Zhitong Hong Kong Stock Analysis | Overseas economy trapped in a stagflation paradox, Hong Kong Securities and Futures Commission takes action to rectify chaos

[Market Dissection]

The US stock market is 迎来 "Triple Witching Day," with Goldman Sachs estimating that over $4.7 trillion in notional options will expire on the 21st, including $2.8 trillion in SPX options and $645 billion in notional individual stock options. On such delivery days, the market generally experiences significant volatility, especially as the US stock market is in a downward trend, raising concerns about a potential continuation of the sell-off. As a result, both markets are cautious today, with the Hong Kong stock market down 2.19%.

The Turkish stock market is also concerning. On March 21, Turkey's main stock index fell by 5%, triggering a circuit breaker. The main banking index in Turkey continued to decline, dropping by 8%. On Thursday (March 20), the Turkish central bank's monetary policy committee held an emergency meeting and announced an increase in the overnight lending rate by 200 basis points (2 percentage points) to 46%. After the resumption of trading, the benchmark index fell by 7.2%. The reasons for the sharp decline in Turkey include various internal protests and inflation anxiety, which has weakened expectations for further interest rate cuts.

The Federal Reserve's decision not to cut interest rates led the Bank of England to abandon its inclination to lower rates on Thursday, while the Swedish central bank directly announced the end of its easing cycle, citing the complexity of the international backdrop. This means that after the US has stabilized the dollar, other countries, which originally intended to ease, are now hesitant to do so in order to maintain exchange rates. The trade war is bound to lead to an economic slowdown, creating a vicious cycle. Stagflation is a frightening phenomenon, but there seems to be no solution yet. A more immediate concern is that the Trump administration will begin imposing reciprocal tariffs on April 2. This will pose a significant test for the global economy.

The most tense situation is in Europe, which has also taken corresponding countermeasures. However, there are doubts about whether Europe has the confidence to confront the US and is still hoping for leniency from the US. According to reports, on March 20, Maroš Šefčovič, the European Commission's Vice-President for Interinstitutional Relations and Foresight, expressed goodwill towards the US, stating that the US and Europe should jointly address the so-called issue of China's "overcapacity," while simultaneously pressuring Chinese companies, claiming that Chinese electric vehicle and battery manufacturers should be prepared for technology transfer if they wish to invest in the EU. Just yesterday, he stated that Europe should recognize the situation and respond proactively, yet continued to act in this manner.

Once upon a time, when China collaborated with European automakers during the era of oil vehicles, there were no hard requirements for technology transfer; it was the result of voluntary negotiations between enterprises. This blatant demand for technology transfer is truly difficult to understand, and such statements will inevitably raise market concerns.

Li Ka-shing's sale of ports continues to ferment, with Hong Kong Executive Council convener Regina Ip citing business and legal professionals on social media, stating that the aforementioned agreement is difficult to overturn, and there seems to be no legislation in Hong Kong that can prevent this transaction. Since CK Hutchison is registered in the Cayman Islands and does not involve any assets within China, it is quite challenging to block the sale. Although this appears to be a commercial transaction on the surface, it has significant implications. It involves many ports along the "Belt and Road" initiative, which China has operated for over a decade since 2013, and the sale means that China will lose valuable strategic assets.

The widespread attention this matter has garnered is due to its complexity, involving a group of businessmen with overseas investments and the business environment, making the weighing of pros and cons a significant issue Due to the controversy, the stock prices of companies under Li Ka-shing have declined, with Cheung Kong Holdings (00001), CK Hutchison Holdings (01113), and Hutchison China MediTech (00013) experiencing significant drops. The market value of Li Ka-shing's companies has evaporated by HKD 32.36 billion. Market sentiment is naturally affected.

Additionally, regulators are intensifying efforts to crack down on illegal securities and futures business operations. The Ministry of Public Security has announced five typical cases, mainly involving illegal off-market financing, which is a form of disguised usury with very high leverage. Under pressure, related illegal speculative funds will sell stocks to avoid scrutiny, causing market disturbances.

The Hong Kong Securities and Futures Commission's actions are also underway, issuing a circular to licensed corporations regarding initial public offering subscriptions and financing services, focusing on three core risks in IPO subscriptions and financing: uncontrolled client leverage, chaotic fund management, and loose identity verification. The leverage limit for licensed institutions in new share subscriptions has been compressed from "hundred-fold frenzy" to a maximum of 10 times.

This means that hundred-fold leverage will become a thing of the past. In the small territory of Hong Kong, there are as many brokerages as rice shops, leading many small brokerages to adopt various means to attract clients, including high-leverage new share subscriptions, which hide significant risks. In 2024, 70 new stocks are expected to be issued in Hong Kong, with 24 of them breaking below their issue price on the first day, accounting for 34.3%; by the end of the year, 38 will have broken below their issue price, accounting for 54.3%. High leverage is like a double-edged sword, amplifying both returns and risks. It is indeed necessary to rectify this chaos. After the new regulations are implemented, the competitive landscape among Hong Kong brokerages will change, with large brokerages continuously expanding their market share while small brokerages struggle. Only after the survival of the fittest will healthy development be welcomed.

Returning to the market, the strongest robotics sector is showing signs of weakness. The National and Local Joint Construction Humanoid Robot Innovation Center officially launched an open fund on March 21, 2025, with a total scale of HKD 3 million, and an average single project funding amount of HKD 300,000 to HKD 500,000. This fund mainly targets outstanding young scholars from domestic universities, research institutions, and enterprises, focusing on basic research and frontier exploration in four major fields and 17 sub-directions.

