 yuan, resulting in a paper loss of 504 yuan for each board lot of 200 shares.

【Northbound funds inflow of 10 billion, LAOPU GOLD under pressure】

In the tech sector, Alibaba (09988.HK) saw its stock price decline by 1.9% to close at 161.9 yuan, while Tencent (00700.HK) and JD.com (09618.HK) fell by 1.1% and 1.4%, respectively. Baidu (09888.HK), Kuaishou (01024.HK), and Bilibili (09626.HK) dropped between 1.9% and 2.4%, with NetEase (09999.HK) falling 4.4% and Meituan (03690.HK) down 0.4%.

In the consumer sector, Pop Mart (09992.HK) reported a year-on-year revenue increase of 2.45 to 2.5 times in the third quarter, exceeding expectations, and received a target price upgrade from brokerages, with its stock price rising 2.4% for the day and a trading volume of 7.86 billion yuan. Citigroup expects Pop Mart to continue its good trend in the upcoming peak season, with holiday performance potentially serving as a short-term catalyst, although the base effect will lead to a slowdown in growth momentum. Based on optimistic sales prospects driven by IP strength, earnings forecasts for fiscal years 2025 to 2027 have been raised by 16.8% to 17.3%, with the target price increased from 398 yuan to 415 yuan 【Over 1,200 Stocks Decline, CSPC Pharmaceutical Stock Price Under Pressure】

The Hong Kong stock market has turned weaker, with a rise and fall ratio of main board stocks at 18 to 29 (compared to 30 to 20 the previous day). There were 1,202 declining stocks (a drop of 2.1%). Today, among the Hang Seng Index constituent stocks, 20 rose while 66 fell, with a rise and fall ratio of 23 to 75 (compared to 64 to 32 the previous day). The market recorded short selling of HKD 33.882 billion today, accounting for 17.582% of the total turnover of shortable stocks at HKD 192.705 billion. Pop Mart had a total short selling amount of HKD 1.723 billion, with a short selling ratio of 21.919%.

Innovent Biologics (01801.HK) has conducted a placement to Takeda Pharmaceutical at a nearly 30% premium and reached an authorized cooperation involving USD 11.4 billion. Its stock price opened up 9.9% but fell nearly 2% throughout the day. In other pharmaceutical stocks, CSPC Pharmaceutical (02005.HK) and Sinopharm (01099.HK) rose by 5.2% and 4.3%, respectively. Morgan Stanley released a report believing that Sinopharm's stock price will rise within the next 30 days, with a probability of 70% to 80%, maintaining an "Overweight" rating.

However, CSPC Pharmaceutical (01093.HK) saw its stock price drop 5.2% to HKD 8.46. Daiwa released a report downgrading its investment rating on CSPC to "Sell," believing that the stock price has already reflected business development (BD) expectations and anticipating a slowdown in finished drug sales, thus lowering revenue forecasts for 2025 to 2027. Based on discounted cash flow valuation, the target price was raised from HKD 5 to HKD 7.3. Daiwa indicated that the downgrade of CSPC's rating is due to business development expectations already being reflected in the stock price, and due to the slowdown in finished drug sales, it has lowered revenue forecasts for 2025 to 2027 by 4% to 16%. Besides business development, short-term growth momentum and product pipeline may also be weak