The Federal Reserve's hawkish interest rate cuts hit the US stock market hard, and the Hong Kong stock market fell today along with international markets, with all three major indices dropping over 1% in the morning and narrowing their losses in the afternoon.
According to Zhitong Finance APP, the Federal Reserve's hawkish interest rate cuts hit the US stock market hard, and the Hong Kong stock market fell today along with international markets, with all three major indices dropping over 1% in the morning and narrowing their losses in the afternoon. By the close, the Hang Seng Index fell 0.56% or 112.04 points to 19,752.51 points, with a total turnover of 142.87 billion HKD; the Hang Seng China Enterprises Index fell 0.4% to 7,152.13 points; the Hang Seng TECH Index fell 0.66% to 4,439.47 points.
Huatai Securities pointed out that the divergence between domestic and foreign capital continues, with attention on the marginal tightening pressure of overseas liquidity after the FOMC meeting. Key changes include: foreign capital movements: proactive allocation foreign capital has seen a net outflow for nine consecutive weeks; southbound funds: net inflow remains at a high level, focusing on high dividends and new economy; industrial capital: buybacks are approaching April levels; sentiment tracking: the short-selling ratio of Hong Kong Internet stocks has risen significantly.
Blue chip performance
TENCENT Holdings (00700) surged in the afternoon. By the close, it rose 2.27% to 415.2 HKD, with a turnover of 14.31 billion HKD, contributing 35.92 points to the Hang Seng Index. It was reported today that Apple is in talks with TENCENT and ByteDance to integrate their AI models into iPhones sold in China, but negotiations are still in the early stages. TENCENT stated: 'No comment.'
In other blue chip stocks, SUNNY OPTICAL (02382) rose 4.43% to 70.75 HKD, contributing 3.61 points to the Hang Seng Index; Li Auto-W (02015) rose 1.28% to 91.05 HKD, contributing 2.52 points to the Hang Seng Index; ZHONGSHENG HLDG (00881) fell 4.12% to 14.88 HKD, dragging down the Hang Seng Index by 0.74 points; WH GROUP (00288) fell 3.63% to 6.1 HKD, dragging down the Hang Seng Index by 3.03 points.
Hot sectors
Overall, large Technology stocks mostly declined today, with news that Apple is discussing AI model collaboration with TENCENT and BYTEDANCE. TENCENT rose over 2% against the trend today, leading related Concept stocks to jump, with WEIMOB INC soaring over 50% in the afternoon. The Smart Phone Industry Chain also increased, with Q TECH rising over 4%. Chinese Airlines reached historic passenger volume records, and the Aviation Industry performed strongly throughout the day; some chip stocks and Film and Television Entertainment stocks also gained. On the other hand, Bitcoin briefly fell below the 0.1 million mark, causing a collective decline in Cryptos Concept stocks; the Fed executed "hawkish rate cuts," putting pressure on Hong Kong Property Stocks; Mainland Real Estate, pharmaceutical stocks, and shipping stocks all fell.
1. Aviation stocks led the gains. At the close, Air China Limited (00753) rose 5.24% to 5.22 HKD; China Southern Airlines (01055) rose 5% to 4.2 HKD; Beijing Capital International Airport (00694) rose 3.94% to 2.9 HKD; China Eastern Airlines (00670) rose 1.92% to 2.62 HKD.
According to industry monitoring data, as of December 15, Chinese Airlines have completed a passenger transportation volume exceeding 0.7 billion this year, reaching 700.48 million passengers, with an average daily passenger transport volume exceeding 2 million, a year-on-year increase of 18.1% and a 10.7% increase compared to 2019, setting a historical high for the development of civil aviation in China. Additionally, listed airlines recently disclosed their November operational data, showing that the industry passenger load factor in November decreased by approximately 2.7 percentage points month-on-month but was higher than the 1.6 percentage points from 2019.
SWHY pointed out that aviation typically experiences a seasonal lull in travel during the fourth quarter, yet travel demand remains resilient. The fundamental supply and demand in the aviation sector is currently in an improving phase, with domestic demand steadily increasing and international demand continuously recovering. The long-term supply and demand gap shows high certainty, and oil prices are currently at high levels with significant downward potential. In a relatively optimistic or improving macro environment, cyclical Aviation Sector symbols are expected to benefit, and this current cycle is likely to start.
2. TENCENT related stocks surged in the afternoon. At the close, WEIMOB INC (02013) rose 35.76% to 2.05 HKD; YOUZAN (08083) rose 18.35% to 0.129 HKD; TENCENT (00700) rose 2.27% to 415.2 HKD.
According to reports from financial society, several insiders revealed that Apple is negotiating with TENCENT and BYTEDANCE to integrate their AI models into iPhones sold in China. Apple began integrating OpenAI's ChatGPT into its devices this month, with Siri calling ChatGPT, although ChatGPT has not been launched in China. It is reported that discussions between Apple, TENCENT, and BYTEDANCE regarding the use of their AI models are still in very early stages.
WEIMOB INC surged over 50% in the afternoon. According to reports from Wall Street, a related person from WEIMOB stated that as one of TENCENT's important ecological partners, WEIMOB's mini-program is the first to access WeChat small store, supporting merchants' participation in the WeChat e-commerce ecosystem; current related products are being connected to provide users with richer shopping choices and a more convenient shopping experience.
