The Hang Seng Index fluctuates and rebounds, with net inflow from northbound capital increasing to HKD 13.9 billion, and SMIC has support

After falling for four consecutive days (a total drop of 512 points or 1.9%), the Hang Seng Index rebounded today (21st). U.S. President Trump has intensified threats to seize Greenland and threatened to impose new tariffs on opposing countries. The Dow Jones and Nasdaq fell 1.8% and 2.4% respectively on the night of the 20th. At the time of writing, the yield on U.S. 2-year bonds fell to 3.584%, the yield on U.S. 10-year bonds fell to 4.269%, and the U.S. dollar index dropped to 98.6. Dow futures rose 126 points or 0.26%, and Nasdaq futures rose 95 points or 0.4%. The Shanghai Composite Index rose 3 points or 0.08% to close at 4,116 points, the Shenzhen Component Index rose 0.7%, and the ChiNext Index rose 0.5%, with a total transaction amount of 2.6 trillion yuan in the Shanghai and Shenzhen markets.

The Hang Seng Index opened 90 points lower this morning before rebounding, rising 205 points to reach 26,692 points at the close, an increase of 97 points or 0.4%, closing at 26,585 points; the Hang Seng China Enterprises Index rose 28 points or 0.3% to close at 9,122 points; the Hang Seng Tech Index rose 62 points or 1.1% to close at 5,746 points. The total transaction amount for the day was 250.451 billion yuan. The total transaction amount for northbound trading was 108.997 billion yuan, while southbound funds saw a net inflow increase to 13.93 billion yuan (compared to a net inflow of 3.663 billion yuan on the previous trading day), marking the second trading day this year with a net inflow exceeding 10 billion yuan (the last time was on January 5 with a net inflow of 18.723 billion yuan). Alibaba-W (09988.HK) rose 2.2% to close at 163.2 yuan, with a transaction amount of 10.925 billion yuan, while Tencent (00700.HK) rose 0.25% to close at 602.5 yuan. The Tracker Fund of Hong Kong (02800.HK) rose 0.45% to close at 26.8 yuan, with a transaction amount of 17.75 billion yuan, and the short selling amount was 9.392 billion yuan, with the short selling ratio rising to 52.91% (the 3-day average short selling ratio was 29.92%).

Spot gold broke through $4,800 per ounce to reach a new high, boosting gold stocks. Zijin Mining International (02259.HK) rose 4.5%, Zhaojin Mining (01818.HK) rose 4.8%, and Chifeng Jilong Gold Mining (06693.HK) rose 9.1%.

【SMIC and Baidu Rise, Kuaishou Supported】

Chip stocks received support, with SMIC (00981.HK) rising 3.7% to 77.25 yuan, and Hua Hong Semiconductor (01347.HK) rising 5.2%. Baidu-W (09888.HK) rose 3.3% to close at 153.7 yuan, with a transaction amount of 3.175 billion yuan. Citigroup pointed out that Baidu is expected to announce its fourth-quarter 2025 results after the Lunar New Year, with market focus on management's comments regarding the listing progress of Kunlun Core, shareholder returns or improvements, and the year-on-year and quarter-on-quarter growth trends of AI-related revenues (including AI cloud infrastructure, AI applications, and self-driving taxi operational data). Citigroup expects Baidu's core advertising revenue decline year-on-year to narrow from a 18.7% drop in the third quarter to a 16% drop, but has lowered its total cloud business revenue growth forecast from an expected increase of 15% to 11.5%, reflecting high base effects and project revenue fluctuations. Benefiting from cost optimization, gross profit and non-GAAP operating profit are expected to gradually improve. Considering the upcoming listing of Kunlun Core, Citigroup reassessed the divisional valuation model and assigned a valuation of $13.3 billion to the Kunlun Core division, raising Baidu's (BIDU.US) U.S. stock target price from $181 to $186, and reiterating a "Buy" rating Kuaishou-W (01024.HK) saw its stock price rise 3.6% to close at HKD 78.8. Kuaishou recently announced that its Keling AI has surpassed 12 million monthly active users (MAU). As of January this year, the number of paying users on the Keling AI App has increased by approximately 350% compared to December last year, and the average daily revenue level has improved by about 30% compared to December.

【Short interest rises, Anta's stock price weak】

The Hong Kong stock market continues to be weak, with a rise-to-fall ratio of 25 to 24 for main board stocks (compared to 22 to 27 the previous day). Today, 51 of the Hang Seng Index constituent stocks rose, while 33 fell, with a rise-to-fall ratio of 58 to 38 (compared to 50 to 47 the previous day). The market recorded short selling of HKD 41.537 billion, accounting for 18.627% of the total turnover of shortable stocks at HKD 222.991 billion (compared to 15.741% the previous day).

Anta Sports (02020.HK) reported a low single-digit decline in retail sales for the Anta brand last quarter, with its stock price falling 4.2% to close at HKD 79.1. Anta's retail sales for the Anta brand in the fourth quarter of last year showed a low single-digit decline year-on-year. The FILA brand experienced a mid-single-digit growth, while other brands saw increases ranging from 35% to 40%. For the entire last year, Anta's retail sales for the Anta brand had a low single-digit increase, FILA brand had a mid-single-digit increase, and other brands saw increases of 45% to 50%.

Daiwa pointed out two major disappointments in Anta's operational update for the last quarter. First, the core Anta brand recorded a low single-digit year-on-year decline in RSV (retail sales value) in the fourth quarter of 2025, marking the first contraction since 2023; although the decline was less than 1%, it broke the existing trend. Secondly, Anta's management indicated that 2026 will be an "investment year," which the firm believes means that the group's operating profit margin will decline. Due to the slowdown in profit growth and decreased visibility in 2026, the rating was downgraded to "outperform" and the target price was lowered to HKD 95