Zhitong Hong Kong Stock Analysis | The Federal Reserve's Support Strengthens Commodities, The Logic Behind the Rise in Real Estate

[Market Dissection]

The rise in the markets today was expected, as the bullish atmosphere from last Friday had already emerged, coupled with support from the Federal Reserve, leading A-shares to break records again. The trading volume in the Shanghai, Shenzhen, and Beijing markets surpassed 3 trillion yuan, marking the second time in A-share history that it has crossed this threshold. Many listed companies also announced plans to use their idle funds for securities investments, and Hong Kong stocks jumped 1.94%.

Federal Reserve Chairman Jerome Powell delivered a dovish speech at the Jackson Hole central bank annual meeting, stating that the downside risks in the labor market are increasing, and labor force growth has significantly slowed this year. Tariffs have begun to push up prices for certain goods, and the impact of tariffs on CPI is now clear, with the basic assumption being a one-time effect. Long-term inflation expectations remain well anchored, and we will not allow inflation to become a persistent issue. Given that monetary policy is in a tightening phase, we may need to adjust our policy stance. Powell is set to retire next year, and continuing a hawkish stance would be detrimental to him, especially since the current economic situation in the U.S. is not optimistic. If the Federal Reserve does not act decisively, the blame for a decline in U.S. stocks will fall on him, making dovish remarks quite normal. Based on this speech, at least two rate cuts this year are highly probable.

With expectations of rate cuts, the U.S. dollar is likely to weaken, and commodities will strengthen. Coupled with the AI boom, demand for copper will significantly increase, thus enhancing the elasticity of the copper industry. Today, Luoyang Molybdenum Co., Ltd. (03993), Jiangxi Copper Co., Ltd. (00358), and China Nonferrous Mining Corporation (01258) all rose over 8%.

There are also updates in the rare earth sector. The "Interim Measures for Total Quantity Control Management of Rare Earth Mining and Separation" has been released, which stipulates that the state will implement total quantity control management for rare earth mining and separation. This marks a new phase in the management of rare earths as a strategic resource, with strict controls due to the emergence of rare earth smuggling, necessitating the closure of this loophole. Today, JLMAG (06680) rose over 14%.

In real estate, there was unexpected good news. Today, the Shanghai Municipal Housing and Urban-Rural Development Administration, the Municipal Housing Management Bureau, and six other departments jointly issued a notice on "Optimizing and Adjusting the City's Real Estate Policy Measures," involving six adjustments related to housing purchase restrictions, provident funds, housing loans, and housing taxes. The new policy will take effect on August 26, 2025. Among these, the purchase restriction policy has undergone significant adjustments. Families that meet the criteria can purchase an unlimited number of homes outside the outer ring; single adults will follow the housing purchase restriction policy applicable to resident families; provident fund accounts can be used for down payments; and commercial loan rates will no longer differentiate between first and second homes. This is a strong move, but core areas have not been relaxed, similar to Shenzhen and Beijing, as the inventory pressure in remote areas is considerable, so it is reasonable to first digest these areas. Essentially, this provides some stimulus for first-time buyers, but it is not enough to change the current situation, as most people still lack funds.

From a market perspective, today real estate stocks were active, with Shanghai-based China Jinmao (00817) rising over 3%, while larger national real estate companies such as Vanke (02202), Sunac China (01918), China Overseas Grand Oceans Group (00081), and Longfor Group (00960) all saw increases exceeding 6%. How should we view this? In fact, the timing is the key factor; the market has already been preemptively speculating on expectations, because if the stock market can rise significantly in the future, non-property income for residents will increase, thereby boosting enthusiasm for home purchases This is the best way for real estate companies to resolve their debts. Today, Vanke (02202) took the lead, and the company's performance has been announced, achieving positive progress in debt resolution. Through asset disposal and continuous financial support from its major shareholder, Shenzhen Metro Group, Vanke has repaid HKD 24.39 billion in public market debt as scheduled, and there are no maturing offshore public debts before 2027. With the major shareholder backing, at least various businesses can continue to operate normally. Today, the stock surged nearly 10%. Currently, the real estate sector is in a phase of capital accumulation, and subsequent explosions will need to wait for the fundamentals to gradually improve, such as sales data improving. The market sentiment can be gauged by the movements of real estate brokerage Beike (02423).

NVIDIA's WeChat official account announced on August 23 that NVIDIA has launched Spectrum-XGS Ethernet. With the development of AI demand, the power and capacity of data centers within a single facility are being challenged. In terms of data center expansion, traditional commercial Ethernet network infrastructure faces limitations such as high latency, high jitter, and unpredictable performance. Spectrum-XGS Ethernet is a new product added to the NVIDIA Spectrum-X Ethernet platform, breaking these limitations by introducing scale-across infrastructure. The scale-across technology may combine multiple distributed data centers into a billion-watt AI super factory, and for networking, hollow-core fiber is essential. Leading company Yangtze Optical Fibre and Cable (06869) is expected to see the first commercial use of hollow-core fiber by China Mobile in July 2025, which may accelerate the commercialization process. Yangtze Optical Fibre was the only bidder, with an actual winning bid of approximately HKD 36,000 per core kilometer. Today, the stock surged over 26% again.

