Zhitong Hong Kong Stock Analysis | Policy Catalysts Drive Capital Back to Equity Markets as AI Competition Intensifies

[Market Analysis]

Under the pressure of widespread declines in external markets, the Hang Seng Index fell to the 60-day moving average for support in the early session today, then launched a counterattack, closing up 0.92%.

The U.S. non-farm payroll data indeed brought a "surprise" to the market: only 73,000 new jobs were added in July, far below the market expectation of 100,000. Worse still, the previous two months' job additions were revised down by a staggering 258,000, triggering new recession concerns, leading the market to adopt a risk-averse mode, panic-selling risk assets, and flocking into safe-haven assets like government bonds and gold. This directly caused the yield on 10-year U.S. Treasuries to drop from 4.4% to 4.2%, the dollar index to plunge, and the three major stock indices to decline, while gold surged. Shandong Gold (01787) and Chifeng Gold (06693) both saw gains exceeding 9%.

This data undoubtedly dealt a "backstab" to Trump's tariff achievements, prompting Trump to furiously fire the person responsible for releasing this data. This is almost unprecedented in the century-long history of economic statistics in the U.S. On August 3, local time, Trump stated that he would announce a new head of the Bureau of Labor Statistics within three to four days. It is customary for U.S. data to be revised, as the sampling data is inherently incomplete, and this cannot be entirely viewed as falsification. However, the key point is that Trump believes it undermines him, thus necessitating a change to someone who can be completely utilized by him.

This incident highlights that the U.S. labor market is not as robust as claimed, which also suggests that its economy may not be as ideal as thought. This is a concern for the market. Even if there is a change in personnel, the data can be polished, but trust has already been significantly undermined.

The poor data does have one benefit: market expectations for a rate cut in September have rapidly risen from 37.7% to nearly 85%. Powell is certain to face a rate cut before September, and the latest replacement candidates are beginning to emerge.

Note a few signals: starting August 8, two departments will resume the collection of value-added tax on interest income from newly issued government bonds. The purpose of this measure is to squeeze out some risk-free funds, preventing them from clustering in the bond market. More funds should be diverted to the equity market. Additionally, reporters from the Financial Times have learned that some taxpayers have recently received notifications from tax authorities informing them that they need to declare and pay taxes on overseas income, indicating that the state is strengthening regulation of personal overseas income, and income from overseas stock trading will also be taxed. This measure should have some effect, especially given that U.S. stocks are at high levels. In short, various measures are being taken to encourage funds to flow back into the domestic stock market.

At the same time, the People's Daily commented: Nvidia, how can I trust you? It cited many examples, such as a new energy vehicle, a computer, or even a medical robotic surgery system, which could potentially be "paused" in extreme cases. Furthermore, chips can continuously upload sensitive information such as server load rates and IP addresses, which are then seamlessly sent to the U.S. Many Chinese trade secrets could be exposed. This is indeed a very real security risk, rather than a baseless concern. Unless Nvidia can provide sufficient evidence to demonstrate that there are no "backdoors." Therefore, domestic substitution is once again reinforced.

InnoCare Pharma (02577) surged again today. Although Nvidia's H20 sales may be affected, this segment does not account for a large proportion. The company primarily supplies power systems for Nvidia's data centers, and domestic chip power supply also relies on local supply chains InnoCare has passed the Ascend certification and entered the supply chain of domestic server manufacturers such as Inspur. Jefferies estimates that the AI data center GaN market size will reach $2.5 billion, with InnoCare expected to capture over 30% market share as a core supplier. As a result, its stock surged over 30%. Other stocks such as Hua Hong Semiconductor (01347) rose over 8%, and Shanghai Fudan (01385) increased by 5%.

The United States continues to increase its investment in AI. Data shows that since the first quarter of 2023, the investment scale in information processing equipment in the U.S. has grown by 23% after adjusting for inflation, while the total U.S. Gross Domestic Product (GDP) has only increased by 6% during the same period. In the first half of this year, information processing investment contributed to more than half of the overall 1.2% GDP growth rate in the U.S. The AI competition has already begun, and domestic investments are expected to increase continuously, with optical fibers being the first to benefit. Yangtze Optical Fibre (06869) rose nearly 7%.

OpenAI CEO Sam Altman revealed that GPT-5 will launch different versions such as mini and nano in August and will be opened to external access via API (Application Programming Interface). This is expected to impact related application sectors. Beneficiaries include advertising company Huya Technology (01860), which rose nearly 12%, and cloud business's August stock Kingdee International (00268), which increased nearly 5%, while Agent Maifushi (02556) rose nearly 8%.

The military industry is gaining high attention, following the J-10CE, the Chinese Z-10ME has been equipped into the Pakistan military. CCTV News' official Weibo released a report on the drone "swarm" and machine "wolf pack" coordinated combat exercises, with the Fujian ship entering the final stages of commissioning. AVIC Science and Technology (02357) and China Shipbuilding Defense (00317) both rose over 5%.

In the robotics sector, the World Robot Conference will open in Beijing on August 8, expected to gather over 200 top companies including Yushu Technology, with more than 100 new products debuting. The world's first robot consumer festival has been launched, where companies can receive subsidies of up to 250,000 yuan for purchasing robots. There are further catalysts for robotics. On August 15, a humanoid robot sports event will be held at the Bird's Nest. This event has attracted teams from around the world to sign up enthusiastically. Currently, teams from Portugal, Japan, and the UAE have settled in the humanoid robot football training base to begin pre-competition preparations.

