{HKG Stock Commentary} Early this week, the positive market sentiment was boosted by the meeting between Chinese and U.S. leaders, coupled with declines in long-term bond yields and oil prices. U.S. stocks rallied significantly, with the Nasdaq reaching a new high, driven by the semiconductor sector. Meta recently launched its personal AI agent "Muse," stimulating market expectations for structural changes in CPU demand, potential price hikes, and supply tightness. This fueled speculation in CPU-related stocks such as AMD, Intel, ARM, and Qualcomm. However, on the previous day (24th), the yield on the U.S. 10-year Treasury bond surged past 5.1%, hitting a new high in over 20 years, putting renewed pressure on major global stock markets.
As central banks worldwide begin tightening monetary policy, both interest rates and long-term bond yields have risen. Traditionally, this would compress valuations of technology stocks. However, current financial conditions have not yet reached an extremely tight state. Moreover, the rapid growth trend of AI enterprises continues, with strong corporate earnings growth serving as the core support for equities. Therefore, the current high-interest-rate environment may not immediately pressure stock markets, and the likelihood of a short-term market crash remains low. Nevertheless, market stock-picking standards have become more stringent. Funds are expected to remain concentrated primarily in financial stocks benefiting from high interest rates and high dividend yields, pharmaceutical stocks less correlated with the economic cycle, and AI-related stocks with strong commercial monetization capabilities and pricing power.
Regarding Hong Kong stocks, the "Muse" hype briefly drove the Hang Seng Index to rebound to 25,254 points. Tencent and Alibaba, whose AI commercialization paths resemble Meta's, also received temporary support. However, the upward momentum failed to sustain, with market funds opting to take profits near the 25,200 level. Strong sectors did not show follow-through strength, and trading volume remained subdued, reflecting cautious market sentiment and insufficient capital inflow. Without strong buying support, the market is likely to remain in a stock-picking rather than market-picking phase, characterized by continued volatility. In the short term, focus remains on whether the HSI can stabilize around the 24,700 level. If successful, it may retest 25,200 or higher; otherwise, the index could extend its downward trend.
In terms of stock selection, SMIC (00981), the undisputed domestic semiconductor foundry leader, stands as one of the biggest beneficiaries of the industry's rapid development. Investors may consider using its recent pullback as an opportunity to accumulate positions at lower levels.
AI infrastructure development continues at a vigorous pace. Events such as TSMC and ASML raising their full-year revenue forecasts, sustained revenue growth among major cloud service providers, and Neoclouds representative Nebis increasing its GPU rental prices indicate that demand for large model computing power still outstrips supply. This directly supports strong demand for high-end chips and memory chips, suggesting high order visibility across the global semiconductor supply chain for the next two years.
The company's interim results were undoubtedly impressive, surpassing market expectations across key financial metrics such as revenue, net profit, and net profit margin. This also reflects an ongoing shift in the company's business logic. First, the proportion of revenue from the mainland region continues to increase, now accounting for 90% of total revenue, indicating market recognition of product quality and the potential to benefit further from domestic substitution, thereby driving continued revenue growth. Second, the company's average selling price (ASP) has steadily increased, rising 7% year-on-year to $966, showing that the company is beginning to gain pricing power and will have greater flexibility to implement price hikes in the future. Given the ongoing severe shortage of computing power in mainland China and management's indication of a price increase in the third quarter, along with measures such as optimizing product mix, improving capacity utilization, and refining manufacturing processes, gross margins are expected to have further upside potential.
The company's forecast P/B ratio for this year is only 2.8x, representing a significant discount compared to both domestic and international peers, suggesting that its current valuation has not yet reflected its long-term strategic value as the leading mainland semiconductor foundry. With overseas orders returning, accelerated domestic substitution, and sustained strong AI demand, the company's valuation has room for re-rating. Investors may consider accumulating positions at this stage. {Everbright Securities International Product Development & Retail Research Department}
Investments involve risks, and risk tolerance varies among investors. Independent judgment is essential. The author may trade based on market conditions.
