According to Zhitong Finance APP, in the early trading of the Hong Kong stock market, there was a slight downturn, followed by a rise of the three major indices, with the Hang Seng TECH Index once rising more than 1%, but then it fluctuated back down, and the Hang Seng Index and Hang Seng China Enterprises Index turned negative again. At the close, the Hang Seng Index fell by 0.16% or 31.81 points, reporting 19,720.70 points, with a total turnover of 178.46 billion Hong Kong dollars; the Hang Seng China Enterprises Index fell by 0.12%, reporting 7,143.88 points; the Hang Seng TECH Index rose by 0.11%, reporting 4,444.19 points. For the week, the Hang Seng Index decreased by 1.25%, the Hang Seng China Enterprises Index decreased by 0.59%, and the Hang Seng TECH Index decreased by 0.79%.

HTSC believes that before Trump officially takes office in late January, considering the current downward trend in earnings expectations for Hong Kong stocks, the potential tightness of overseas liquidity, the Hang Seng Index’s risk premium fluctuating around the mean during the policy window period, and the currently low short-selling ratio of the Hang Seng Index, the Hong Kong stock market may face a temporary pause. In terms of allocation, it is advisable to focus on stability, and seek resilient stocks with earnings potential within the dividends.

Blue chip performance

Semiconductor Manufacturing International Corporation (00981) led the rise among blue chips. At the close, it rose by 8.22%, reporting 28.3 Hong Kong dollars, with a turnover of 9.484 billion Hong Kong dollars, contributing 14.29 points to the Hang Seng Index. Ping An Securities pointed out that self-controllability is the main theme, with the country frequently launching policies for strong support, and the gap with advanced overseas levels is expected to gradually narrow; driven by demand in AI, Internet of Things, and Electric Vehicles, the wafer foundry industry scale will continue to grow, and advanced processes and specialty processes will develop simultaneously.

Regarding other blue chip stocks, XIAOMI-W (01810) rose by 2.76%, reporting 31.65 Hong Kong dollars, contributing 23.43 points to the Hang Seng Index; TENCENT (00700) rose by 2.7%, reporting 426.4 Hong Kong dollars, contributing 43.74 points to the Hang Seng Index; China Shenhua Energy (01088) fell by 3.46%, reporting 32.05 Hong Kong dollars, dragging down the Hang Seng Index by 6.16 points; Alibaba-W (09988) fell by 3.44%, reporting 80.1 Hong Kong dollars, dragging down the Hang Seng Index by 53.33 points.

Hot sectors

On the market, large technology stocks fluctuated, with WeChat e-commerce experiencing significant catalysts, as Tencent rose by 2.77%, while Alibaba dropped by 3.44%. Semiconductor stocks performed strongly, with Semiconductor Manufacturing International Corporation once increasing by over 13%; the WeChat store's gray test of the 'gift-giving' feature led to a surge in related stocks, with WEIMOB INC rising 25% and EAST BUY increasing by 15%; Theater stocks, Electric Vehicle stocks, and Sporting Goods stocks also saw gains. On the other hand, Bitcoin fell below $97,000, causing declines in Cryptos concept stocks; Coal Industrial Concept(coal Industry) stocks, Aviation/airlines Industry stocks, Steel stocks, and Golden Industrial Concept stocks were all under pressure.

1. "WeChat gift-giving" ignites related stocks. At the close, WEIMOB INC (02013) rose 25.37% to HKD 2.57; EAST BUY (01797) rose 15.54% to HKD 16.36; Youzan (08083) rose 6.98% to HKD 0.138; TENCENT (00700) rose 2.7% to HKD 426.4.

On December 19, the official WeChat store announced the launch of a gray test for the 'gift-giving' feature, marking another effort to invigorate the e-commerce ecosystem. A relevant person from WEIMOB INC stated that as one of TENCENT's important ecosystem partners, the WEIMOB mini-program is the first to connect with the WeChat store to support merchants' participation in the WeChat e-commerce ecosystem. It was mentioned that relevant products are currently being integrated. Additionally, the EAST BUY WeChat public account recently announced that the 'gift-giving' feature is now available in the WeChat store.

