According to the Zhutong Finance APP, the Hang Seng Index rose more than 2% in the morning, then briefly plunged, followed by a steady rise throughout the day. By the close, the Hang Seng Index was up 1.6% or 362.91 points, at 23,099.78 points, with a full-day turnover of 296.835 billion Hong Kong dollars; the Hang Seng China Enterprises Index rose by 2.14% to 8330.85 points; the Hang Seng Tech Index rose by 3.05% to 5386.48 points.

Goldman Sachs has raised its rating on the Chinese stock market to 'overweight' in its latest report, expecting a further increase of 15-20%. Huatai Securities stated that during the holidays, foreign investors have shown a greater interest in Chinese assets, especially actively managed mutual funds which have shifted from net outflows over 15 months to net inflows, although the current inflow volume is still relatively limited. Considering the underweight positioning of foreign assets in China, policy response speed, and domestic real estate/consumer data during the holiday period, they maintain the view that the trend interpretation window will continue until mid-October.

Blue chip performance

The Hong Kong Stock Exchange (00388) surged over 4% again, having risen over 80% since mid-September. At the close, it was up 4.68%, at 393.8 Hong Kong dollars, with a turnover of 8.342 billion Hong Kong dollars, contributing 34.67 points to the Hang Seng Index. HSBC's report mentioned that the Hong Kong Stock Exchange is expected to benefit from continued rate cuts in the United States, a rebound in mainland risk sentiment, further improvements in infrastructure such as the Southbound Trading and Chinese government bond futures, additional fiscal and monetary policy stimulus, as well as a potential further narrowing of AH share premiums. Huatai Securities also pointed out that for every additional 5 billion yuan in daily average turnover, the Hong Kong Stock Exchange's profit is expected to increase by around 2.2%.

In other blue-chip stock news, Citic (00267) rose by 12.88%, to 11.04 Hong Kong dollars, contributing 14.94 points to the Hang Seng Index; China Life Insurance (02628) rose by 12.42%, to 20.55 Hong Kong dollars, contributing 27.67 points to the Hang Seng Index; Li Ning (02331) rose by 8.93%, to 20.85 Hong Kong dollars, contributing 6.5 points to the Hang Seng Index; China United Network Communications (00762) rose by 8.79%, to 7.67 Hong Kong dollars, contributing 6.2 points to the Hang Seng Index.

Hot sectors

On the market, the semiconductor sector, China-affiliated brokerage firms continued their recent strong performance, real estate stocks bottomed out and rebounded, and shipping stocks collectively rebounded. In addition, defense, infrastructure, aviation, and Macau casino stocks all rose today. It is worth noting that AH high premium stocks were sought after today, Holly Futures rose by 58.15%, to 5.82 HKD; Zhejiang Shibao rose by 44.27%, to 4.66 HKD; Jingcheng MAC rose by 34.23%, to 3.49 HKD.

1. The semiconductor sector continued its strong performance. As of the close, Brainhole Tech (02203) rose by 275.94%, to 0.5 HKD; Contel (01912) rose by 58.12%, to 0.185 HKD; Semiconductor Manufacturing International Corporation (00981) rose by 21.76%, to 33.3 HKD; Hua Hong Semiconductor (01347) rose by 16.25%, to 32.55 HKD.

Goldman Sachs released a research report indicating that wafer fabs are expected to benefit from the increasing demand for domestic semiconductor manufacturing, driving long-term revenue expansion. However, profits are still under pressure due to depreciation from pricing and capacity expansion. The bank pointed out that wafer fabs are expanding capacity as planned to seize the rising local demand, holding a positive view on long-term opportunities. Huatai Securities stated that with the recovery trend in consumer electronics demand, the capacity utilization rate of domestic wafer foundries is expected to continue its recovery trend, with performance expected to remain positive. With support from a stable and robust rebound after touching the fundamentals, the bank is bullish on the sustained valuation recovery of the Hong Kong stock semiconductor manufacturing sector.

2. China-affiliated brokerage firms all showed strength. As of the close, Shenwan Hongyuan (06806) rose by 40.91%, to 4.65 HKD; China Merchants (06099) rose by 28.54%, to 25.9 HKD; China International Capital Corporation (03908) rose by 23.11%, to 24.55 HKD; CSC (06066) rose by 22.22%, to 17.16 HKD.

During the National Day holiday, the Hong Kong stock market maintained a high level of prosperity. The AH premium rate of brokerage firms' AH stocks significantly narrowed. According to Wind data, as of October 4th, the average AH premium rate of brokerage firm stocks was 71.98%, a decrease of 78.73 percentage points from September 30th. Only 4 brokerage firm stocks had AH premium rates over 100%, a decrease of 7 before the holiday. Huatai Securities pointed out that the current AH valuation of the brokerage sector is still at the lower percentile of the past 10 years, with some AH premiums at the lowest point in the last decade, bullish on the sector's investment opportunities in the context of positive market feedback cycle.

