Market focus on the Fed interest rate decision this week, the Hang Seng Index opened low and rose today, with all three major indexes up more than 1%, and the gains further expanded in the afternoon. As of the close, the Hang Seng Index rose by 1.37% or 237.9 points to 17660.02 points, with a total daily turnover of 63.078 billion Hong Kong dollars; the Hang Seng China Enterprises Index rose by 1.41% to 6176.03 points; the Hang Seng Tech Index rose by 1.12% to 3536.57 points.

CICC pointed out that due to its sensitivity to external liquidity and the linked exchange rate system, the Hang Seng Index has greater flexibility than A shares. At the industry level, growth stocks sensitive to interest rates (biotechnology, technology hardware, etc.), sectors with a high proportion of overseas U.S. dollar financing, local dividend payment stocks, and property sectors benefiting from the export chain driven by U.S. rate cuts may also benefit marginally.

Blue chip performance

Li Auto Inc. (02015) led the blue chips. As of the close, it rose by 6.26%, reaching 78.9 Hong Kong dollars, with a turnover of 0.561 billion Hong Kong dollars, contributing 10.47 points to the Hang Seng Index. From January to August 2024, Li Auto delivered a total of 288,103 new cars, a year-on-year increase of 38.4%. Citigroup believes that the subsequent launch of new car models will further improve Li Auto's product lineup, enhance its overall sales volume space, and the combination of high per vehicle sales prices and economies of scale is expected to maintain a good profit level. It is expected that Li Auto's sales volume will reach 0.53 million vehicles in 2024.

In other blue chip stocks, New World Development (00017) rose by 5.48%, reaching 7.12 Hong Kong dollars, contributing 0.86 points to the Hang Seng Index; CK Asset (01113) rose by 4.38%, reaching 32.15 Hong Kong dollars, contributing 4.28 points to the Hang Seng Index; Haier Smart Home (06690) fell by 2.3%, reaching 23.4 Hong Kong dollars, dragging down the Hang Seng Index by 2.2 points; and Hengan International (01044) fell by 0.92%, reaching 21.65 Hong Kong dollars, dragging down the Hang Seng Index by 0.22 points.

Hot sectors

On the market, large technology stocks are generally rising, with Meituan and Alibaba both up more than 1%. The timing of the Fed’s interest rate cut is approaching, the price of gold hits a new historical high again, and gold stocks are rising again; the expectation of interest rate cut boosts the property sentiment, and Hong Kong property stocks are performing well; the hurricane in the United States supports oil prices, and the three major oil companies are collectively rising; real estate and property management stocks, which performed poorly yesterday, rebounded today; China mainland banking stocks, gas stocks, auto stocks, casino stocks, and sporting goods stocks are generally doing well. On the other hand, theater stocks, home appliance stocks, and heavy equipment stocks are sluggish.

1. Gold stocks continue to rise. As of the close, Zhaojin Mining (01818) rose 2.62% to HKD 13.3; Zijin Mining Group (02899) rose 2.44% to HKD 15.1; Chinagoldintl (02099) rose 2.25% to HKD 31.85; SD Gold (01787) rose 1.52% to HKD 16.08.

On September 16th, the international gold price hit a historical high again, with COMEX gold reaching as high as $2617.4 and spot gold rising to a maximum of $2589.68. The market is now focused on the interest rate decision to be announced by the Federal Reserve on September 19th Beijing time. According to the Fed observation tool of CME Group, the market now estimates a 59% chance of a 50 basis point rate cut by the Fed, higher than the 43% last Friday.

Sinolink Securities stated that the timing of the rate cut is approaching, and the gold price is expected to continue its rapid upward trend. It is expected that the operating center of the gold price in 2025 will climb to USD 2600-2700 per ounce. The bank pointed out that the official rate cut by the Federal Reserve signals a significant increase in the volatility of domestic golden industrial concept stocks, making it more difficult to achieve relative and absolute returns. Gold companies involved in refining processes are more likely to release their performance in Q4 this year, and the performance forecast at the end of January 2025 can be verified. The stock price has the basis to rebound with the gold price.

2. Hong Kong property stocks rose across the board today. As of the close, New World Development (00017) rose 5.48% to HKD 7.12; CK Asset (01113) rose 4.38% to HKD 32.15; Wharf REIC (01997) rose 3.87% to HKD 22.8; Link REIT (00823) rose 1.57% to HKD 38.8.

The expectation of a Fed interest rate cut further boosts the property sentiment in Hong Kong. According to the latest data from Centaline Property, 15 transactions were recorded in the top 10 housing estates in Hong Kong over the weekend, a significant increase of 87.5% compared to the 8 transactions of the previous weekend, reaching a new high in about half a year since late March. Chen Wing Kit, Vice Chairman of Centaline Property Asia-Pacific, commented that the market generally expects the Fed to announce a rate cut at the interest rate meeting. The market sentiment has recently improved, and the property market sentiment is also positive. Many buyers are taking advantage of the low interest rate to absorb the new supply, driving the volume and transaction volume of property viewings to increase significantly. It is believed that the property market will continue to rebound after the rate cut.

3. Mainland real estate stocks and property management stocks rebounded. As of the close, Sino-Ocean GP (03377) rose 6.49% to HKD 0.197; Logan Group (03380) rose 3.9% to HKD 0.8; CIFI Hold GP (00884) rose 3.2% to HKD 0.226; Pine Tech (06626) rose 2.53% to HKD 3.24.

