Finance Associated Press, October 10 (Editor: Hu Jiarong) The three major Hong Kong stock indexes experienced significant fluctuations this week, with the technology index leading the decline. As of today's close, the Hang Seng Index fell by a cumulative 6.53% to close at 21251.98 points; the technology index fell by a cumulative 9.39% to close at 4736.10 points; the state-owned enterprise index fell by a cumulative 6.57% to close at 7621.74 points.

Note: Performance of the Hang Seng Index this week

During the National Day holiday, the Hong Kong stock market showed strong performance. After the Hang Seng Index reached a high of 23241.74 in two years on Monday, the market began to decline.

Note: The performance of the Hang Seng Technology Index this week

Despite the market adjustment, some institutions still remain bullish on the future performance of the Hong Kong stock market.

Guotai Junan International pointed out that the reasonable upward target price for the optimistic scenario of the Hang Seng Index before the end of the year ranges from 23,500 to 25,000 points, expecting funds to flow from blue-chip stocks to leading companies in segmented industries. Stocks with lagging performance but high dividends are expected to benefit from fund inflows.

Bocom International also believes that this is part of a normal technical adjustment in the market, expecting the Hong Kong stock market to have upward potential in October. The future market may exhibit high volatility and high differentiation.

Meanwhile, stocks that surged during the National Day period experienced varying degrees of pullback this week. For example, Swhyhk (00218.HK), Sunac (01918.HK), China Sce Group (01966.HK), Yuzhou Group (01628.HK), Guotai Junan i (01788.HK), and Bocom Intl (03329.HK) saw cumulative declines of 41.20%, 41.19%, 39.63%, 34.08%, 31.37%, 22.22% respectively this week.

The pullback of these stocks is related to profit-taking in the market. As mentioned earlier, after a period of rise in the Hong Kong stock market, both the index and individual stocks saw corrections, leading some investors to cash in their profits. Therefore, some stocks with significant gains also underwent adjustments.

Southbound funds.

Due to the holiday effect, the southbound funds only had 3 trading days this week, with a total net inflow of 11.985 billion Hong Kong dollars.

Note: The performance of southbound funds since the beginning of this year.

Today's Market

Looking at the market performance, stocks in coal, petroleum, infrastructure, brokerage, and autos sectors have shown outstanding performances.

Coal stocks are leading with Mongol Mining surging over 10%.

In the coal industry, Mongol Mining (00975.HK), Yankuang Energy (01171.HK), and Mongolia Energy (00276.HK) rose by 10.39%, 8.82%, and 8.33% respectively.

Note: Performance of coal mining stocks.

On the news side, according to the morning announcement from the People's Bank of China, it is decided to establish a mechanism for easy exchange among securities, funds, and insurance companies, supporting eligible securities, funds, and insurance companies to pledge assets such as bonds, stock ETFs, and CSI 300 component stocks as collateral, and exchange for national debt, central bank bills, and other high-quality liquid assets from the People's Bank.

Guosheng Securities believes that this policy will support the high dividend companies strategy. For companies with high dividend yields, major shareholders can increase their shareholding at a lower cost, potentially increasing the dividend payout ratio and attracting more investors seeking stable returns. For example, if a company's dividend yield is 4%, a major shareholder can borrow two billion at an interest rate of 2.25% to increase their shareholding, generating 8 million yuan in dividend income. After deducting the 4.5 million yuan interest on the loan, the net income is approximately 3.5 million yuan. This interest rate differential income can persist long-term, increase with the dividend yield, and encourage major shareholders to actively increase their shareholding and dividend payout ratio.

Similarly encouraged by this bullish news, petroleum and infrastructure stocks also saw gains. By the closing bell, China Oilfield (00346.HK), CNOOC (00883.HK), and PetroChina (00857.HK) rose by 6.72%, 4.15%, and 3.90% respectively.

Note: Performance of petroleum stocks.

By the closing bell, China Communications Construction (01800.HK), China Communications Construction (01800.HK), and China Railway (00390.HK) rose by 19.02%, 10.52%, and 8.97% respectively.

Note: Performance of infrastructure stocks.

The merger of two brokerages has attracted market attention, with Haitong Securities rising over 90%.

Among brokerage stocks, Haitong Securities (06837.HK), Guotai Junan (02611.HK), and Guolian Securities (01456.HK) rose by 95.48%, 55.07%, and 1.58% respectively.

Note: Performance of brokerage stocks

In terms of news, according to the Guotai Junan announcement, the company and Haitong Securities plan to carry out a major asset restructuring through a stock-for-stock absorption merger and raise supporting funds. The exchange ratio between Haitong Securities and Guotai Junan is 1:0.62, meaning that every 1 share of Haitong Securities A shares can be exchanged for 0.62 shares of Guotai Junan A shares, and every 1 share of Haitong Securities H shares can be exchanged for 0.62 shares of Guotai Junan H shares.

Institutional analysts mentioned that benefiting from policy stimulation, market trading sentiment has significantly improved. The brokerage sector has benefited from the market recovery before the National Day with a large increase. In the short term, factors such as incremental capital inflow, improved market risk appetite, continuous introduction of incremental policies, and accelerated pace of brokerage mergers and acquisitions are positive. The short-term investment value of the brokerage sector has increased, but attention is still needed on the risk of retracement after the sector's substantial volume rise.

Most auto stocks rose, with Geely Auto surging over 9%.

Among auto stocks, Geely Auto (00175.HK), Xpeng Motors-W (09868.HK), and Nio-SW (09866.HK) rose by 9.34%, 8%, and 4.62% respectively.

Note: Performance of auto stocks.

In terms of news, according to the data from the China Passenger Car Association, in the national passenger car market in August, new energy vehicle manufacturers with monthly wholesale sales exceeding 10,000 units accounted for 90.8% of the total sales of new energy passenger vehicles that month. Based on preliminary estimates, the estimated wholesale sales volume of these manufacturers in September will reach 1.11 million units. Based on this calculation, the wholesale sales volume of new energy passenger vehicles nationwide in September is expected to be 1.228 million units, a year-on-year increase of 48% and a month-on-month increase of 17%.

Individual stocks are fluctuating.

Ctrip Group rose more than 8%, with Citigroup raising its target price to $72.

Ctrip Group-S (09961.HK) rose 8.48%, closing at 505.50 Hong Kong dollars. Citigroup's report stated that Ctrip is expected to disclose its third-quarter performance from mid to late November, with revenue and adjusted net income expected to be in line with market expectations. However, there is a potential for further increase due to the resilience of China's travel demand recovery and Ctrip's good performance in research and development cost control.

JD.com Group rose by more than 3%, with institutions suggesting that the valuation level of internet companies still has room for upward adjustment.

JD.com Group-SW (09618.HK) rose 3.40%, closing at 167.10 Hong Kong dollars. Bocom International stated that the valuation level of individual stocks of internet companies currently has room for upward adjustment compared to the average valuation since 2022.