Zhitong Hong Kong Stock Analysis | The explosive product Manus ignites the tech circle as the country promotes the establishment of a "carrier-level" venture capital fund

[Market Dissection]

Yesterday's analysis mentioned: "It shouldn't be difficult for the meeting's positive news to reach a new high." Today, the Hong Kong stock market gapped up directly, steadily advancing throughout the day, with bulls completely in control, closing up 3.29%, and trading volume expanded to 377.1 billion. It reached a new high not seen in nearly three years, clearly showing a bullish market pattern.

Overnight, the U.S. stock market finally got a breather, not continuing its decline. The reason is that the U.S. tariff war has eased somewhat: the U.S. granted a one-month tariff exemption for cars imported from Canada and Mexico under the United States-Mexico-Canada Agreement (USMCA). Stellantis's U.S. stock rose over 10% at one point, and the related joint venture stock Leapmotor (09863) in Hong Kong also rose 8.88%, which was mentioned yesterday.

Some say that the Trump administration is not very concerned about the U.S. stock market, believing he wants to deliberately inflate assets to achieve debt dilution. This statement has some merit, but it should be noted that a significant amount of assets in the U.S. are concentrated in the stock market, including various pension funds, which is essentially the lifeblood of the U.S. The so-called economic prosperity in the U.S. is largely driven by the stock market. For many years, most of the consumption in the U.S. has been maintained by money earned from the stock market. For example, during the mask era, the U.S. helicopter money was distributed, and when people received the money, they entered the stock market. When they made money, they naturally consumed, creating a virtuous cycle.

Now, if this channel is blocked, consumption capacity will sharply decline. Coupled with Trump's various contractions and subsequent transmissions, the results are predictable. The aftereffects are expected to manifest in the second quarter. Don't be fooled by the Federal Reserve still holding on; when it starts rapid interest rate cuts, it indicates that it can't hold on any longer. Therefore, the Trump administration is not oblivious; the stock market certainly needs saving, but the question is what effect a one-month tariff exemption can have. Canadian officials have stated that Canada will not end retaliatory tariffs unless the U.S. fully cancels tariffs on Canada. Choosing to stand firm is the right move; isn't Zelensky's leading demonstration in this regard also because he sees through the essence of external strength and internal weakness? Moreover, with the Democratic Party backing, the stock market is just one battlefield among various covert wars.

Against this backdrop, it will be difficult for the U.S. stock market to return to an upward trajectory. Unless Trump makes a significant move, such as quickly resolving the Russia-Ukraine conflict and gaining benefits, but that is very difficult. Europe can't stabilize, and Russia has been tricked too many times to cooperate easily. So, what about the Federal Reserve cutting interest rates? It seems it can only provide temporary relief; if not handled well, it could lead to more troublesome recession expectations. It's tough all around.

Strangely, in this round of the Hong Kong stock market, foreign capital is not the main player; instead, they are selling off more and holding relatively low positions. This, in turn, indicates that the U.S. stock market has not reached despair yet and is still immersed in Trump's pie-in-the-sky fantasies. Meanwhile, the Chinese market still retains the expectation of foreign capital as an incremental factor.

The market continues to focus on the Two Sessions, and some say the Two Sessions may not meet expectations; it's hard to understand that thinking. The third session of the 14th National People's Congress will hold a press conference this afternoon at the Media Center, inviting Zheng Shanjie, Director of the National Development and Reform Commission, Lan Fo'an, Minister of Finance, Wang Wentao, Minister of Commerce, Pan Gongsheng, Governor of the People's Bank of China, and Wu Qing, Chairman of the China Securities Regulatory Commission, to answer questions from Chinese and foreign journalists on issues related to development and reform, fiscal budget, commerce, finance, and securities First, let's look at the speech by Zheng Zhanjie, Director of the National Development and Reform Commission: The export of the private economy accounted for 64.7% last year, an increase of 1.4 percentage points; private investment in manufacturing and infrastructure grew by 10.8% and 5.8%, respectively. There is a foundation, support, and guarantee for achieving the target of around 5% this year, and we are full of confidence.

