Affected by the downturn in the A-share market, Hong Kong stocks rose initially but retreated later today. NVIDIA announced it will invest $100 billion in OpenAI to support the construction of new data centers and infrastructure required for artificial intelligence workloads. The Dow Jones Industrial Average and Nasdaq Composite Index in the U.S. each rose 0.1% and 0.7%, respectively, overnight. As of this writing, the yield on the 2-year U.S. Treasury bond fell to 3.597%, while the yield on the 10-year U.S. Treasury bond dropped to 4.131%. The U.S. Dollar Index declined to 97.29. The latest Dow futures gained 39 points or 0.08%, and Nasdaq futures rose 7 points or 0.03%. The Shanghai Composite Index fell 6 points or 0.18% to close at 3,821 points, while the Shenzhen Component Index dropped 0.3%. The combined trading volume in the Shanghai and Shenzhen markets reached RMB 2.49 trillion.
The one-month Hong Kong dollar Hibor rose to 3.91%, hitting a one-month high. Hong Kong stocks initially advanced but then fell today. The Hang Seng Index opened 91 points higher and climbed as much as 109 points to reach 26,454 points before retreating. In the afternoon, it fell 340 points to a low of 26,003 points. The index closed down 185 points or 0.7% at 26,159 points. The Hang Seng China Enterprises Index fell 80 points or 0.9% to 9,290 points, and the Hang Seng Tech Index declined 90 points or 1.5% to 6,167 points. The total turnover amounted to HKD 294.57 billion. Northbound trading turnover totaled RMB 149.515 billion, while southbound funds recorded net outflows of RMB 4.069 billion (versus net inflows of RMB 12.736 billion the previous day). Hong Kong Exchanges and Clearing Limited (HKEX) stock price fell 1.2% to close at HKD 437.40, while Lens Technology slid 7.1%.
[Northbound Capital Outflow; Baidu Drops 5%]
Alibaba (09988.HK) rose 0.1%, Meituan (03690.HK) fell 2.8% to close at HKD 101, Baidu (09888.HK) shares dropped 5.4% to close at HKD 128.40, with a turnover of HKD 4.77 billion. JD.com (09618.HK) retreated 4.4% to close at HKD 128.30.
Nomura issued a report on China’s internet industry stating that the ‘monthly total usage time’ (MTS) for Chinese users in August grew by 8.9% year-over-year, slowing from July’s 9.7% growth. The report noted that Taobao app, operated by Alibaba and newly integrated with instant retail services, saw accelerated user engagement growth, with its MTS increasing by 17% year-over-year in August (up from 11% in July), primarily driven by a 19% increase in daily active users (DAU).
The report noted divergent trends in e-commerce user engagement: competition in instant retail remained intense. In August, the competition in the instant retail sector was still fierce, mainly between Alibaba and Meituan, overshadowing JD.com. Growth in Meituan’s app slowed, with the monthly total usage time (MTS) rising only 10% in August, significantly lower than July’s 21%, mainly due to a 10% increase in DAU. Regarding search, the report stated that although Baidu App remains China’s leading search engine, its total usage time (MTS) in August fell 6% year-over-year, mainly dragged down by a 10% decrease in DAU, even though daily average usage per user (DTSD) increased 5%, which was insufficient to offset the decline.
[Over a Thousand Stocks Decline; HSBC Rises Against the Trend]
The breadth of Hong Kong stocks continued to weaken today, with the ratio of advancing to declining stocks on the main board at 18 to 31 (compared to 19 to 30 the previous day). Among them, 1,274 stocks declined (average drop of 2.4%). Within the Hang Seng Index components, 18 stocks rose while 67 stocks declined, making the ratio 20 to 76 (compared to 19 to 80 the previous day). The market recorded short-selling of HKD 41.394 billion today, accounting for 16.05% of the total turnover of shortable stocks amounting to HKD 257.903 billion (compared to 20.039% the previous day).
HSBC (00005.HK) rose against the trend, climbing 1.3% to close at HKD 108.60. Citi issued a report stating that over the past three months, highly internationalized UK banks have performed stronger due to higher HIBOR and easing tariff concerns. The bank’s top picks in the industry are NatWest (NWG.L) and HSBC. Citi expects HSBC management will raise its full-year guidance for net interest income to ‘over $42 billion’ (from approximately $42 billion previously). The bank maintains a ‘Buy’ rating on HSBC, raising its target price from HKD 105.60 to HKD 118.20 and including it in its 90-day short-term upside watchlist.