3. Defense stocks led the gains. As of the close, China Aerospace (00031) rose by 94.12%, to 0.66 HKD; Con Aero Tech (00232) rose by 44.37%, to 0.205 HKD; AvicChina (02357) rose by 24.24%, to 5.33 HKD; CSSC Offshore & Marine Engineering (00317) rose by 8%, to 15.12 HKD.

China Securities pointed out that several listed military industry companies recently disclosed orders and contracts, indicating that the industry recovery may have begun. Zheshang Securities pointed out that the successful launch of intercontinental missiles in recent times showcases strategic deterrence capabilities; regional or global military dynamics may be affected by conflicts in the Middle East, increasing attention on the defense military industry sector. Looking into the second half of 2024, it is expected to enter a new upward cycle. The defense industry has a certain planned nature, with the sector index adjusted to the early stage of the 14th Five-Year Plan, gradual elimination of some disturbing factors, and an expected improvement in industry fundamentals.

4. Infrastructure stocks surged at the close. As of the close, China Railway Construction Corporation (01186) rose by 15.44%, to 7.03 HKD; China Railway (00390) rose by 11.3%, to 5.12 HKD; China Communication Construction (01800) rose by 7.04%, to 5.78 HKD; CRRC Corporation (01766) rose by 6.09%, to 6.1 HKD.

CSC Securities pointed out that the current bullish policies are expected to continue, with the potential for further enhancement in the capital markets, real estate, and fiscal policies, directly benefiting undervalued state-owned construction enterprises and the construction and infrastructure sectors. They stated that during the National Day holiday, the Hong Kong stock market continued to rise, with the average increase of the five construction central enterprises listed in Hong Kong reaching 21.5%. The AH premium rate dropped from 110% to 90%, and the return on investment for A-share construction state-owned enterprises has improved. With the clear policy intentions already evident and continuous release of positives, they remain bullish on undervalued construction state-owned enterprises.

Popular fluctuating stocks

Uspace Technology (01725) surged by 170% at one point during trading and closed with a 119.09% increase at HK$2.41.

Uspace Technology recently announced that Wen Yichuan has resigned as the chairman of the board of directors; and Mohamed Ben Amor has been appointed as the new chairman of the board of directors, effective immediately. Ben Amor has been serving as the Secretary-General of the Arab Information and Communication Technologies Organization (AICTO) since 2016, an organization supported by the Arab League aimed at promoting ICT development in the Arab region. Prior to this, Uspace Technology announced the launch of six commercial optical satellites, marking a milestone in satellite mass production and commercialization for the group. The company also revealed its pursuit of various potential business opportunities and collaborations in the aerospace sector, particularly in the Middle East.

China International Capital Corporation (02799) and China Cinda (01359) saw significant volume-driven increases. By the close, China International Capital Corporation rose by 41.79% to HK$0.95; China Cinda rose by 32.69% to HK$2.07.

On September 24, the Banking and Insurance Regulatory Commission stated during a press conference that they would expand the pilot program for bank equity investments. This was followed by the release of notices expanding the scope of the pilot program for equity investments by financial asset management companies. CSC Securities believes that AIC will become an important patient capital player in the technology finance market.

Zhong Rong International (00354) continued its upward trend, with a 29.52% increase by the close at HK$8.38.

Huawei previously announced that the native HarmonyOS system, HarmonyOS NEXT, will start public testing on October 8. The initial batch of models for the 'pure' HarmonyOS operating system HarmonyOS NEXT includes the Huawei Mate 60 series, Huawei Mate X5 series, and Huawei Mate Pad Pro 13.2 series. GTJA previously stated that Zhong Rong International, as a core partner of Huawei Cloud, stands to benefit significantly from the development of Huawei AI Cloud. With the ability to integrate software and hardware for HarmonyOS, the company supports the practical application of HarmonyOS in various industries. The company has released multiple new AI products, with development prospects exceeding expectations.

4. Jiahe Biotech-B (06998) opened significantly higher after resumption of trading. As of the close, it rose by 41.82%, to HK$2.34.

Jiahe Biotech announced that the company will acquire Yiteng Medicine Group through a merger. The company has entered into a CDK4/6i outsourcing management agreement with Yiteng Medicine Group. The directors anticipate the commercialization of CDK4/6i is imminent, and the company's development has reached an important stage, necessitating strong business capabilities to seize all possible market opportunities. The board of directors believes that the target group meets the above criteria. It is expected that the merger will bring complementary and synergistic effects to the group and the target group, laying a solid foundation for the sustainable development of the enlarged group after the merger is completed. It is worth noting that the company plans to change its name to "Yiteng Jiahe Medicine Group Limited".