Zhitong Hong Kong Stock Analysis | The US and Russian leaders may hold talks soon, and brain-computer interfaces are set for a major release

[Market Dissection]

The uncertainty factors have finally been eliminated, and Hong Kong stocks have once again fluctuated upward today, with the Hang Seng Index closing up 0.69%, re-establishing itself above the 25,000-point threshold.

Good news has emerged regarding third-party sanctions against Russia. On August 6, Russian President Vladimir Putin met with U.S. Special Envoy for Middle East Affairs, David Schenker, at the Kremlin in Moscow. Trump stated that the talks were "productive and made significant progress," and he also indicated that a meeting between the U.S. and Russian leaders could happen soon. The White House stated that Russia expressed a desire to meet with Trump, and Trump is open to meeting with both Putin and Zelensky.

On August 7 local time, Russian presidential aide Ushakov stated that Russia is preparing specific arrangements for a meeting between the two heads of state with the U.S. This indicates that both sides have reached a consensus, and a ceasefire in the near future is worth looking forward to. Therefore, there may no longer be sanctions against us. The sanctions against India are not necessarily a bad thing, as Modi has chosen to stand firm: he will never compromise on a 50% tariff and is prepared to pay a heavy price. Modi is also expected to visit China again at the end of August, and Brazilian President Lula stated: "I want to call China and India to discuss how to work together in BRICS to respond to Trump." Thus, the situation is favorable for us.

Additionally, S&P Global Ratings has released a report deciding to maintain China's sovereign credit rating at "A+" with a "stable" outlook. According to the Ministry of Finance, the S&P report reflects a high recognition of China's economic growth resilience and debt management effectiveness, demonstrating confidence in the positive outlook for the Chinese economy. Do not underestimate ratings; they are also a financial weapon, and their quality significantly influences global investment flows.

The current stock market environment is quite friendly, especially after the market has determined that the Federal Reserve will cut interest rates in September. The U.S. dollar has fallen for five consecutive days, while spot gold has risen over 0.7%, breaking through $3,390. The rise in gold generally corresponds to a weakening trend of the U.S. dollar. Today, China Gold International (02099) and Chifeng Gold (06693) both rose over 6%, and the gold jewelry company mentioned yesterday, Lao Pu Gold (06181), continued to rise over 3%, while Luk Fook Holdings (03738) rose over 6%.

Under the expectation of interest rate cuts, the most sensitive sector in Hong Kong stocks is the property developers. New World Development (00017) saw a significant rise of over 10% amid rumors that the Cheng family is negotiating financing with Blackstone, or may have privatization plans. Local Hong Kong property stocks also rose, with Wharf Holdings (01997) and Henderson Land (00012) both increasing by around 4%. Mainland property stocks have also started to follow suit, with China Xinhua (01908), New Town Development (01030), and Yuexiu Property (00123) all rising over 3%.

Foreign trade is also performing well. According to data from the General Administration of Customs, in the first seven months, ASEAN has become my largest trading partner, with a total trade value of 4.29 trillion yuan, an increase of 9.4%, accounting for 16.7% of my total foreign trade. The EU is my second-largest trading partner, with a total trade value of 3.35 trillion yuan, an increase of 3.9%, accounting for 13% of my total foreign trade. The U.S. is my third-largest trading partner, with a total trade value of 2.42 trillion yuan, a decrease of 11.1%, accounting for 9.4% of my total foreign trade. The structure is reasonable, gradually increasing trade transfers to ASEAN and Europe Trump stated that a 100% tariff will be imposed on imported products, including semiconductors, which will intensify the export pressure on China's semiconductor industry in the short term, but will further strengthen China's determination for self-sufficiency in the medium to long term. Hua Hong Semiconductor (01347) continues to rise steadily, and the rare earth company Jinli Permanent Magnet (06680) will release its performance on August 19, rising over 4% today.

To obtain tariff exemptions, CEO Tim Cook announced a new $100 billion investment in the Oval Office, aimed at shifting more Apple production to the United States. In addition to the previously announced plan to invest $500 billion in the U.S. over the next four years, Apple's total investment commitment in the U.S. has reached $600 billion. Apple shares surged over 5% in the U.S. stock market, directly boosting the supply chain, with the multi-attribute stock Hong Teng Precision (06088) rising nearly 7% again in August; GoerTek (01415), which derives over 90% of its revenue from Apple orders, also rose over 9% today; while BOE Technology Group (00710) will supply OLED panels for the iPhone 17 Pro series. Relevant data shows that in the second quarter of this year, LG accounted for 21.3% of Apple's OLED share, BOE accounted for 22.7%, and Samsung accounted for 56.0%. BOE Precision (00710) rose over 8% today.

The express delivery industry has officially started a "de-involution" process. Starting from August 4, the base price for express delivery in Guangdong Province has been raised by 0.4 yuan per ticket, with the average price exceeding 1.4 yuan. According to relevant department requirements, no company may collect at a cost lower than 1.4 yuan, or they will face severe penalties. ZTO Express-W (02057) rose over 4%; lithium salts are also experiencing significant competition, with the main contract for lithium carbonate futures expanding its daily increase to 5%, reported at 72,140 yuan/ton. Tianqi Lithium (09696) rose nearly 7%, and Ganfeng Lithium (01772) rose over 4%.

