The Hang Seng Index falls below 26,000, northbound capital inflow decreases by 62%, metal and mobile phone stocks are sold off

The Iran-US war continues, with Iran confirming the blockade of the Strait of Hormuz, raising market concerns about the risks of global shipping and supply chain disruptions due to the conflict, leading to a decline in Hong Kong stocks today (3rd). The Dow Jones Industrial Average fell 0.2% overnight (2nd), while the Nasdaq rose 0.4%. At the time of writing, the yield on the US 2-year Treasury bond rose to 3.535%, and the yield on the US 10-year Treasury bond rose to 4.094%, with the US dollar index rising to 99.06. Dow futures are currently down 794 points or 1.6%, and Nasdaq futures are down 501 points or 2%. The Korea Composite Stock Price Index (KOSPI) fell 7.2%, with SK Hynix's stock price plunging 11.5%, while the Nikkei index fell 3.2%. The Shanghai Composite Index fell 59 points or 1.4% to close at 4,122 points, the Shenzhen Component Index fell 3.1%, and the ChiNext Index fell 2.6%, with a total trading volume of nearly 3.13 trillion yuan in the Shanghai and Shenzhen markets. The National Committee of the Chinese People's Political Consultative Conference will open at 3 PM tomorrow at the Great Hall of the People in Beijing, lasting for seven days until next Wednesday morning.

The Hang Seng Index opened up 130 points, initially rising 159 points to 26,218 points before declining, and at the close, it had dropped 332 points to 25,727 points, finishing down 291 points or 1.1% at 25,768 points; the Hang Seng China Enterprises Index fell 93 points or 1.1% to close at 8,608 points; the Hang Seng Tech Index fell 112 points or 2.3% to close at 4,876 points. The total trading volume for the day was 370.545 billion yuan. The total trading volume for northbound trading was 179.031 billion yuan, while southbound funds had a net inflow of 6.081 billion yuan today (compared to a net inflow of 16.214 billion yuan on the previous trading day), a daily reduction of over 62%.

The Tracker Fund (02800.HK) fell 1.2% to close at 25.96 yuan, with a trading volume of 21.22 billion yuan, short selling amounting to 10.37 billion yuan, and a short selling ratio of 48.9%; China Southern Hang Seng Technology (03033.HK) declined 2.6% to close at 4.762 yuan, with a trading volume of 18.5 billion yuan, short selling amounting to 5.736 billion yuan, and a short selling ratio of 31%. Tencent (00700.HK) fell 0.7% to close at 510.5 yuan, with a trading volume of 14.13 billion yuan, while Alibaba-W (09988.HK) fell 1.2% to close at 134.8 yuan. Zhizhu (02513.HK) fell 4%. MiniMax-WP (00100.HK) rose 9.1% against the trend, after the stock announced a loss of 1.87 billion USD for the previous year after the market closed yesterday, with CICC indicating that MiniMax's performance last year exceeded expectations.

【PetroChina continues to rise, metal stocks under pressure】

Sinopec (00386.HK) fell 2.7%, but PetroChina (00857.HK) and CNOOC (00883.HK) rose 5% and 3.2%, respectively. Oil equipment stock Shandong Molong (00568.HK) surged 26% to close at 11.79 yuan, having reached a high of 16.33 yuan during the session, a rise of 74.7%, with a trading volume of 11.28 billion yuan. Metal commodity stocks were under pressure, with Shandong Gold (01787.HK), Zhaojin (01818.HK), and Zijin (02899.HK) falling 5% to 6.3%, while China Silver (00815.HK), China Gold International (02099.HK), Zijin Gold International (02259.HK), WanGuo Gold (03939.HK), and Lingbao Gold (03330.HK) fell 7.7% to 8.9% Jiangxi Copper (00358.HK) and Luoyang Molybdenum (03993.HK) saw their stock prices drop by 7.1% and 6.9%, respectively. Minmetals Resources (01208.HK) fell by 9.3%. Lithium stocks Tianqi Lithium (09696.HK) and Ganfeng Lithium (01772.HK) dropped by 8.1% and 10.9%.

CICC published a report suggesting that investors focus on investment opportunities in upstream oil and gas exploration and development, oil services, and refining companies due to changes in the situation in Iran. In the short term, the bank believes that due to the increase in geopolitical premiums, the oil price center may rise from about $67 per barrel in 2025 to over $70. Additionally, Iran's control over the Strait of Hormuz, the stability of crude oil trade flows in the Middle East, and the safety of production facilities in Gulf countries are also short-term catalysts for rising oil prices. Considering a 15% annual decline in oil prices by 2025 and the current upward expectations, the bank lowered its net profit forecast for CNOOC (00883.HK) in 2025 by 4.2% to RMB 128.4 billion, maintained its net profit forecast for 2026, and expects net profit in 2027 to reach RMB 142.47 billion. The bank raised CNOOC's target price by 22.8% to HKD 28, giving it an "outperform" rating.

【Declining Stocks Exceed 1,600, Mobile Stocks Under Pressure】

The Hong Kong stock market continued to weaken, with a rise-and-fall ratio of 14 to 39 for main board stocks (compared to 12 to 42 the previous day), and 1,627 declining stocks (a decline of 3.5%). Among the Hang Seng Index constituent stocks, 17 rose and 67 fell, with a rise-and-fall ratio of 19 to 76 (compared to 14 to 86 the previous day). The market recorded short selling of HKD 68.744 billion, accounting for 22.089% of the total turnover of HKD 311.21 billion for shortable stocks.

Shipping stocks Orient Overseas (00316.HK) and COSCO Shipping Holdings (01919.HK) rose by 2.9% and 5.2%, respectively. However, chip stocks declined, with SMIC (00981.HK) down 3.2%, Hua Hong Semiconductor (01347.HK), Innoscience (02577.HK), Bairun (06082.HK), and Tenstorrent (09903.HK) falling by 5.4% to 6.6%. Mobile component stocks BYD Electronics (00285.HK), GoerTek (01415.HK), Q Technology (01478.HK), and Lens Technology (06613.HK) dropped by 5.4% to 6.7%, while AAC Technologies (02018.HK) fell by 8.6%. Wire stocks Changfei Optical Fiber (06869.HK) declined by 6.6%. Power equipment stocks Harbin Electric (01133.HK) and Dongfang Electric (01072.HK) fell by 6.2% and 13.8%, respectively.

JP Morgan published a report stating that with the escalation of conflicts in the Middle East and Iran's closure of the Strait of Hormuz, the Asian transportation and industrial ecosystem is undergoing fundamental reshaping due to the intersection of geopolitical shocks, tightening regulations, and shifts in trade flows. The bank noted that companies with scale advantages, flexibility, and strategic layouts in container shipping, tankers, bulk shipping, ports, supply chains, defense, and aviation are seizing upward opportunities. Container shipping and regional operators are benefiting from their network coverage and pricing power, while tankers and bulk shipping benefit from supply tightening and rigorous capital allocation strategies. Leading ports and supply chains are profiting from route diversions and warehousing revenues, and the defense industry is entering a structural upcycle due to the global shift in strategic focus