*Articles published in {Economic Information Daily}, whether signed or unsigned, represent the authors' personal opinions and do not reflect the position of {Economic Information Daily}. {Economic Information Daily} serves solely as a platform for free expression.
As central banks worldwide begin tightening monetary policy, both interest rates and long-term bond yields have risen. Traditionally, this would compress valuations of technology stocks. However, current financial conditions have not yet reached an extremely tight state. Moreover, the rapid growth trend of AI enterprises continues, with strong corporate earnings growth serving as the core support for equities. Therefore, the current high-interest-rate environment may not immediately pressure stock markets, and the likelihood of a short-term market crash remains low. Nevertheless, market stock-picking standards have become more stringent. Funds are expected to remain concentrated primarily in financial stocks benefiting from high interest rates and high dividend yields, pharmaceutical stocks less correlated with the economic cycle, and AI-related stocks with strong commercial monetization capabilities and pricing power.
Regarding Hong Kong stocks, the "Muse" hype briefly drove the Hang Seng Index to rebound to 25,254 points. Tencent and Alibaba, whose AI commercialization paths resemble Meta's, also received temporary support. However, the upward momentum failed to sustain, with market funds opting to take profits near the 25,200 level. Strong sectors did not show follow-through strength, and trading volume remained subdued, reflecting cautious market sentiment and insufficient capital inflow. Without strong buying support, the market is likely to remain in a stock-picking rather than market-picking phase, characterized by continued volatility. In the short term, focus remains on whether the HSI can stabilize around the 24,700 level. If successful, it may retest 25,200 or higher; otherwise, the index could extend its downward trend.
In terms of stock selection, SMIC (00981), the undisputed domestic semiconductor foundry leader, stands as one of the biggest beneficiaries of the industry's rapid development. Investors may consider using its recent pullback as an opportunity to accumulate positions at lower levels.
AI infrastructure development continues at a vigorous pace. Events such as TSMC and ASML raising their full-year revenue forecasts, sustained revenue growth among major cloud service providers, and Neoclouds representative Nebis increasing its GPU rental prices indicate that demand for large model computing power still outstrips supply. This directly supports strong demand for high-end chips and memory chips, suggesting high order visibility across the global semiconductor supply chain for the next two years.
The company's interim results were undoubtedly impressive, surpassing market expectations across key financial metrics such as revenue, net profit, and net profit margin. This also reflects an ongoing shift in the company's business logic. First, the proportion of revenue from the mainland region continues to increase, now accounting for 90% of total revenue, indicating market recognition of product quality and the potential to benefit further from domestic substitution, thereby driving continued revenue growth. Second, the company's average selling price (ASP) has steadily increased, rising 7% year-on-year to $966, showing that the company is beginning to gain pricing power and will have greater flexibility to implement price hikes in the future. Given the ongoing severe shortage of computing power in mainland China and management's indication of a price increase in the third quarter, along with measures such as optimizing product mix, improving capacity utilization, and refining manufacturing processes, gross margins are expected to have further upside potential.
The company's forecast P/B ratio for this year is only 2.8x, representing a significant discount compared to both domestic and international peers, suggesting that its current valuation has not yet reflected its long-term strategic value as the leading mainland semiconductor foundry. With overseas orders returning, accelerated domestic substitution, and sustained strong AI demand, the company's valuation has room for re-rating. Investors may consider accumulating positions at this stage. {Everbright Securities International Product Development & Retail Research Department}
Investments involve risks, and risk tolerance varies among investors. Independent judgment is essential. The author may trade based on market conditions.
*Articles published in {Economic Information Daily}, whether signed or unsigned, represent the authors' personal opinions and do not reflect the position of {Economic Information Daily}. {Economic Information Daily} serves solely as a platform for free expression.
