"Review": Hongqiao, Zijin, and SMIC rank among the top three blue-chip stocks for annual growth

Aluminum stock Hongqiao (01378.HK), mining stock Zijin (02899.HK), and chip stock SMIC (00981.HK) have respectively become the top three blue-chip stocks in terms of annual increase, with increases of nearly 1.77 times, 1.52 times, and 1.25 times this year. The U.S. President Trump, who advocates a "America First" policy, has pushed for trade protectionism policies such as "reciprocal tariffs" this year, causing turbulence in global financial and trade markets. He has also significantly raised tariffs on China and imposed restrictions on semiconductor chips, which has accelerated the "domestic substitution" of China's AI and chip industries, leading to a significant rise in the stock prices of Chinese chip companies. Earlier this year, the mainland AI DeepSeek large model shook the tech world, and tech giant Alibaba (09988.HK) has also announced plans for substantial investments in the AI field, leading to a revaluation of Chinese assets and driving the revaluation of tech stocks, with Alibaba's stock price increasing by 77.5% this year.

Commodity prices and commodity stocks have surged this year, becoming the most outstanding investment varieties. The expansion of the U.S. fiscal deficit has raised market concerns about government fiscal sustainability, with U.S. government debt exceeding $38 trillion as of October. From October to November, the U.S. federal government experienced its longest shutdown in history, lasting 43 days. Additionally, Trump's "tariff war" has intensified trade tensions, increasing global demand for "de-dollarization" as a safe haven. The U.S. dollar index has fallen from 108.49 at the end of last year to around 98 in late December this year (to be updated), a cumulative drop of over 9% this year (to be updated). With the U.S. expanding the scope of the 50% tariffs on steel and aluminum imports in August, including hundreds of derivative products in the tariff list, and the new key mineral list in early November, which for the first time included various minerals such as copper and silver, this news has stimulated commodity prices to soar. As of late December, spot gold has increased by over 60% this year, while the average spot aluminum price in Shanghai has risen by over 13%.

Aluminum stock Hongqiao, mining stock Zijin (02899.HK), and chip stock SMIC (00981.HK) have respectively become the top three blue-chip stocks in terms of annual increase. The development of the electric vehicle industry and investments in energy storage industries have driven aluminum demand. The market also expects that domestic production capacity will be maintained and that global new supply capacity will be limited, supporting the rise in aluminum prices. Zijin has benefited from record-high gold and copper prices, especially as copper prices have been influenced by the shadow of U.S. tariffs affecting warehouse inventories outside the U.S., with Zijin's stock price increasing by 1.46 times this year (to be updated). SMIC has benefited from the anticipation of domestic chip substitution, the AI boom, and the year-end memory chip shortage, which has collectively stimulated a rise in capacity utilization, with its stock price increasing by 1.25 times for the year. In contrast, Meituan (03690.HK), which has been suffering from intense competition in the "takeout war," has seen its stock price drop nearly 32% this year, making it the blue-chip stock with the largest decline. The company reported a loss in the third quarter of this year, recording a Non-IFRS loss of over 16 billion RMB.

【Hongqiao Becomes the Blue-Chip Champion in Increase, Strong Commodity Prices Favorable】

Aluminum product company Hongqiao's stock price increased by 1.77 times for the year, making it the blue-chip stock with the largest increase. The rise in Hongqiao's stock price is related to market expectations for aluminum supply and demand. Its peer, Chalco (02600.HK), has also recorded an increase of 1.53 times this year (to be updated) Due to the tightening of global supply caused by power issues and the sustained expectations of explosive demand for energy storage, global aluminum supply has become tight. As a leading global aluminum industry chain producer, China Hongqiao has built a profitable "moat" through its industry chain support and scale advantages. The high self-sufficiency rates of bauxite, electricity, and alumina also ensure the company's cost advantage per ton of aluminum. In mid-March, the company announced that its net profit for last year increased by 95% year-on-year, with a total dividend of HKD 1.61 per share for the entire year, a significant increase of 1.56 times compared to HKD 0.63 per share the previous year, making the high dividend factor highly favored by the market. In mid-August, Hongqiao announced its performance for the first half of this year, with revenue exceeding RMB 81 billion, a year-on-year increase of 10%, mainly due to the rise in sales prices of aluminum alloy products and alumina products, recording a net profit of RMB 12.361 billion, an increase of 35%. The overall gross profit margin for the interim period was 25.7%, up 1.5 percentage points. Among them, the gross profit margin for alumina products was about 28.8%, and the gross profit margin for aluminum alloy processing products was about 23.3%, increasing by 3.4 and 2.3 percentage points respectively, mainly benefiting from the increase in sales volume and sales price. UBS also indicated that Hongqiao's dividend payout ratio is not less than 63%, and an additional share repurchase plan of RMB 3 billion has been added.

In mid-November, Hongqiao announced a placement of 400 million shares in a "old shares first, new shares later" manner, at a price of HKD 29.2 per share, expected to raise approximately RMB 11.49 billion, intended for the development and enhancement of its domestic and overseas projects, repayment of existing debts to optimize its capital structure, as well as to supplement working capital and for general corporate purposes. By late November, Hongqiao's stock price had risen back above HKD 30.