3. The Smart Phone Industry Chain saw widespread gains. At the close, Q TECH (01478) rose 4.64% to 6.54 HKD; SUNNY OPTICAL (02382) rose 4.43% to 70.75 HKD; COWELL (01415) rose 2.85% to 28.9 HKD; AAC TECH (02018) rose 2.04% to 37.55 HKD.
Apple is reportedly in preliminary discussions with TENCENT and BYTEDANCE to consider integrating their AI models into iPhones sold in China. Additionally, starting December 12, Jiangxi Province will launch the "Home Appliance Replacement Subsidy - Mobile Phone and Tablet Special Event," offering a 15% subsidy on the Fill Price for mobile phones and tablets, with a maximum subsidy of 1,000 yuan per transaction. Morgan Stanley pointed out that Jiangxi is the third province in the mainland to announce such a policy, believing that other provinces may follow suit. Morgan Stanley expressed that the subsidy policy will serve as a short-term Bullish catalyst for the Smart Phone OEM production and supply chain, and believes that Xiaomi, SUNNY OPTICAL, AAC TECH, BYD Electronics, and Q TECH will be the main beneficiaries.
4. Concept stocks in Cryptos collectively declined. At market close, OKG TECH (01499) fell 5.88% to 0.176 Hong Kong dollars; LINEKONG (08267) dropped 3.64% to 0.53 Hong Kong dollars; OSL GROUP (00863) decreased 2.36% to 7.85 Hong Kong dollars.
In the early hours of December 19, Bitcoin briefly fell below the 0.1 million dollar mark, marking the largest single-day drop since August. As of the time of publication, Bitcoin hovered around 0.1 million dollars. Powell stated that the Federal Reserve is not allowed to own Bitcoin and has not sought to change the law regarding the ownership of Bitcoin. Meanwhile, Trump had promised to implement favorable policies for the Cryptos industry upon taking office and considered establishing a Bitcoin strategic reserve. Bitcoin was previously propelled by Trump's victory in the U.S. election, entering a surge mode, and on Tuesday, it rose to over 0.108 million dollars, setting a historic high for the second consecutive day.
5. Hong Kong Property Stocks were generally under pressure. At market close, HENDERSON LAND (00012) fell 3.32% to 23.3 Hong Kong dollars; LINK REIT (00823) dropped 2.4% to 32.5 Hong Kong dollars; HANG LUNG PPT (00101) decreased 2.38% to 6.16 Hong Kong dollars; SHK PPT (00016) fell 2.23% to 72.3 Hong Kong dollars.
The Federal Reserve lowered interest rates by 25 basis points as expected and forecasts only two additional cuts totaling 50 basis points next year, lower than previously anticipated. Powell stated that the Federal Reserve is cautiously approaching a stage of slowing down or pausing interest rate cuts, emphasizing that any future cuts will require new progress on inflation. Morgan Stanley noted that the Hong Kong real estate market is not seeing any improvement next year, and the outlook remains challenging, with interest rates remaining at a high level being detrimental to the overall development of Hong Kong's property market. Although many local real estate stocks are relatively cheap, Morgan Stanley believes that market oversupply and developers' inventory buildup are not helpful for market development, currently predicting that residential prices will continue to decline in the first half of next year.
Popular stocks with abnormal movements
1. Herbs Generation Group Holdings Limited (02593) debuted on the market. At market close, it rose 10.4% to 4.14 Hong Kong dollars.
Herbs Generation Group Holdings Limited priced each share at 3.75 Hong Kong dollars, issuing a total of 33.3336 million shares, with a minimum trading unit of 800 shares, and the net proceeds will be approximately 95.3 million Hong Kong dollars. The prospectus shows that Herbs Generation Group is a diversified supplier of health and beauty skincare products, rooted in Hong Kong for over twenty years, employing a multi-channel sales model, focusing on the development, sales, and marketing of its own brand products. Currently, Herbs Generation Group operates a total of eight own brands.
It is worth noting that Herbs Generation Group Holdings Limited was formerly known as XIN YING MEI KESI, founded in 1999 by TVB star Kwok Chun-on and his sister, Kwok Chih-yin, along with an independent third party (who later exited in October 2000). According to the placement announcement, Herbs Generation Group Holdings Limited received an oversubscription of 6,083.63 times in the public offering, a subscription multiple only second to that of MOST KWAI CHUNG, which was listed in 2018, in the history of Hong Kong stocks.
2. ZTE (00763) AH Stocks rose. At the close, it was up 6.01%, reported at 22.05 HKD.
On December 18, Volcano Engine held the FORCE conference, unveiling a new upgrade for the Doubao large model family. Institutions believe that by 2025, as ByteDance further intensifies its efforts in AI, the application of large models like Doubao will further increase the demand for reasoning computing power. Northeast Securities noted that the company is seizing new opportunities brought by AI large models, launching a full-stack and all-domain intelligent computing solution covering computing power, network, capability, large models, and applications. The firm is bullish on ZTE's competitive advantages and sustained growth in the computing power + connectivity sector.