Brain-computer interfaces have once again welcomed the release of a significant document by seven departments: by 2030, the innovation capability of the brain-computer interface industry will be significantly enhanced, forming a safe and reliable industrial system, cultivating 2 to 3 global leading enterprises and a batch of specialized and innovative small and medium-sized enterprises, and building an internationally competitive industrial ecosystem. The reason for the joint release by seven departments is that brain-computer interfaces belong to frontier science, which, in addition to assisting medical applications, can drive a large number of industries, including chips, brain-controlled robots, brain-controlled smart homes, sensors, software, sports training, and driver monitoring, etc. Currently, this market is dominated by the U.S. and Europe, but with policy support and China's advantages in various fields, it is expected to catch up and seize the high ground. Major stocks in Hong Kong include Nanjing Panda Electronics (00553), which surged over 19%, and MicroPort Scientific (02172), which rose over 8%.

RWA has introduced a new target, with the ride-hailing platform Cao Cao Mobility (02643) announcing a strategic cooperation memorandum with the licensed financial institution Victory Securities (08540) in Hong Kong. The two parties will focus on three core areas: tokenization of real-world assets (RWA), stablecoin payment applications, and compliant digital currency issuance, to carry out in-depth cooperation. The company's Robotaxi business has stable and predictable operational characteristics, naturally aligning with RWA's requirements for underlying assets, and is seen as a highly promising frontier RWA target. The cooperation between the two parties is expected to accelerate the asset tokenization process of the Robotaxi industry through blockchain technology and Web 3.0 innovative models, with Cao Cao Mobility (02643) rising nearly 18% today 【Sector Focus】

Shipping giants are raising freight rates: Hapag-Lloyd announced that starting from August 16, it will impose a peak season surcharge (PSS) on routes from Asia to Africa: Asia/Oceania → Southwest Africa (Angola, Congo, etc.): USD 600/TEU (USD 800/TEU for refrigerated containers to Cameroon). Asia/Oceania → South Africa: USD 200/TEU (excluding refrigerated containers). Asia/Oceania → Conakry, Guinea: USD 600/TEU (USD 800/TEU for refrigerated containers).

Maersk has raised freight rates on multiple routes since July 15: China to the East Coast of South America (Brazil, Argentina, etc.): up by USD 1,000/TEU. Far East to West Africa route: up by USD 50/TEU; Middle East to East Africa route: up by USD 750/TEU.

CMA CGM has also added USD 300/TEU on the Asia (excluding Japan) to Red Sea route during the same period.

Main Beneficial Stocks: Yang Ming Marine Transport Corp (02510), SITC International Holdings (01308), China COSCO Shipping Corporation Limited (01919), Orient Overseas International Limited (00316).

【Stock Picking】

Dongyue Group (00189): Half-year profit expected to increase significantly year-on-year, refrigerant market continues to rise

Recently, Dongyue Group plans to invest nearly HKD 200 million in the quality improvement of PTFE, green intelligent transformation of tetrafluoroethylene, and pilot production of tetrafluoropropylene. Dongyue Group released a profit warning for the first half of the year, expecting that the net profit attributable to shareholders for the year ending June 30, 2025, may increase significantly by about 150% year-on-year.

Comment: The company benefits from the continuous rise in the refrigerant market, and its performance is expected to enter an upward cycle. From June to August, the downstream air conditioning industry maintained a year-on-year growth trend in production, with strong demand supporting refrigerant prices, which have been steadily rising since 2025.

The refrigerant market is entering a peak demand season, with strong certainty of price increases. The company's advantages are highlighted, as it is a leader in the fluorosilicone industry and is expected to fully benefit. Dongyue Group is a leading enterprise in China's production capacity and quota for R22 and R32, with approximately 220,000 tons of R22 capacity and about 60,000 tons of R32 capacity.

In terms of quotas, according to the Ministry of Ecology and Environment, the company has a quota of 43,900 tons for R22 in 2025, accounting for about 29.46% of the total quota, making it the largest quota in the country; it has a quota of 56,300 tons for R32, accounting for about 20.09% of the total quota, second only to the quota ratio of Juhua Co., Ltd.; the company has a total of 129,900 tons of production quotas for second and third generation refrigerants, ranking among the top in the country. The price of R22 is expected to rise significantly. Dongyue Group is a leader in the second-generation refrigerant industry, with a large number of R22 quotas, and is expected to fully enjoy the benefits of price increases.

The company is the world's largest supplier of PTFE materials, becoming a key material in the humanoid robot sector. Most of the company's R22/R142b capacity is used for fluorinated polymer raw materials, which have a large domestic demand and may support prices for non-refrigerant applications in the medium to long term. As the price of refrigerants continues to rise under a tight supply-demand balance, the gross profit and net profit of the company's refrigerant products continue to increase. The refrigerant market is in a long-term boom cycle, and as a leader in the fluorosilicone industry, the company is expected to fully benefit, while the gradual increase in export demand from September to October may lead to further market expectations