GTJA pointed out that TENCENT WeChat's global monthly active users reached 1.38 billion. The 'gift-giving' feature being tested is similar to 'WeChat red envelopes', but it offers more transaction convenience and social diversity, which is expected to activate the e-commerce user base and drive growth in transaction scale. The new feature reflects TENCENT's proactive attitude in the social and e-commerce sectors, potentially enhancing platform value and benefiting related partners.

2. Semiconductor stocks collectively strengthened. At the close, Semiconductor Manufacturing International Corporation (00981) rose 8.22% to HKD 28.3; HG SEMI (06908) rose 6.9% to HKD 0.62; HUA HONG SEMI (01347) rose 4.63% to HKD 21.45; SOLOMON SYSTECH (02878) rose 4.44% to HKD 0.47.

Guokai Securities pointed out that due to factors such as the explosion in AI demand, stabilization of the global economy, and various countries introducing supportive policies for the semiconductor industry, the global semiconductor industry is expected to see a recovery in 2024. Ping An Securities believes that looking forward to 2025, the semiconductor industry, as the backbone of the information technology industry, holds significant importance for National Security and economic development; domestic substitution will become the long-term main theme in China's semiconductor market. Moreover, the Smart Phone market is entering a phase of competition, with emerging products like foldable screens, AI phones, AI PCs, and AI glasses expected to bring new development opportunities to the industry chain.

3. Electric Vehicle stocks rose. At the close, LEAPMOTOR (09863) rose 3.39% to HKD 32.05; LI AUTO-W (02015) rose 2.42% to HKD 93.25; NIO-SW (09866) rose 1.88% to HKD 35.3.

The year-end traditional peak season combined with the old-for-new replacement policy has led to a continued high prosperity in the retail end of the Passenger Vehicle market. Data from the Ministry of Commerce shows that as of 24:00 on December 19, nearly 2.7 million vehicles have been scrapped and renewed nationwide, with over 3.1 million vehicle replacements. According to data from the Passenger Car Association, the retail market for new energy Passenger Vehicles reached 1.268 million units in November, a year-on-year increase of 50.5% and a month-on-month increase of 5.9%. In November, the domestic new energy vehicle retail penetration rate was 52.3%. From January to November 2024, retail sales reached 9.594 million units, a year-on-year increase of 41.2%. Minsheng Securities anticipates that the old-for-new replacement policy will continue in 2025, with the duration and intensity yet to be observed.

4. Cryptos concept stocks experienced significant declines. By the end of trading, GRANDSHORES (01647) fell by 5.95%, closing at 0.079 HKD; LINEKONG (08267) dropped by 5.66%, closing at 0.5 HKD; OSL GROUP (00863) decreased by 5.61%, closing at 7.41 HKD.

On December 19, Bitcoin briefly fell below the 0.096 million USD mark, reaching a low of 0.0957 million USD per coin. Bitcoin retraced from a peak of 0.108 million USD per coin, having dropped over 0.01 million USD per coin within two days. Previously, Federal Reserve Chairman Powell explicitly stated during a press conference after the monetary policy meeting that the Federal Reserve has no intention of participating in any plans for the government to hoard Bitcoin. He emphasized that such matters fall within the jurisdiction of Congress, and the Federal Reserve is not seeking to change existing laws to allow the holding of Bitcoin. Powell's remarks immediately caused market turbulence, and Bitcoin prices quickly corrected from their highs earlier in the week.

5. Coal stocks generally fell. By the end of trading, China Coal Energy (01898) dropped by 6.37%, closing at 8.97 HKD; China Shenhua Energy (01088) decreased by 3.46%, closing at 32.05 HKD; YANKUANG ENERGY (01171) fell by 2.69%, closing at 8.68 HKD.