Zijin has the second largest increase among blue chips for the year, with a cumulative increase of 1.52 times. Spot gold rose to nearly USD 4,500 per ounce in late December, a historical high, and copper futures on the London Metal Exchange also reached new highs. Morgan Stanley previously reported that there were three copper mine accidents globally this year, and it is expected that the copper supply-demand gap will widen next year, with significant upward potential for copper prices. In addition, the weakening of the US dollar this year has helped support commodity prices. In mid-October, Zijin announced its operating results for the first three quarters of this year, with cumulative operating revenue increasing by 10.3%. The net profit attributable to shareholders was RMB 37.864 billion, a year-on-year increase of 55.5%, with a gross profit margin of 60.62% for mining enterprises, an increase of 22.91 percentage points; the overall gross profit margin was 24.93%, an increase of 5.4 percentage points. Zijin also finalized the listing of its overseas gold asset integration platform, Zijin Gold International (02259.HK), at the end of September, with a listing price of HKD 71.59 per share, which had risen to HKD 146 by late December.

【Zijin and SMIC are popular, HSBC performs well】

The DeepSeek concept has driven stocks related to artificial intelligence models, and the US restrictions on chips to China have also triggered funds to chase the "domestic self-replacement" concept. Among chip stocks, SMIC (00981.HK) and Hua Hong (01347.HK) have increased by 1.25 times and 2.43 times respectively for the year, with SMIC being the third largest blue chip in terms of annual increase. In November, SMIC announced its third-quarter results, with revenue increasing by 7.8% quarter-on-quarter, exceeding the upper limit of the 7% guidance, and the gross profit margin increased by 1.6 percentage points quarter-on-quarter to 22%, exceeding the upper limit of the guidance of 20% The capacity utilization rate during the quarter rose to 95.8%. The quarterly net profit increased by 29% year-on-year to USD 192 million, exceeding market expectations. The market anticipates that SMIC will benefit from the continued localization of the supply chain, with full capacity in the fourth quarter. Earlier reports from domestic media indicated that SMIC has implemented a price increase of about 10% on some of its capacity.

Among other stocks benefiting from the AI boom, Baidu (09888.HK), which develops its own AI chips and has cloud services benefiting from AI models, and Alibaba (09988.HK) both saw annual increases of 59% and 77.5%, respectively. Kuaishou (01024.HK), which launched a generative AI model, saw an annual increase of over 56%.

Pop Mart (09992.HK) was the fourth largest blue-chip stock in terms of annual increase, rising 1.09 times over the year. The company benefited from the popularity of intellectual property (IP) products like Labubu, driving sales and a surge in stock prices. The Labubu series of products had previously seen high-priced auction transactions at the beginning of the year, and the Labubu craze also triggered cross-media effects. Benefiting from the Labubu trend, the company's revenue in the third quarter increased by 2.45 to 2.5 times year-on-year, with overseas markets growing by 3.65 to 3.7 times. On August 26, Pop Mart's stock price reached a high of HKD 339.8 (an increase of 2.79 times from the end of last year), and it even became a "blue-chip" in early September. However, some brokerages later expressed concerns about the company's significant increase in Labubu product supply in the short term to exchange for profits. Deutsche Bank indicated that Labubu's capacity had skyrocketed from 10 million units in the first half of the year to an average of 50 million units per month by the end of the year, raising concerns that "popularization" could signal a decline in IP popularity, leading to market worries about the company's revenue growth being difficult to sustain next year. With the significant increase in Labubu product supply, the disappearance of high premiums in the secondary market has led some market participants to focus on changes in Pop Mart's previous operational strategy based on product scarcity and uniqueness, increasing uncertainties, and concerns that the new consumer "trendy toy" concept may fade. Since September, Pop Mart's stock price has continued to retreat, dropping to a low of HKD 184.6 on December 10 (a decline of over 45% from the August high of HKD 339.8), and remained below HKD 200 by late December, with the market attributing this to the "blue-chip curse."

Hansoh Pharmaceutical (03692.HK) saw its stock price increase by 1.09 times over the year, making it the fifth largest blue-chip stock in terms of increase. Hansoh Pharmaceutical benefited from revenue driven by drug patent licensing agreements and business development. In early June, the company announced that its wholly-owned subsidiary Shanghai Hansoh Biopharmaceutical and Jiangsu Hengrui Medicine entered into a licensing agreement with Regeneron (REGN.US), with the stock price starting at HKD 26 and rising to nearly HKD 39 by mid-August. The company announced a placement at HKD 36.3 per share, raising nearly HKD 3.9 billion. In mid-October, Hansoh announced another major business development transaction, reaching a licensing cooperation with Roche for global exclusive rights to HS-20110 (CDH17ADC). According to a recent report from Guojin Securities, among the top 20 business development transactions of Chinese innovative pharmaceutical companies this year (by transaction amount), Hansoh's two transactions ranked 13th and 19th The stock price of Hansoh Pharmaceutical has been rising continuously since mid-October at HKD 35, reaching a high of HKD 44.22 on December 12 (an increase of 1.56 times compared to the closing price at the end of last year), but has been retreating continuously in late December.

In addition, heavyweight stock HSBC Holdings (00005.HK) has seen its stock price increase by 61.5% this year. The company's stable dividend payouts, multiple share buybacks, and continuous enhancement of shareholder returns have made it very popular in the market. HSBC's stock price rose from HKD 75.8 at the end of last year, breaking through the HKD 100 mark in late July, returning to the "red chip" category, and surpassing HKD 120 in late December. In October of this year, HSBC announced plans to privatize Hang Seng Bank (00011.HK) at a premium of about 30% through an agreement arrangement, involving a total cash payment of over HKD 106.1 billion. (fc/w/t)