YICAI News on September 23rd (Editor: Hu Jiarong) Today, the Hong Kong stock market did not continue the previous week's rally, with mixed performances in the three major indices. At the close, the Hang Seng Index fell by 0.06% to close at 18247.10 points; the technology index dropped by 0.15% to close at 3698.27 points; the Hang Seng China Enterprises Index rose by 0.12% to close at 6389.08 points.

From the chart above, the three major indices of the Hong Kong stock market did not continue the previous uptrend. China International Capital Corporation pointed out that the Fed rate cut can bring about a phase of greater resilience, but long-term and sustained growth still comes from domestic growth and policies.

Longer-term capital inflows are not solely determined by rate cuts, as historical experience shows that among the three factors determining foreign capital flows (overseas liquidity, geopolitics, and domestic fundamentals), domestic fundamentals and policy efforts are often more important. In 2019, despite the Fed rate cut, foreign investment continued to flow out of the market, causing significant fluctuations, while in 2017, even with a Fed rate hike, foreign capital still flowed into the Chinese market, vividly illustrating this point.

Today's Market

In terms of market performance, home appliances, coal, and electric power stocks have performed well, while the trends of pharmaceutical and auto stocks have weakened.

Most home appliance stocks continue to rise, with Midea Group's shares rising nearly 6%.

Among home appliance stocks, Midea Group (00300.HK), Hisense Ha (00921.HK), and Haier Smarthome (00921.HK) rose by 5.63%, 1.75%, and 1.74% respectively.

On the news front, Guosen Securities pointed out that in August, home appliance retail sales stopped falling and rebounded, while the performance of household appliances both online and offline improved. The effects of the trade-in policy are expected to be gradually released, driving the demand for home appliances in China. Home appliance export revenue in August increased by 12%, with good growth in exports.

In addition, since the listing of Midea Group's H-shares on the 17th, the cumulative increase has reached 23.36%. Citigroup released a research report, giving Midea Group a "buy" rating for the first time, anticipating that with the accelerated implementation of the government's trade-in policy for consumer goods, home appliances will become the most benefiting consumer sector in the second half of the year. The group is expected to accelerate sales growth in the second half of the year, and its profit visibility is optimistic.

Coal prices rebounded for four consecutive weeks in the off-season, with China Qinfa rising nearly 9%.

In the coal sector, China Qinfa (00866.HK), Mongolia Energy (00276.HK), Southgobi (01878.HK) rose by 8.70%, 8.33%, 4.33%, respectively.

On the news front, despite being in the traditional off-season, coal prices have been on the rise for four consecutive weeks. Taking Qinhuangdao Port's 5500 kcal thermal coal as an example, its closing price has increased from 631 yuan/ton on September 7 to 686 yuan/ton on September 18, with an increase of 55 yuan/ton. Despite the relatively stable market prices at ports and a decrease in civilian electricity demand, there are still supporting factors for coal prices in the short term.

National cumulative installed power generation capacity increased by 14% year-on-year in the first 8 months, boosting the trend of electric power stocks.

Among electric power stocks, Huadian Power (01071.HK), Huaneng Power (00902.HK), China Resources Power (00836.HK) rose by 4.62%, 3.52%, and 3.33%, respectively.

In terms of news, the National Energy Administration released the national electricity industry statistics for January to August today. As of the end of August, the cumulative installed capacity of power generation in the country was about 3.13 billion kilowatts, a year-on-year increase of 14%. Among them, the installed capacity of solar power generation was about 0.75 billion kilowatts, a year-on-year increase of 48.8%; the installed capacity of wind power was about 0.47 billion kilowatts, a year-on-year increase of 19.9%.

Pharmaceutical stocks weakened, with Genscript Bio Technology falling nearly 10%.

Among pharmaceutical stocks, Genscript Bio Technology (01548.HK), Wuxi Bio (02269.HK), Asymchem Laboratories (06821.HK) fell by 9.82%, 5.08%, and 4.84% respectively.

On the news front, despite the pharmaceutical stocks benefiting from the Fed's rate cut last week and continuing to strengthen, today's trend did not continue the previous momentum. Institutions pointed out that this positive impact will continue to have a positive effect on the pharmaceutical sector.

They also mentioned that with the start of the rate cut cycle, investment and financing activities in the pharmaceutical industry are expected to gradually pick up, and the increase in research and development activities will be particularly beneficial to leading enterprises in competitive CXO industries globally and the industry leaders in various sub-sectors.

Most of the automobile stocks are adjusting, with NIO falling by nearly 5%.

In the automobile sector, NIO-SW (09866.HK), Leapmotor (09863.HK), and XPeng-W (09868.HK) fell by 4.99%, 3.16%, and 2.23% respectively.

In terms of news, reports suggest that out of consideration for "national security," the U.S. Department of Commerce is expected to propose on Monday to ban connected vehicles and autonomous vehicles driving on U.S. roads from using Chinese software and hardware. The move is seen as a significant upgrade to the continued restrictions the U.S. has placed on Chinese automobiles, software, and components.

Southbound funds.

Today, southbound funds continued to have a net inflow, with the inflow amounting to 8.514 billion Hong Kong dollars. So far this year, there has been a cumulative inflow of nearly 465.4 billion Hong Kong dollars.

Individual stocks are fluctuating.

China Aoyuan soared nearly 127%, introducing Middle Eastern institution Multi Gold as a strategic investor.

China Aoyuan (03883.HK) rose by 126.89%, closing at 0.27 Hong Kong dollars. In terms of news, the Middle Eastern investment group Multi Gold Group Limited has become China Aoyuan's new strategic investment partner, entering the board of directors and obtaining the position of chairman.

Zoomlion rose over 3%, terminating the spin-off of Zoomlion High-Altitude Equipment and Restructuring for listing.

Zoomlion (01157.HK) rose by 3.24%, closing at 4.14 Hong Kong dollars. In terms of news, the company announced the decision to terminate the spin-off of its subsidiary Hunan Zoomlion Intelligent High-Altitude Operation Machinery Co., Ltd. for listing through a restructuring with Shenzhen Roadrover Technology Co., Ltd.

Guosheng Securities pointed out that Zoomlion is a domestic construction machinery giant, with continuously enriching product categories and smooth progress in overseas expansion. The bank noted that the domestic construction machinery market has bottomed out, and there may be an upward turning point in the future against the background of policy-driven domestic demand recovery and the arrival of renewal and replacement demand.