Some believe this scale is too small; in fact, this fund is not an industrial investment fund but focuses on special support for young scientific research talents, aiming to encourage innovative ideas and technological breakthroughs. The initial HKD 3 million is a pilot, and the scale will gradually expand in the future.

For the robotics industry, the market clearly will not easily cool down. At today's Tesla quarterly meeting, Elon Musk revealed that the humanoid robot Optimus has completed manufacturing on the pilot production line at the Fremont factory and will enter trial production this year. Tesla aims to produce 5,000 units of Optimus this year, with ordered components sufficient to support the production of 10,000 to 12,000 units this year, and a target of 50,000 units by 2026. Clearly, Musk is betting on the robotics direction.

Additionally, the National and Local Joint Construction Humanoid Robot Innovation Center, in collaboration with Shanghai University and Tsinghua University, jointly launched the embodied intelligent simulation platform "GeWu," promoting the transition of humanoid robot technology from the laboratory to industrialization. Various news stimuli will follow Today, the market rose with few varieties performing well, mainly those related to earnings, such as GaoWei Electronics (01415): 2024 revenue is expected to reach approximately USD 2.494 billion, an increase of about 170.0% year-on-year; net profit is expected to be USD 119 million, an increase of about 155.54% year-on-year. This is mainly due to an increase in new backend camera module orders from customers. Today, it surged over 8%.

Others include Tongcheng Travel (00780): 2024 revenue is expected to grow by 45.8% year-on-year. It rose over 4%. Yihuatong (02402) is driven by its major asset restructuring plan and favorable hydrogen energy industry policies. By integrating Xuyang Hydrogen Energy, its fuel cell system gross margin is expected to improve, and losses may significantly narrow in 2025. Today, it rose over 7%.

【Sector Focus】

Since March 2025, cement prices in the three northeastern provinces, the Yangtze River Delta, and Hebei have generally increased, with the national average cement price rising for two consecutive weeks. Companies are enhancing price discipline through staggered production and coordinated production cuts, combined with seasonal demand recovery, pushing prices close to the cost line.

Deepening supply-side reform: The industry plans to reduce actual clinker capacity by about 20% by addressing overproduction capacity, coupled with carbon emission constraints accelerating the elimination of backward capacity, optimizing the medium- to long-term supply-demand pattern; policy stimulus and increased infrastructure investment;

Fiscal policy efforts: The 2025 government work report clearly states that special bonds will increase to CNY 4.4 trillion and ultra-long-term special government bonds to CNY 1.3 trillion, focusing on supporting infrastructure, urban renewal, and other projects. In the first two months, the scale of local government bond issuance reached a nearly three-year high, accelerating project commencement with infrastructure funds in place.

Main varieties: Huaxin Cement (06655), Conch Cement (00914), China Resources Cement Technology (01313).

【Stock Picking】

Goldwind Technology (02208): Export capacity accounts for nearly half, ample orders on hand

Recently, the National Energy Administration released national electricity industry statistics for January-February. As of the end of February, the cumulative installed power generation capacity nationwide reached 3.4 billion kilowatts, a year-on-year increase of 14.5%. Among them, the installed wind power capacity reached 530 million kilowatts, a year-on-year increase of 17.6%. The export performance is particularly impressive, with new wind turbine export capacity reaching 5,193.7 megawatts in 2024, with 904 new wind turbines exported, totaling 5,193.7 megawatts, a year-on-year increase of 41.7%, setting a new historical high.

Commentary: In 2024, Goldwind Technology exported 450 wind turbines to 15 countries, with a capacity of 2,478.4 megawatts, accounting for nearly half of China's total wind power export capacity. The export capacity of wind turbines shows a continuous upward trend, with market share steadily increasing. Goldwind Technology maintains the top position in export share. The order price of Vestas has increased from less than EUR 0.9/W in 2021 to EUR 1.1/W in Q3 2024.

Goldwind Technology has ample order reserves. As of the end of Q3 2024, the company had orders on hand of 44.28 GW, including 5.5 GW overseas. The domestic offshore wind shipment volume is expected to be 1 GW in 2024 and will reach 2 GW in 2025; in terms of international business, there are 4 GW of orders for the whole year of 2024, with actual execution and delivery of 3 GW, and it is expected to exceed 5 GW in 2025. The company's wind turbine shipment volume is expected to continue to grow in 2025 The company's average gross profit margin for international units is over 12%. With the increasing proportion of international units and offshore units delivered, as well as the rise in the share of high-speed models leading to cost reductions, it is expected that the overall unit gross profit margin will continue to improve by 2025.

The company is exporting on a large scale to the Asia, Africa, and Latin America markets, with Southeast Asia, led by Vietnam, planning a significant acceleration in wind power. The wind power market in Latin America is steadily growing. Goldwind Technology has already entered the list of the world's top five wind turbine suppliers in both Latin America and South Africa, and has also expanded into the Australian market. Southeast Asia has also entered Vietnam, Central Asia, and the Middle East. Goldwind Technology is supplying projects under construction in all of these markets. Goldwind Technology has signed an agreement for the Kalayaan 2 wind power project with TBC, a leading renewable energy company in Southeast Asia, with a total installed capacity of 100.8 MW.

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