From August 27 to 29, the 2025 AGIC Shenzhen (International) General Artificial Intelligence Conference and General Artificial Intelligence Industry Expo will be held at the Shenzhen International Convention and Exhibition Center. During the conference, forums will be held on topics such as embodied intelligence, large models, humanoid robots, intelligent terminals, dexterous hands, and computing power; 100 disruptive AI technologies will make their global debut, covering cutting-edge fields such as AI chips, generative AI, intelligent robots, and embodied intelligence.

Authentic variety UBTECH (09880) announced that its placement has been completed, with a total of 30,155,450 shares placed, raising a total of HKD 2.41 billion. It is reported that the total amount raised from this placement exceeds the sum of the previous four placements, making it the largest stock placement financing for a humanoid robot listed company in capital market history, and it has received enthusiastic support from national sovereign funds, important industrial capital, long-term funds, and multi-strategy funds With orders in hand and financing secured, UBTECH (09880) surged over 10%.

Automobile stocks with good sales are also moving, such as Leapmotor (09863), which announced on its official Weibo that its total deliveries in July reached 50,129 units, a year-on-year increase of over 126%, marking the first time Leapmotor's monthly sales surpassed 50,000 units. Today, it rose over 8%; Great Wall Motors (02333) reported that in the first seven months of this year, its cumulative vehicle production was approximately 672,200 units, and total sales were approximately 674,100 units, representing increases of 4% and 3.57%, respectively. In July, vehicle production totaled 101,045 units, a year-on-year increase of 18.22%; total sales reached 104,372 units, a year-on-year increase of 14.34%. This indicates an increase in growth momentum. The Brazilian factory is scheduled to start production in August, further expanding into Latin America. Today, the stock rose over 5%.

Recently, there have been market rumors that Anta Sports (02020) is about to complete the acquisition of the American sneaker brand Reebok. Anta Sports' corporate communications department stated regarding this news: "We do not comment on market rumors. We recommend relying on the information officially released by the company." There was neither confirmation nor denial, so it can be monitored in the future.

【Sector Focus】

On August 4th, according to Xinhua News Agency, Chilean President Boric stated on the 3rd that a mining accident that occurred a few days ago in the O'Higgins region of central Chile resulted in 6 deaths, with all 5 trapped miners confirmed dead.

According to media reports, Codelco has initiated an investigation into the cause of the accident, and all underground operations have been halted. It is currently unclear how long the production stoppage will last and whether it will affect the company's production targets.

The mine accounts for over a quarter of Codelco's total production, with copper production of 356,000 tons last year. The news of the copper mine's production halt has boosted the already tense copper market sentiment. Copper prices on the London Metal Exchange rose 0.4% on Monday, reaching a peak of $9,672 per ton, continuing the upward trend from the previous trading day.

This incident will provide short-term stimulus to copper prices, while the medium-term outlook will mainly depend on the US dollar exchange rate, tariffs, demand, etc. Key stocks include Jiangxi Copper (00358), Minmetals Resources (01208), and China Nonferrous Metal Mining (01258).

【Stock Picking】

Bilibili-W (09626): Strong performance in the gaming market, Q2 financial report expected to show steady growth

In Q1 2025, the company's revenue is approximately 7 billion yuan, a year-on-year increase of 24%, with revenues from gaming, advertising, value-added services, and IP derivatives growing by 76%, 20%, 11%, and -4%, respectively. Gross margin increased to 36.3%, with non-GAAP net profit attributable to the parent company of approximately 363 million yuan, achieving a turnaround.

Commentary: The company's revenue growth and profit improvement are notable, with strong performance in the gaming market. "Three Kingdoms: Strategizing the World" has driven gaming revenue growth beyond expectations, launching its eighth season on May 31, aiming to build a good reputation. Advertising revenue increased by 20% year-on-year, with performance advertising growing by over 30%, benefiting from an increase in the number of advertisers and improvements in AI technology. Bilibili held a live broadcast for its 16th anniversary at the end of June.

From the user perspective: 1) The user base continues to expand: in Q1 2025, the platform's DAU and MAU reached 107 million and 368 million, respectively. 2) Bilibili remains youthful: over the past year, the average age of Bilibili users was 26, with over half of users being from the post-2000 generation 3) The platform continues to maintain high user engagement: the average daily usage time per user reaches 108 minutes; 50 million users use Bilibili for more than two hours each day; the retention rate of users who have been with the platform for 15 years is 90%.

Under the strategy, Bilibili's demand for e-commerce advertising is strong, while the company is also continuously upgrading its commercialization tools. With the recent launch of InsightAgent, Bilibili's efficiency in facilitating commercial orders during this year's 618 shopping festival has increased by more than five times, and data insight efficiency has improved by more than three times. In terms of gaming business, Changqing Games remains stable, with attention on the performance of new games.

Looking ahead, on one hand, the institution expects the launch effect of the traditional Chinese version of "Three Kingdoms: Strategizing the World" in Hong Kong, Macau, and Taiwan, while on the other hand, it also anticipates the performance of new games such as "Escape from Duckkov" and "Dudu Face Prank." The second quarter financial report is expected to achieve steady growth, driven by the stable performance of "Romance of the Three Kingdoms: Strategy Edition," with mobile game revenue expected to grow by 61% year-on-year; the advertising business is expected to benefit from an increase in advertising clients and technological upgrades, with an anticipated year-on-year growth of 18%