①How did semiconductor stocks perform during the holiday period? ②How do institutions view the subsequent market trend?
Cailian Press, October 8 (Editor Hu Jiaring) — The Hong Kong stock market today welcomed the last trading day of the National Day Golden Week. In contrast to the comprehensive suspension of trading in the A-share market due to holidays, the Hong Kong stock market traded for a cumulative four days during the long holiday.
As of today's close, the Hang Seng Index fell by 1.15% during the holiday period, closing at 26,829.46 points; the Technology Index fell by 1.64%, closing at 6,514.19 points; and the China Enterprises Index fell by 1.39%, closing at 9,523.87 points.
Note: Performance of the Hang Seng Index during the holiday period
Taking the Hang Seng Index as an example, the index showed an initial rise followed by a decline during the holiday period. Specifically, it surged significantly on October 2, but gains moderated in the following trading sessions.
Rotation between technology and cyclical sectors as dual main themes
Performance of semiconductor stocks draws market attention
SMIC (00981.HK) and Hua Hong Semiconductor (01347.HK) rose by 12.51% and 13.81%, respectively.
The rise in these stocks was primarily driven by two factors. First, Goldman Sachs raised its target price for SMIC to HKD 90, believing that the increase in China’s self-sufficiency rate in AI chips will reshape the global supply chain landscape. Second, Southbound funds net purchased over HKD 40.3 billion in the week before the holiday, with the technology sector receiving 30% of capital allocation.
Gold stocks benefit from safe-haven demand
Zijin Gold International (02259.HK) and Shandong Gold (01787.HK) have risen cumulatively by 21.48% and 15.59%, respectively. In terms of news, London spot gold broke through USD 4,000 per ounce, hitting a record high. Additionally, the tense situation in the Middle East combined with the deadlock in U.S. debt ceiling negotiations has driven capital inflows into gold ETFs.
Institutional Viewpoint: Rising Chinese Pricing Power Drives Structural Market Trends
Guo Hai Securities issued a report stating that Hong Kong stocks are undergoing a historic shift in pricing power, with Chinese forces (Southbound funds, China bond yield logic) significantly surpassing the influence of traditional U.S. bond frameworks on valuations. The counter-trend rise of Hong Kong stocks from August to September despite earnings downgrades validates the risk premium model based on China bond yields. Combined with Chinese holdings and trading proportions breaking through key thresholds, the target price for the Hang Seng Index in 2025 has been raised to 29,000 points, with a focus on sectors benefiting from Chinese pricing logic such as AI, innovative pharmaceuticals, and raw materials.
Guotai Haitong Securities pointed out that, driven by continued large-scale inflows of incremental funds and the structural advantages of Hong Kong stock assets, the market performance during the golden autumn season may surpass that of the first quarter this year, with major indices expected to reach new highs.
Today's Market
Based on today's closing prices, the Hang Seng Index, Technology Index, and State-Owned Enterprises Index fell by 0.48%, 0.55%, and 0.52%, respectively.
Specifically, artificial intelligence, tech internet, and airline stocks were under pressure, while gold, nuclear power, and pharmaceutical stocks moved higher against the trend.
Artificial intelligence and tech internet stocks were affected by external news.
At the close, GDS Holdings-SW (09698.HK) fell 5.57%, Mobvista (01860.HK) dropped 5%, and SenseTime-W (00020.HK) declined 3.82%.
Note: Performance of artificial intelligence stocks.
In terms of news, Oracle's cloud business gross margin unexpectedly came under pressure. According to internal documents, its server rental business equipped with NVIDIA chips recorded revenue of $900 million in the quarter ending August, but the gross margin was only 14%. After accounting for unspecified depreciation expenses, the actual profit margin may have been further compressed to below 7%.
Notably, the current business is still supported by the older Ampere architecture chips released in 2020. The newly launched Blackwell chips caused a single-quarter loss of nearly $100 million due to a mismatch between data center deployment and customer payment cycles, which dragged down the overall gross margin (currently around 70%) despite the expansion of the cloud business.
Although Oracle responded that the related allegations were "biased," concerns over the sustainability of profitability among tech giants quickly spread across the market.