This statement fully affirms the role of private enterprises, gathering a large number of China's best private companies in the Hong Kong stock market, such as Tencent (00700), Alibaba (09988), Meituan (03690), etc. To be honest, if this were in the US stock market, it would have skyrocketed by now. However, it is never too late to mend the fold. The previous situation where foreign capital dominated valuations is also beginning to be broken, and national capital now has the confidence to set prices itself. Today, Alibaba (09988) surged over 8%, Tencent (00700) rose 7.62%, and Meituan (03690) increased over 5%.

Next, let's look at the remarks from Pan Gongsheng, the Governor of the Central Bank: This year, we will lower the reserve requirement ratio and interest rates at an opportune time based on domestic and international economic and financial conditions and the financial market situation. The meaning of "opportune time" is to watch when the Federal Reserve starts to cut interest rates; as soon as it does, we should quickly follow suit. Considering the current situation in the United States, it shouldn't be too long. Therefore, today the real estate stocks moved, such as Xincheng Development (01030) and Vanke (02202), which both saw movement today.

CSRC Chairman Wu Qing stated that we will continue to promote the implementation of the new "Nine National Policies" and the "1+N" policy system, accelerating the advancement of a new round of capital market reform and opening up. We will unblock the bottlenecks for medium- and long-term funds entering the market from social security, insurance, and wealth management, enhancing strategic strength reserves through multiple channels. The influx of incremental funds into the market is worth looking forward to. Some have suggested establishing a stabilization fund, but it seems unlikely to be pushed forward as the necessity is not great, and the market is already strengthening.

Today, the most explosive news in the market came: On March 5, a Chinese team released a general-purpose AI agent "Manus," which has taken the tech circle by storm. Manus far outperformed OpenAI in the GAIA benchmark test. Manus is a truly autonomous AI agent capable of fully automating deep research, complex data analysis, contract review, resume screening, and other tasks, covering various scenarios such as research, life, data analysis, education, and production efficiency.

Unlike traditional AI assistants, Manus can not only provide suggestions or answers but also directly deliver complete task results. It is worth noting that OpenAI is planning to launch a more expensive AI agent service, with the highest level "Doctor-level Research Agent" costing up to $20,000 per month (approximately 145,000 RMB). OpenAI expects that in the future, these "AI agent" products will contribute 20% to 25% of the company's total revenue. This shows that Manus has very high value, which is a significant blow to OpenAI. More importantly, this represents a truly large-scale application of AI. Therefore, Manus has brought new stimulation to AI, essentially replicating the scenario of deepseek, with many previously rising varieties making a comeback.

Of course, the first to benefit is still the AI agent concept, with related varieties such as Mingyuan Cloud (00909), which focuses on real estate, surging over 23%, leading enterprise management software provider Kingdee International (00268) rising nearly 21%, and companies focusing on AI agent commercialization such as Maifushi (02556) increasing over 13%, while short video platform Kuaishou-W (01024) rose nearly 16% Meitu (01357) in AI photo editing design rose nearly 13%.

Secondly, the demand for cloud services has increased again, such as Kingsoft Cloud (03896), and Alibaba (09988) announced that Alibaba Cloud will provide generative AI foundational model solutions to Japanese companies, planning to increase the number of projects using the company's models to over 1,000 in the next three years. In Japan, services will be provided in the form of "private cloud," ensuring that data does not leave Japan's data centers, thus guaranteeing security.

The era of "productivity tools" for AI Agents has officially arrived. The PC market is becoming the primary beneficiary. From high-performance workstations to commercial terminals, from thermal design to privacy protection, the implementation of Manus is triggering a chain reaction in the hardware ecosystem. Major players such as ZTE (00763), Lenovo (00992), and the hardware-software integrated Weishi Jiajie (00856) were mentioned yesterday.

CK Hutchison Holdings (00001), mentioned yesterday, rose again by over 9% today, indicating that the market is trading on its potential success. This is because the enterprise value of the port assets (excluding Hutchison Port Trust and Hong Kong and mainland ports) held by the company, which owns 80% equity, is HKD 97.8 billion (approximately USD 12.6 billion), which is far below the disclosed 100% enterprise value of USD 22.765 billion.