According to the China Coal Market Network, due to the daily consumption of thermal coal not meeting expectations, high inventory levels in the upstream and downstream areas, and elevated levels of imported coal, coal prices have continued to decline. On December 18, the "CCTD Bohai Rim Thermal Coal Spot Reference Price" for the three specifications of 5500K, 5000K, and 4500K were 787, 685, and 586 RMB/ton, respectively, falling by 5, 5, and 7 RMB/ton compared to the previous day, and decreasing by 39, 40, and 47 RMB/ton compared to the beginning of the month. Sinolink believes that with the traditional peak season coinciding with the annual electricity/coal contract, the market is showing price reduction pressure, and it is expected that the market coal price for thermal coal may decline in 2025, with an estimated average coal price around 800-820 RMB/ton for the year.

Popular stocks with abnormal movements

1. Kingsoft Cloud (03896) remained strong throughout the day. By the end of trading, it rose by 10.87%, closing at 4.69 HKD.

UBS Group published a research report indicating that Kingsoft Cloud benefits from AI development and support from the Kingsoft ecosystem. Kingsoft Cloud's performance in the third quarter was robust, exceeding market expectations, which helps enhance investors' expectations for its revenue and profit recovery. The firm noted that Kingsoft Cloud's current stock price level is still below the Company Valuation of independent cloud companies in China, believing that the market has underestimated the potential development opportunities of KINGSOFT and its AI Business.

2. Kangnaite Optics (02276) hit a new high again. By the end of trading, it rose by 10.85%, closing at 19.82 HKD.

On the evening of December 19, Flash Technology launched the country's first mass-produced AI shooting glasses - Flash AI Shooting Glasses. It is worth mentioning that for over a month, several companies have released smart glasses products. GTJA pointed out that the company is actively laying out its smart glasses business and will benefit from the acceleration of industry development. AI smart glasses are the best hardware carrier for AI implementation, and the industry is entering a period of rapid development. The company's collaboration is proceeding smoothly, and it will be among the first to benefit.

3. SUTENG JUCHUANG (02498) rose in the afternoon. By the close, it was up 5.83%, reported at 27.25 Hong Kong dollars.

Hua Xing Securities pointed out that the MX product will accelerate the expansion of ADAS Lidar into the sinking market, becoming the main driver of the company's growth in 2025. In addition to the vehicle-mounted ADAS area, SUTENG JUCHUANG's Lidar will continue to explore larger market space in the fields of robotics and drones. The company expects that the Lidar shipment volume in the robotics field is likely to exceed 100,000 units in 2025.

4. ALCO HOLDINGS (00328) experienced a dramatic drop. By the close, it was down 85.96%, reported at 0.73 Hong Kong dollars.

ALCO HOLDINGS previously issued a profit warning, expecting a loss in the six months ending September between 20 million to 30 million Hong Kong dollars, compared to a profit of 0.572 billion Hong Kong dollars in the same period last year. The anticipated loss is mainly due to gains of approximately 0.613 billion Hong Kong dollars from the cancellation of consolidation of subsidiaries last year, while this period's gains from cancellation of consolidation were about 2 million Hong Kong dollars; along with decreased revenue this period caused by macro headwinds and fierce competition in the electronics market.

5. Herbs Generation Group Holdings Limited (02593) broke below its issue price on the second day of listing. By the close, it was down 17.39%, reported at 3.42 Hong Kong dollars.

Herbs Generation Group Holdings Limited has been a diversified supplier of health and beauty skincare products rooted in Hong Kong for over twenty years, employing a multi-channel sales model focused on developing, selling, and marketing proprietary brand products. In the first half of this year, the group's revenue declined approximately 3% year-on-year to 0.118 billion Hong Kong dollars, compared to 0.122 billion Hong Kong dollars in the same period last year; net income also fell from 18.3 million Hong Kong dollars in the previous year to 7.5 million Hong Kong dollars.

New stock first listing.

Small Garden (00999) performed remarkably well. At the close, it rose by 13.65% to 9.66 HKD.

Small Garden's price per share is set at 8.5 HKD, with a total issuance of 0.1012 billion shares, and each lot consists of 800 shares, resulting in a net amount of approximately 0.795 billion HKD. It is reported that Small Garden is one of the well-known direct chain restaurants in China's popular convenience-oriented Chinese dining market, ranking among the industry's top in both business scale and growth rate. As of the last actionable date, the company has 623 operating direct stores covering 135 cities or counties across 13 provinces in China.