Technology stocks were also affected by the above news. By the close, Baidu Group-SW (09888.HK) fell 3.02%, Kuaishou-W (01024.HK) dropped 2.22%, and Alibaba-W (09988.HK) declined 1.61%.
Note: Performance of tech stocks.
Pressure on airline stocks
By the close, China Southern Airlines (01055.HK), China Eastern Airlines (00670.HK), and Air China (00753.HK) fell 4.03%, 3.82%, and 3.21%, respectively.
Note: Performance of airline stocks.
In terms of news, airline stocks fell today mainly due to rising oil prices and the industry’s low season. On one hand, OPEC+ agreed to increase crude oil production by 137,000 barrels per day in November, but the increase was lower than expected, pushing up oil prices and increasing fuel costs for airlines. On the other hand, the fourth quarter is traditionally the off-peak season for air travel, with reduced passenger demand leading to a downward revision of profit forecasts for airlines.
Record-high gold prices drive related concept stocks
At the close of trading, Chifeng Gold (06693.HK), Shandong Gold (01787.HK), and Zhaojin Mining (01818.HK) rose by 13.26%, 7.61%, and 4.06%, respectively.
Note: Performance of gold stocks
On the news front, gold stocks performed strongly today, with the key catalyst being international gold prices hitting an all-time high. As of this writing, London spot gold has exceeded USD 4,000 per ounce, setting a new record high.
Note: Performance of spot gold
Nuclear power stocks strengthen as the International Atomic Energy Fusion Energy Conference approaches.
At the close of trading, CNNC International (02302.HK), CGN Mining (01164.HK), and CGN Power (01816.HK) rose by 22.40%, 7.82%, and 0.68%, respectively.
Note: Performance of nuclear power stocks
In terms of news, from October 13 to 18, the International Atomic Energy Fusion Energy Conference will be held in Chengdu. Founder Securities noted that developments in the fusion industry have become significantly more frequent compared to July-August, and the upcoming conference is expected to announce major national and international advancements. Additionally, China's BEST project is anticipated to launch its second wave of intensive bidding in Q4, while other fusion facilities are also expected to begin operations. The entry of major players and significant progress in overseas device ignition are driving momentum. The year’s second major wave for the fusion sector may be underway.
Majority of pharmaceutical stocks strengthened.
At the close of trading, ImmuOnco-B (01541.HK), Viva Biotech (01873.HK), and Harbour BioMed-B (02256.HK) rose by 14.03%, 13.94%, and 9.43%, respectively.
Note: The performance of pharmaceutical stocks
In terms of news, the Nobel Prize in Physiology or Medicine was officially announced recently. Mary E. Brunko, Fred Ramsdell, and Shimon Sakaguchi won the award for their groundbreaking achievements in the field of 'peripheral immune tolerance.' Analysts pointed out that the announcement of this year's Nobel Prize is expected to ignite a wave of research and development in Treg cell therapy technology and innovative drugs.
Viva Biotech ranked among the top gainers. Guoyuan International noted that the company has been investing in AI-driven drug discovery for five years, with AI-related orders now accounting for 12% of new orders, showing an increasing trend.
Stocks with notable movements
Youzan rose more than 8% as the company plans to transfer its listing to the Main Board.
Youzan (08083.HK) surged 8.37%, with cumulative gains nearing 40% since October. Regarding developments, the company is actively exploring and evaluating the possibility of transferring all its shares from GEM on the Hong Kong Stock Exchange to the Main Board. Currently, the assessment of the potential Main Board transfer is still in the preliminary stage, and no formal application has been submitted to the Hong Kong Stock Exchange.
JL Mag Rare-Earth Co. rose over 9%, highlighting the strategic importance of the rare earth sector.
JL Mag Rare-Earth Co. (06680.HK) rose 9.19%, closing at HKD 24. In terms of news, on October 6, the Trump administration was reportedly discussing taking a stake in Critical Metals, which could give the U.S. direct ownership of the largest rare earth mining project in Greenland. Huaxi Securities previously noted that while the U.S. government is actively rebuilding its domestic rare earth supply chain, global production of rare earth permanent magnets remains highly concentrated in China in the short term. Meanwhile, GF Securities believes that factors such as price increases, supply-side reforms, supply disruptions, and the enhanced strategic importance of the sector will continue to drive valuation and earnings growth in the rare earth sector.
