"Market Review" Hong Kong stocks fell first and then stabilized, with northbound capital net buying over 10.3 billion. Hong Kong Stock Exchange is slightly bearish

The external stock market is trending downwards, and the Hong Kong stock market today (5th) is fluctuating with a slight bearish sentiment. Goldman Sachs and Morgan Stanley have warned investors that the stock market may experience a correction of 10% to 20% in the next one to two years, with concerns that leading technology stocks are overvalued. The Dow Jones and Nasdaq fell by 0.5% and 2% respectively on the night of the 4th. At the time of writing, the yield on the 2-year U.S. Treasury bond has dropped to 3.566%, the yield on the 10-year U.S. Treasury bond has fallen to 4.077%, and the U.S. dollar index has decreased to 100.13. The latest Dow futures are up 79 points or 0.17%, while Nasdaq futures are down 53 points or 0.2%. A-shares are fluctuating positively, with the Shanghai Composite Index rising 9 points or 0.23% to close at 3,969 points, and the Shenzhen Component Index up 0.37%. The total trading volume in the Shanghai and Shenzhen markets is 1.87 trillion yuan. The Tariff Commission of the State Council announced that China will continue to suspend the 24% tariff rate on the U.S. for one year, retaining the 10% additional tariff rate.

The Hang Seng Index opened 250 points lower, with the initial decline expanding to 456 points, reaching 25,496 points. The decline then significantly narrowed, and during the afternoon session, it briefly rose by 28 points to a high of 25,980 points. The index closed down 16 points or 0.07% at 25,935 points; the Hang Seng China Enterprises Index fell 9 points or 0.1% to close at 9,163 points; the Hang Seng Tech Index dropped 32 points or 0.56% to close at 5,785 points. The total market turnover for the day was 238.825 billion HKD. The total trading volume of northbound funds was 95.688 billion HKD, while southbound funds had a net inflow of 10.373 billion HKD today (compared to a net inflow of 9.832 billion HKD on the previous trading day).

Hang Seng China Enterprises (02828.HK) fell slightly by 0.04% for the day, with a turnover of 15.82 billion HKD, while the Tracker Fund of Hong Kong (02800.HK) remained unchanged, with a turnover of 13.9 billion HKD. Gold mining stocks rebounded, with Zijin Mining (02899.HK) rising nearly 2.4%.

Sailis (09927.HK) debuted on its first day, opening at 128.9 HKD, down 2% from the listing price of 131.5 HKD, and reached a low of 118 HKD during the day, closing flat at 131.5 HKD, with a turnover of 2.378 billion HKD.

【Sailis closes flat, Hong Kong Stock Exchange is bearish】

In the technology sector, Meituan-W (03690.HK) and NetEase-S (09999.HK) saw their stock prices rise by 1.3% and 0.3% respectively, while Tencent (00700.HK) closed flat at 629 HKD. Xiaomi-W (01810.HK), Baidu-SW (09888.HK), Alibaba-W (09988.HK), JD-SW (09618.HK), and Kuaishou-W (01024.HK) fell between 0.2% and 0.7%, while Bilibili-W (09626.HK) dropped 4.1%.

The Hong Kong Stock Exchange (00388.HK) announced at noon that its net profit for the third quarter increased by 56% year-on-year, nearing the upper limit of market expectations, but the stock price fell nearly 0.5% to close at 423.6 HKD. JP Morgan reported that the Hong Kong Stock Exchange's net profit for the third quarter was 4.9 billion HKD, a year-on-year increase of 56% and a quarterly increase of 10%, exceeding the bank's estimates by 3% Various business performances generally exceeded expectations, with revenue 1% higher than the bank's forecast, mainly driven by clearing and settlement income; expenses were 4% lower than expected due to a decrease in employee costs. Net investment income decreased by 34% quarter-on-quarter, roughly in line with expectations. The operating profit margin reached 75%, an increase of 203 basis points quarter-on-quarter, better than expected. Regarding the recent decline in Hong Kong Stock Exchange stock prices alongside the weakening Hang Seng Index, JP Morgan believes that this divergence between stock price performance and fundamental driving factors (trading volume) creates conditions for a strong price increase in the coming months, maintaining an "overweight" rating for the Hong Kong Stock Exchange, with a target price of HKD 530.

【One stock falls while Master Kong rises】

The Hong Kong stock market turned weaker, with a rise-to-fall ratio of 21 to 28 for main board stocks (compared to 14 to 36 the previous day), with 1,135 declining stocks (a drop of 2.4%). Today, 46 constituent stocks of the Hang Seng Index rose, while 37 fell, with a rise-to-fall ratio of 52 to 42 (compared to 32 to 66 the previous day). The market recorded short selling of HKD 37.693 billion today, accounting for 18.304% of the total turnover of shortable stocks, which was HKD 205.925 billion.

Some tourism-related stocks performed well, with China Duty Free Group (01880.HK) reporting a 22% year-on-year decline in net profit for the first three quarters but declaring a dividend of 25 cents RMB, marking the company's first interim dividend. The stock price rose 4% to close at HKD 66.95. China Eastern Airlines (00670.HK) and Air China (00753.HK) rose by 4.6% and 3.7%, respectively. The General Office of the State Council issued a notice regarding the arrangement of certain holidays in 2026, stating that the Spring Festival holiday will last from February 15 to February 23, totaling nine days, marking the longest Spring Festival holiday in history. According to CCTV, less than half an hour after the announcement, the search volume for train tickets and international flights during the New Year and Spring Festival periods on online travel booking platforms doubled instantly and continues to rise. An additional day off will stimulate more travel. From the search volume data, popular domestic travel destinations during the Spring Festival include Sanya, Dali, Harbin, Haikou, and Xishuangbanna.

Food stock Master Kong (00322.HK) saw its stock price rise 4.3% to close at HKD 11.86, making it the largest blue-chip gainer. Goldman Sachs recently published a report stating that on Monday (the 3rd), during the Food and Beverage Companies Day, they conducted a non-deal roadshow with Master Kong's management. Master Kong still faces challenges in achieving its sales target for the fiscal year 2025 (originally expected to be flat to low single-digit year-on-year growth), mainly due to weak beverage business; however, the profit target (double-digit year-on-year growth in recurring net profit) is still expected to be achieved, mainly benefiting from pricing base effects, favorable costs, efficiency improvement measures, and strict promotional management. Looking ahead to 2026, Master Kong's management reiterated that improving profit margins will be the core focus while also hoping to restore revenue growth trajectory and continue to promote efficiency improvement measures. The company typically locks in procurement of various raw materials for half a month to several months