The China Photovoltaic Industry Association: firmly opposes engaging in vicious competition at prices below cost, shifting from homogeneous low-efficiency competition to high-quality and high-level competition. The photovoltaic industry has been sluggish for a long time, and failing to take strong measures could lead to trouble; some actions may be forthcoming this time. GCL-Poly Energy (03800), Xinyi Solar (00968), and Flat Glass Group (06865) all saw varying degrees of increases today, but the most significant was GCL-Poly New Energy (00451), which will announce its interim report on August 27. According to previous forecasts, the interim performance is expected to improve, and although there is still a net loss, the loss margin has significantly narrowed. Today, the stock suddenly surged over 14%, possibly indicating that the performance direction is better than expected. The stock prices of photovoltaic companies are generally at low levels, making this position relatively cost-effective.

Dongfeng Motor Group (00489) is preparing for privatization and resumed trading today. The company announced that its subsidiary, Voyah, will be listed on the Hong Kong Stock Exchange through an introduction, and Dongfeng Motor Group will simultaneously complete its privatization and delisting. According to the announcement, this transaction will use Voyah's equity + cash as the payment method, with an overall acquisition price of HKD 10.85 per share, including a cash consideration of HKD 6.68 per share and an equity consideration of HKD 4.17 per share. Today, the stock price surged over 54%. The variable lies in how much Voyah's valuation is worth. Nio (09866), mentioned last Friday, surged over 15% again today, mainly due to speculation that orders exceeded expectations. Nio's president, Qin Lihong, revealed the day after the new car launch, "Nio does not disclose the number of orders, but if calculated by the hour, so far, the order volume for the new ES8 has exceeded last month's Lido L90." In August, Zhitong Jin Gu Micro Alliance Group (02013): The mid-term performance showed revenue of approximately 775.5 million yuan, with adjusted revenue also around 775.5 million yuan, a year-on-year increase of 7.8%; the adjusted net profit was 16.9 million yuan, marking the first turnaround since 2021. Additionally, Chairman Sun Taoyong increased his holdings by 4 million shares, raising his stake to 6.76%. The company has consistently maintained close collaboration with the Tencent ecosystem and actively embraced new opportunities in WeChat e-commerce. By 2025, the number of newly bound WeChat small store merchants has exceeded 300, with a monthly GMV scale of approximately 50 million yuan and a monthly growth rate of about 100%. Today, the stock surged over 13% again.

【Sector Focus】

On the evening of August 24, the 2025 TMEA Tencent Music Entertainment Gala grandly opened at the Galaxy Macau Convention Center, which can accommodate 16,000 spectators, with the venue fully packed. Over 30 top Chinese musicians, including Jolin Tsai, Zhou Shen, Wu Qingfeng, and Wang Sulong, took the stage, repeatedly elevating the atmosphere.

On the evening of August 10, Eason Chan's "FEAR and DREAMS World Tour" concluded its final stop at the Galaxy Macau Convention Center, with a performance lasting nearly 4 hours, during which Eason Chan performed 12 encore songs, creating a lively atmosphere. The concert not only directly boosted gaming revenue but also stimulated related consumption in hotels and dining, extending tourists' stay. It is expected that gaming revenue in August will exceed expectations again.

Main varieties: Sands China (01928), Galaxy Entertainment (00027), Wynn Macau (01128), MGM China (02282), SJM Holdings (00880).

【Stock Picking】

Hong Kong Stock Exchange (00388): Record high revenue and profit in the first half of the year, new stock market remains active

In the first half of 2025, the Hong Kong Stock Exchange's revenue and other income reached HKD 14.076 billion, a 33% increase compared to the first half of 2024, with shareholders' profit attributable reaching HKD 8.519 billion, a 39% increase from the first half of 2024. The Hong Kong Stock Exchange plans to implement 24-hour trading over 5 days.

Commentary: The Hong Kong Stock Exchange achieved record highs in both revenue and profit for the first half of the year, with an increase in average daily trading volume leading to good profitability and significant strategic progress in multiple businesses. The IPO pipeline is rich, with the number of IPO applications reaching 207 as of June 2025, a significant increase from 120 in March 2025. Multiple data points have seen explosive growth. Since the beginning of this year, the average daily trading volume in the Hong Kong securities market has exceeded HKD 240 billion, more than 17 times the HKD 13 billion in 2000, witnessing the continuous growth of the Hong Kong market and investor community over the past 25 years. The growth in the Hong Kong Stock Exchange's derivatives market has been even more significant, with an average daily trading volume of 1.76 million contracts this year, far exceeding the 37,500 contracts in 2000 Since 2000, the number of listed companies in Hong Kong has increased from 790 to over 2,600, with mainland enterprises listed in Hong Kong accounting for 81% of the total market capitalization. The Hong Kong Stock Exchange (HKEX) is actively preparing to launch a "Technology Enterprise Channel" to facilitate the listing applications of mainland technology and biotechnology companies in Hong Kong, helping to attract more large-scale enterprises to list in Hong Kong and thereby generate more listing fee income. Expanding into the ASEAN and Middle Eastern markets: HKEX 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. The new stock market of HKEX remains active, with the Hong Kong new stock market having completed over 50 listing applications, raising nearly $17 billion, leading the global IPO rankings. Currently, there are as many as 230 companies in line for IPO applications, with the new stock fundraising amount ranking first in the world