"Market Review" EU and US tariff risks reignite, Hang Seng Index falls 1%, biotech stocks under pressure

U.S. President Trump threatened to impose tariffs on NATO's eight countries over the Greenland issue, reigniting tariff risks between Europe and the U.S. The mainland announced that last year's fourth-quarter GDP rose by 4.5% and last year's GDP growth was 5%, in line with expectations, leading to a decline in Hong Kong stocks today. The Dow Jones and Nasdaq fell nearly 0.2% and 0.1% respectively last Friday, and U.S. markets will be closed tonight in observance of Martin Luther King Jr. Day. At the time of writing, the yield on U.S. 2-year bonds rose to 3.594%, and the yield on U.S. 10-year bonds rose to 4.227%, while the U.S. dollar index fell to 99.19. Dow futures were down 327 points or 0.7%, and Nasdaq futures were down 294 points or 1.2%. The mainland reported that the industrial added value above designated size in December last year rose by 5.2% year-on-year, exceeding expectations, while retail sales in December rose by 0.9% year-on-year, slightly below expectations. The Shanghai Composite Index rose by 12 points or 0.3% to close at 4,114 points, and the Shenzhen Component Index rose by 0.09%, with a total transaction volume of 2.7 trillion yuan in the Shanghai and Shenzhen markets.

The Hang Seng Index opened down 203 points, initially falling 311 points to a low of 26,533 points, then narrowing the decline to 129 points, ultimately closing down 281 points or 1.05% at 26,563 points; the Hang Seng China Enterprises Index fell by 86 points or 0.9% to close at 9,134 points; the Hang Seng Tech Index fell by 72 points or 1.2% to close at 5,749 points. The total transaction volume for the market was 225.689 billion yuan. The total transaction volume for northbound trading was 100.899 billion yuan, while southbound funds had a net inflow of 2.292 billion yuan today (with a net inflow of 93.58 million yuan on the previous trading day).

New World Development (00017.HK) surged 16.3% to 11.07 yuan, with a transaction volume of 1 billion yuan. Its affiliate, New World Department Store China (00825.HK), rose nearly 30%, with a transaction volume exceeding 7.35 million yuan. Zheng Jiachun, chairman of the parent company Chow Tai Fook Enterprises, stated in an interview with the South China Morning Post that this private investment holding company will continue to seek transactions that create "win-win outcomes." In the interview, Zheng Jiachun did not comment on New World Development.

【New World Soars, Alibaba Faces Selling Pressure】

It was reported that four smartphone manufacturers, Xiaomi, OPPO, vivo, and Transsion, lowered their annual shipment forecasts. Xiaomi (01810.HK) saw its stock price decline by 1.7% for the day, while smartphone component stocks such as Q Technology (01478.HK), AAC Technologies (02018.HK), and Sunny Optical (02382.HK) fell by 2% to 2.6%. Tencent (00700.HK), Meituan (03690.HK), and JD.com (09618.HK) fell by 1.1% to 1.5%, while Kuaishou (01024.HK) and Alibaba (09988.HK) fell by 2% and 3.5% respectively. Bilibili (09626.HK) dropped by 6.8%.

Morgan Stanley released a report on the outlook for Chinese tech stocks this year, stating that after last year's "DeepSeek moment," the firm believes that the development path of AI in China will be brighter by 2026, driven by both supply and demand sides In addition to AI, the overseas expansion of local internet companies in mainland China has also become an important factor in responding to macroeconomic, competitive, regulatory, and geopolitical risks. The bank has given an "overweight" rating to stocks in the industry, including Tencent (00700.HK), Alibaba (BABA.US), Pinduoduo (PDD.US), and Tencent Music (TME.US), with Tencent being the top choice in the industry.

【Over 1,300 stocks fell, biotech stocks turned bearish】

The Hong Kong stock market turned weaker, with a rise and fall ratio of 18 to 32 for main board stocks (compared to 23 to 27 the previous day), and 1,319 stocks fell (a decline of 2.5%). Today, 22 constituent stocks of the Hang Seng Index rose, while 66 fell, with a rise and fall ratio of 25 to 74 (compared to 42 to 55 the previous day). The market recorded short selling of HKD 27.214 billion today, accounting for 13.837% of the total turnover of shortable stocks, which was HKD 196.675 billion.

Some AI-related stocks weakened, with Kingsoft Cloud (03896.HK), Inspur Intelligent (03696.HK), and GDS Holdings (09698.HK) falling by 4.1% to 5.7%, while Zhizhu (02513.HK) and MINIMAX (00100.HK) each dropped by 10.4% and 13.7%.

The Hang Seng Biotechnology Index declined by nearly 3.1%, with China National Pharmaceutical (01177.HK), 3SBio (01530.HK), and Kelun-Biotech (06990.HK) falling by 5.4% to 6.2%, while Innovent Biologics (01801.HK), WuXi Biologics (02269.HK), Hansoh Pharmaceutical (03692.HK), Weigao (01066.HK), and Legend Biotech (09969.HK) fell by 4% to 4.8%