Note that the country is promoting the establishment of a "carrier-level" national venture capital guidance fund. The national venture capital guidance fund will attract nearly CNY 1 trillion in local and social capital. It focuses on cutting-edge fields such as artificial intelligence, quantum technology, and hydrogen energy storage, investing in seed and startup companies through market-oriented methods, while also considering small and medium-sized enterprises in the early and mid-stages, supporting original and disruptive technological innovation and key core technology breakthroughs, and cultivating strategic emerging industries and future industries. The biomanufacturing, embodied intelligence, and 6G mentioned in this year's government work report are also within the investment scope. The fund's duration will reach 20 years. A large amount of funding to support high-tech innovation industries is a very pragmatic measure, and the aforementioned fields represent future investment directions.

【Sector Focus】

On March 6, Wu Qing, chairman of the China Securities Regulatory Commission, stated at the economic theme press conference of the 14th National People's Congress that the Financial Regulatory Administration has launched the second batch of pilot long-term stock investments for insurance funds, approving CNY 52 billion before the Spring Festival, and another CNY 60 billion was approved a few days ago, with further expansions to follow. When the market is good, the increase in the proportion of insurance capital's equity investment will promote its investment benefits. Overall, insurance capital tends to invest in low-volatility, high-dividend industries such as banking and public utilities, favoring stable income products.

Main varieties: China Life (02628), China Pacific Insurance (02601), New China Life Insurance (01336), Ping An Insurance (02318).

【Stock Picking】

Hong Kong Exchanges and Clearing (00388): Cooperation between Saudi Arabia and Hong Kong capital markets is increasingly close, with trading activity continuing to rise.

In January and February of this year, the Saudi Capital Market Authority launched a series of policies to eliminate the requirement for foreign investment licenses and enhance market transparency. Cooperation between Saudi Arabia and Hong Kong capital markets is becoming increasingly close, jointly promoting the diversified development of financial markets In 2024, the Hong Kong Stock Exchange achieved revenue and other income of HKD 22.374 billion, a year-on-year increase of 9.06%; it realized a net profit attributable to shareholders of HKD 13.05 billion, a year-on-year increase of 10.0%.

Commentary: Saudi Arabia has gathered a large amount of Middle Eastern capital and has relatively abundant oil and gas resources, creating significant bilateral cooperation opportunities, making it a market that the Hong Kong Stock Exchange needs to focus on developing. The performance of the Hong Kong Stock Exchange is steadily rising, with multiple business collaborations developing. From the beginning of the year to date, the average daily trading volume in the Hong Kong market is HKD 200 billion, an increase of 5% compared to the previous quarter and a 50% increase compared to the average for the entire last year.

Spot market revenue growth driven by Stock Connect: The annual revenue from the spot market was HKD 8.62 billion (year-on-year +18.5%), mainly benefiting from a significant increase in average daily trading volume and the release of policy dividends. The trading volume of Stock Connect performed well, with a northbound average daily trading volume of RMB 150.1 billion (year-on-year +39.0%) and a southbound average daily trading volume of HKD 48.2 billion (year-on-year +55.0%). Stock Connect achieved annual revenue of HKD 2.7 billion (year-on-year +24.0%), with a significant increase in contribution from Q4.

The Hong Kong Stock Exchange is actively preparing to launch a "Tech Company Special Line" to facilitate the listing applications of technology and biotechnology companies already listed in the mainland, helping the company attract more large-scale enterprises to list in Hong Kong, thereby obtaining more listing fee income.

Expanding into the ASEAN and Middle Eastern markets: The Hong Kong Stock Exchange will further strengthen its promotional efforts in ASEAN and the Middle East, exploring cooperation opportunities including ETF listings, and is committed to increasing overseas-recognized exchanges to facilitate more overseas companies in secondary listings in Hong Kong. The company's shareholder returns are stable, with an annual dividend of HKD 9.3 per share, maintaining a payout ratio of 90.0%. The growth in trading and settlement fees is attributed to the increased trading activity in the spot and primary derivatives markets.

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