Zhitong Hong Kong Stock Analysis | Reciprocal tariffs stir up blood and storm, robot investment sparks complaints but outlook remains optimistic

[Market Dissection]

Another day of blood and storm, with European and American stock markets all falling, the Nikkei 225 index plummeting by 4%, and the South Korea Composite Index's decline expanding to 3%. The Hong Kong stock market was relatively mild today, down 1.31%.

On Sunday Eastern Time, U.S. President Trump stated that the targets for the reciprocal tariffs he will announce this week will include all countries globally, not just the 10 to 15 countries with the largest trade deficits. Trump insists that tariffs are a way to protect the U.S. domestic economy from unfair competition and also serve as a bargaining chip for better terms in negotiations. He hinted that he might scale back his reciprocal tariff plan, with tariffs in some cases potentially being lower than those imposed by other countries on the U.S., which also indicates the significant uncertainty surrounding Trump's tariffs. In short, it's about intimidation first, then negotiating terms. The biggest impact is on Japan and South Korea, where the stock markets have also dropped significantly, as the U.S. market is the major player.

Regarding TikTok, Trump stated that the U.S. would reach a sale agreement with TikTok's parent company before April 5, which is also the deadline for the TikTok ban extension. Given the situation, if the U.S. does not gain any benefits, it may be difficult for them as well. In response, the People's Daily published an article signed by Zhong Sheng: "China and the U.S. are moving towards mutual benefit, allowing investments to better benefit the people of both countries," mentioning cooperative win-win examples like Tesla and Apple. This statement is also quite significant. Both sides have leverage.

Under tariff pressure, the S&P 500 index has fallen nearly 10% from its peak, with a market value evaporating by $5 trillion. The latest economic data shows that the U.S. Consumer Confidence Index has dropped to its lowest level in over two years. If the stock market does not rebound quickly, consumer weakness may persist. In a bear market, the consumption habits of the middle class may see a significant decline. The U.S. is a society where consumption accounts for 70% of GDP, which poses a substantial negative impact on the global consumption market.

On the Russia-Ukraine front, the prospect of reconciliation has become bleak. Putin's internal remarks were exposed, stating he is "willing to fight a hundred-year war," indicating that he has seen the situation clearly and no longer harbors illusions about the U.S. U.S. President Trump expressed anger at Putin's remarks in an interview with NBC and threatened to impose "secondary tariffs" on Russian oil buyers if the Russia-Ukraine conflict continues due to Russian reasons. Trump is prepared; if negotiations fail, he will continue sanctions while profiting from oil. The U.S. continues to lose credibility, and Bitcoin is also struggling, currently dropping to around $83,800. Gold has once again become strong, with today's gold prices surging, breaking through the $3,100 per ounce mark, trending towards $3,200, with leading Lingbao Gold (03330) rising nearly 6% and China National Gold International (02099) up over 7%.

The State Administration for Market Regulation: legally reviewing the transaction of CK Hutchison Holdings Limited at the port. This review is expected to take a long time, and the transaction will definitely not happen anytime soon. Moreover, it cannot be ruled out that some issues may arise during the review. This event is not yet concluded, and it has been reported that CK Hutchison (00001) plans to spin off its global telecommunications assets for listing on the London Stock Exchange. In response, CK Hutchison announced that the board is aware of recent media reports regarding the potential spin-off of the company's global telecommunications assets and business. As of the date of this announcement (March 31), the board has not made any decisions regarding any transactions related to the company's global telecommunications business and is currently uncertain whether any transactions will take place What is this about? Is the asset trying to continuously move overseas? Anyway, let's keep watching the show. Today, the drama of port value reassessment was played out again, but the stocks that rose were all in the Southeast Asia shipping sector, such as Yang Ming Marine Transport Corporation (02510) and Seaspan Corporation (01308), while related companies like China Shipbuilding Leasing (03877) and SF Holding (06936) were also quite active.

The Ministry of Finance quickly supported the banks. According to the decisions made by the Central Committee of the Communist Party and the State Council, in 2025, the Ministry of Finance will issue the first batch of special government bonds worth 500 billion yuan to actively support Bank of China, China Construction Bank, Bank of Communications, and China Postal Savings Bank in replenishing their core Tier 1 capital. On March 30, China Construction Bank, Bank of China, Postal Savings Bank, and Bank of Communications announced plans to issue A-shares to specific investors, with a total fundraising scale of 520 billion yuan, of which the Ministry of Finance will contribute 500 billion yuan. The aim is to enhance the banks' ability to serve the real economy. The key point is that the major shareholders are increasing their stakes at a 10% premium, which greatly boosts confidence. Related stocks like China Construction Bank (00939) and Bank of China (03988) rose more than 2%. However, this did not lift the overall market.

The venture capital and technology circles are in a heated debate. On March 28, Zhu Xiaohu, a partner at Jinsha River Venture Capital, stated in an interview that due to "unclear commercialization," he is exiting investments in humanoid robots in bulk, which sparked various criticisms. Objectively speaking, the robotics industry is still in its "infancy," and many investment failures will occur before it matures, so exits are normal. However, it shouldn't be dismissed entirely; for instance, investments in companies like Yushu have certainly been very profitable, and currently, there is so much money that cannot be invested. This really tests investment skills. The tech circle naturally reacted strongly because such statements harm those engaged in real industries.

In the short term, unclear commercialization paths, high data costs, and insufficient hardware maturity are indeed issues. The robotics sector has been heavily speculated, and is currently in an adjustment period, amplifying this kind of noise. Horizon Robotics (09660) fell over 9%, but in the long run, with the continuous iteration of multimodal large models, world models, and hardware, the industry's development will be rapid, and the prospects for robotics are quite broad, making it worth looking forward to after the adjustment.