The National Bureau of Statistics recently released data on the real estate market. From January to August, the year-on-year decline in several key indicators such as the sales area and sales revenue of new houses nationwide, the amount of funds in place by real estate companies, and the area of new housing starts has continued to narrow. Among them, the year-on-year decline in the sales area of new houses nationwide has been narrowing for three consecutive months, and the decline in sales revenue has been narrowing for four consecutive months; the decline in the amount of funds in place by real estate companies has been narrowing for five consecutive months, and the decline in the area of new housing starts has been narrowing for six consecutive months.

Sinolink Securities pointed out that recently the central bank has stated that maintaining price stability and promoting moderate price recovery are important considerations for monetary policy; taking measures to further reduce the financing costs of enterprises and residents. The implementation of monetary policy and the decrease in mortgage rates are positive for the real estate market, and we look forward to the decrease in both incremental and existing mortgage rates.

4. Most automobile stocks are rising. At the close, Li Auto Inc-W (02015) rose 6.26% to HK$78.9; Leap Motor (09863) rose 4.45% to HK$23.45; Guangzhou Automobile Group (02238) rose 1.35% to HK$2.26.

According to data from the China Passenger Car Association, from September 1st to 8th, the retail sales of passenger vehicles in the market reached 0.388 million units, a year-on-year increase of 10% and a month-on-month increase of 5%. From September 1st to 8th, the retail sales of new energy vehicles in the market reached 0.214 million units, a year-on-year increase of 56% and a month-on-month increase of 11%. In addition, as of September 14th, the Old-for-New Information Platform for automobiles has received more than 1 million applications for scrappage subsidies (with a daily average of over 0.013 million applications). Everbright Securities believes that it is expected that with the steady progress of the old-for-new policy across the country, the industry prosperity in the second half of 2024 is likely to improve.

Recently, the U.S. government decided to significantly increase import tariffs on Chinese products, with the tariffs on electric vehicles increasing by as much as 100%. According to the announcement of the Office of the U.S. Trade Representative, some tariff adjustments will take effect starting from September 27th. Industry insiders analyze that the scale of China's export of new energy vehicles to the United States is very small, so the actual impact of this additional tariff on China's export of new energy vehicles is limited.

5. Mainland banking stocks are generally rising. At the close, Postal Savings Bank of China (01658) rose 2.42% to HK$4.23; Bank of Communications (03328) rose 2.27% to HK$5.41; CM Bank (03968) rose 2.21% to HK$30.1.

Minsheng Securities pointed out that at this stage, the growth rate of the total financial indicators has stabilized, and the central bank has expressed that its supportive monetary policy stance remains unchanged, providing good support for stable economic growth. On the other hand, government investment continues to increase, which is expected to provide certain support for social financing. Due to the expectations of interest rate cuts on existing mortgage loans and the disclosure of interim results, the sector has experienced a recent correction. However, in the process of stabilizing and improving the economy, the high dividend allocation value of banks remains attractive. Dahua Jixian believes that after the recent adjustment of the stock prices of mainland banking stocks, their valuations have been depressed, dividend yields have rebounded, and they may bring a glimmer of hope for defensive stocks.

Popular fluctuating stocks

1. Pine Tech (01079) announces positive earnings. At the close, it rose 62.5% to HK$0.052.

Pine Tech announces good earnings, expecting unaudited after-tax comprehensive net profit of not less than about HKD 40 million for the year ended 30 June 2024, compared to a comprehensive net loss of about HKD 0.1076 billion in the same period last year. The expected turnaround from loss to profit is mainly due to a significant increase in the group's income in the 2024 fiscal year, as well as a substantial reduction in general and administrative expenses in the 2024 fiscal year.

Kaisa Group (01638) surged in trading volume. At the close, it rose 17.44% to HKD 0.101.

Kaisa Group has disclosed further information regarding the overseas debt restructuring. According to the announcement, approximately 75.11% of the outstanding principal of debts within the Kaisa Group and approximately 81.07% of the outstanding principal of debts within Ruijing have been included in the restructuring support agreement, as recalculated and confirmed by the information agent. In the first half of this year, Kaisa Group delivered a total construction area of approximately 0.28 million square meters across 12 projects in Shenzhen, Beijing, Chongqing, Xuzhou, Jieyang, Zhongshan, and other cities.

Pak Tak Int'l (02668) declined again. At the close, it fell 6.59% to HKD 0.425.

The Hong Kong Securities and Futures Commission recently conducted an inquiry into the shareholding distribution of Pak Tak Int'l. The inquiry results revealed a high concentration of shareholding in the company. As of 4 September this year, there were a total of 25 shareholders holding 3.483 billion shares, equivalent to 74.41% of the company's issued share capital. Together with the 0.98 billion shares held by a major shareholder of the company, they accounted for 20.94% of the issued share capital, equivalent to 95.35% of the company's share capital. Therefore, only 0.217 billion shares or 4.65% of the issued share capital are held by other shareholders.

New stocks debut.

Midea Group (00300) performed well. At the close, it rose 7.85% to HKD 59.1.

Midea Group priced its shares at HKD 54.8 per share, issuing a total of 0.566 billion shares, with a board lot size of 100 shares. The net proceeds are expected to be approximately HKD 30.668 billion, making it the largest IPO fundraising on the Hong Kong Stock Exchange this year. It is reported that Midea Group is one of China's leading home appliance manufacturers, with products covering air conditioners, refrigerators, washing machines, kitchen appliances, and other areas.

The company has been listed in the Fortune Global 500 list for nine consecutive years, with business presence in over 200 countries and regions, operating 33 research and development centers and 43 major production bases worldwide, and employing over 0.19 million staff globally. Based on the sales volume and revenue in 2023, Midea Group is the world's largest home appliances enterprise, with a market share of 7.9% by sales volume.