Today, Midea Group (00300) selling off its shares in Xiaomi Group also attracted much attention. This is not surprising; Midea Group strategically invested in Xiaomi at the end of 2014, becoming an important early shareholder with an investment of 1.273 billion yuan. Now, the profits are quite substantial, as Midea Group has gradually sold off Xiaomi Group shares, cashing out over 1.838 billion yuan, with a profit of about 560 million yuan. This is a financial investment, and cashing out after making a profit is understandable. The company's exit from non-core equity investments and focus on smart manufacturing is a wise move. Midea Group also disclosed plans to repurchase shares with a total amount not exceeding 10 billion yuan and not less than 5 billion yuan, with a repurchase price not exceeding 100 yuan per share, and 70% or more of the repurchased shares will be used for cancellation and reduction of registered capital. Today, it rose over 3%.

On March 29, a relevant official from the State-owned Assets Supervision and Administration Commission of the State Council stated at the China Electric Vehicle 100 Forum that the next step will be to strategically restructure central state-owned enterprises in the complete vehicle sector to increase industry concentration. Gou Ping, deputy director of the State-owned Assets Supervision and Administration Commission, stated that they encourage and support central state-owned automobile enterprises to deepen various forms of cooperation with other enterprises to accelerate the enhancement of core competitiveness and market share Coordinating and promoting the integration of automotive central enterprises into the global innovation network, accurately grasping overseas market demand, and orderly carrying out overseas layout. The automotive industry is a large sector, and central enterprises are clearly lagging behind. At this stage, we can only plan to strengthen by first expanding. The main variety is Dongfeng Motor Group Co., Ltd. (00489).

【Sector Focus】

With the rapid development of the artificial intelligence (AI) industry, the threshold for enterprises to deploy large models continues to decrease, driving accelerated penetration at the application end, and the demand for computing power across various industries continues to explode. Several listed companies have successively disclosed large computing power service contracts, pushing artificial intelligence data centers (AIDC) into a period of rapid construction. As the performance of single cabinets significantly improves, the energy consumption of data centers continues to rise.

The International Data Corporation (IDC) and Inspur Information jointly released the "China Artificial Intelligence Computing Power Development Assessment Report," predicting that the IT energy consumption of artificial intelligence data centers will reach 55.1 terawatt-hours in 2024 and grow to 146.2 terawatt-hours by 2027, achieving a sixfold increase over five years.

The end of AI is electricity, and related power stocks in the Hong Kong stock market include Longyuan Power (00916), Datang International Power Generation (00991), and Huadian International (01071).

【Stock Picking】

China Gold International (02099): Turned a profit last year compared to a loss, with rich overseas mineral reserves

China Gold International recently released its 2024 annual performance, with sales revenue of USD 757 million, an increase of 64.69% year-on-year; profit attributable to shareholders of USD 62.732 million, compared to a loss of USD 25.5 million in the same period last year, turning a profit; proposed a final dividend of USD 0.05 per share and a special dividend of USD 0.03 per share.

Comment: Recently, influenced by the U.S. tariff increase decision, market risk aversion sentiment has significantly increased. It is worth noting that international gold prices continue to strengthen, with spot gold breaking through USD 3,120 per ounce, setting a new historical high, and having accumulated nearly a 19% increase this year. China Gold International is the only overseas listed platform of China National Gold Group. The Jiamar Copper-Gold Mine is a large copper polymetallic deposit located in Tibet, serving as the company's main copper mine (100% equity), with main products including copper concentrate and gold concentrate.

As of the end of 2023, the Jiamar mine has proven + controlled copper metal reserves of 5.5436 million tons, gold of 4.39 million ounces, and molybdenum metal of 484,800 tons, with rich resource reserves and good potential for resource increase. At the beginning of 2023, the Jiamar mining area was suspended due to the overflow of tailings from the tailings pond and is expected to resume production in the first half of 2024. As of the end of September 2024, the Jiamar mining area has achieved a copper output of 27,900 tons, corresponding to sales revenue of USD 177 million, with the expected maximum copper output reaching 44,500 tons.

In addition, China National Gold Group has rich overseas mineral reserves, mainly in gold and copper. The company is positioned as the group's overseas resource platform, with relatively stable incremental growth coming from China National Gold Group's overseas resource reserves, including two gold mines, one copper-gold mine, and one copper-lead-zinc mine. These are the Kuru-Jegailik copper-gold mine (54% equity) located in the Kyrgyz Republic, the Kruchkin mine (70% equity) located in the Trans-Baikal region of Russia, the Buchuk gold mine (51% equity) located in Kyrgyzstan, and the Sorimi copper-lead-zinc mine (65% equity) located in the Republic of Congo (Brazzaville), among which the Kuru-Jegailik copper-gold mine has already commenced production, and the first phase of the Sorimi copper-lead-zinc mine in the Republic of Congo (Brazzaville) has also commenced production The Bqiuchuk Gold Mine has begun trial production, while the Kluchik Gold Mine is in the infrastructure phase.

It is expected that the company's gold production for the entire year of 2024 will approach 49,000 tons, and copper metal production is expected to reach 44,500 tons. The outlook is optimistic for the upward cycle of gold prices, with the resumption of production at the Jiamar Gold Mine bringing additional copper and gold.

[Disclaimer] This VIP information product is for communication and discussion purposes only and does not constitute any investment advice. Unauthorized reproduction is strictly prohibited. For more quality information and data products, please log in to the [Zhitong Finance] APP for inquiries.