Hong Kong Stock Close: Hang Seng Index up 0.13%, Tech Index down slightly 0.08%, tech and internet stocks showing mixed performance, brokerage stocks and mainland property stocks rising, optical communication and semiconductor chip stocks declining

On March 17, the three major Hong Kong stock indices opened higher but fell back, maintaining a volatile downward trend in the afternoon. By the close, the Hang Seng Index rose 0.13% to 25,868.54 points, the Hang Seng Tech Index fell 0.08% to 5,107.64 points, the China Enterprises Index increased 0.12% to 8,826.73 points, and the Red Chip Index declined 0.08% to 4,312.14 points.

Market overview shows a divergence among large tech stocks: Alibaba-W rose 0.45%, Tencent Holdings fell 1.52%, JD.com-SW gained 0.54%, Xiaomi Group-W increased 0.45%, NetEase-S declined 0.05%, Meituan-W rose 2.17%, Kuaishou-W dropped 0.25%, Bilibili-W gained 0.99%. Chinese brokerage stocks led the rally, with CITIC Securities and GF Securities both up over 3%. Property developers strengthened, CIFI Holdings rose over 5%, Longfor Group increased over 4%. Sportswear stocks were active, Li Ning rose over 3%. Additionally, entertainment, retail, new energy vehicle companies, internet healthcare, and domestic banks also gained. Optical communication stocks retreated, with Long Fiber Optic Cable dropping over 12%. Chip stocks weakened, with GigaDevice falling over 6%, and Lianchuang Technology down over 5%. Battery, electrical equipment, commercial aerospace, and coal concepts remained subdued during the day. Ant Group’s takeover bid was approved, with Yuekai Securities Finance surging about 47%. NVIDIA’s GTC event sparked excitement for “Token First Stock” Suntech, which gained about 36% intraday.

Company News: Diverging Earnings, Buyback Wave

In the aviation sector, China Southern Airlines (01055.HK) released February operational data: passenger capacity increased 14.39% year-over-year, passenger turnover rose 13.82%, but the seat occupancy rate was 86.31%, down 0.44 percentage points. Cargo and mail turnover increased 12.56%, indicating overall positive operations.

The pharmaceutical sector showed many highlights. Pact Biopharmaceuticals (02565.HK) and TengRui Pharmaceuticals reached an exclusive commercialization partnership for Pidacanc in mainland China, with a combined sales target exceeding 10 billion yuan and about HKD 140 million in rights fees, indicating strong growth potential.

Fosun Pharma (02196.HK)’s LBP - ShC4 and CSPC Pharmaceutical Group (01093) received clinical trial approval in China for highly selective PDE4B inhibitors (SYH2059 inhalation powder), injecting new momentum into drug development.

In energy and construction, Sinopec Oilfield Service (01033.HK) expects 2025 revenue of approximately HKD 80.712 billion, down 0.5% year-over-year, with net profit around HKD 659 million, up 4.3%, showing steady growth.

Qingdao Port (06198.HK) projects 2025 revenue of HKD 18.806 billion, down 0.71%, but net profit increased 0.7%. During the period, container throughput reached 34.2 million TEUs, up 6.3%, demonstrating strong business resilience.

The real estate sector faces mixed signals. CIFI Holdings (00884.HK) expects annual attributable net profit of HKD 17-19 billion, turning profitable from a loss, mainly due to gains from offshore debt restructuring. However, core profit after adjustments shows a loss of HKD 7.5-9 billion, reflecting ongoing industry challenges.

Consumer and tech sectors show clear divergence. Modern Dental Group (03600.HK) expects significant growth in 2025 revenue and net profit, with revenue of HKD 3.675-3.775 billion, up about 9.2%-12.2%, and net profit of HKD 590-610 million, up about 45%-50%.

KE Holdings (02423.HK) expects net revenue for FY2025 to increase 1.2%, but net profit to decline 26.7%. Leapmotor (09863.HK) performed strongly, with revenue of HKD 64.73 billion, up 101.3%, gross margin of 14.5%, a record high, and net profit of HKD 540 million, turning profitable due to increased vehicle and parts deliveries.

Chow Tai Fook (00116.HK) forecasts substantial growth in net profit from ongoing operations in 2025. United Group (00373.HK) issued a profit warning expecting a turnaround to profit. Hopson Development (00733.HK) expects a loss of HKD 280-330 million, while Green Leader Holdings (00061.HK) anticipates a decrease in net profit in 2025.

The buyback wave has become a highlight in the Hong Kong market. NetEase Cloud Music (09899.HK) repurchased 102,000 shares for HKD 14.995 million, Xindong Company (02400.HK) bought back 110,000 shares for HKD 7.839 million, and Yum China (09987.HK) repurchased 18,800 shares for HKD 7.729 million.

Institutional Views: Finding Opportunities in Divergence

Huatai Securities believes that the valuation and earnings expectations of the Hang Seng Tech Index may need more time to stabilize, and current sentiment indicators do not yet signal increased buying. Recent geopolitical volatility may pressure risk assets, leading to cautious outlooks. However, the peak of intense competition, recovery of consumption expectations, and active model application by large firms are key catalysts. The period from mid to late March through early April is a critical validation phase. Before then, “cheap valuations” alone are insufficient to sustain a continuous index rally. Structurally, since 2026, Hong Kong tech stocks have shown significant differentiation, benefiting from capital expenditure expansion in core areas like computing power and hardware, while large internet platforms requiring heavy AI investment face pressure.

CICC states that, in the short term, the valuation of Hong Kong tech stocks has fallen below the mean minus one standard deviation, and RSI indicates oversold conditions, making it attractive. For some investors, current valuations and market sentiment offer a good entry point for gradual positioning. The chance for Hong Kong stocks to outperform other markets again depends on the Fed’s easing expectations, the return of Hong Kong’s structural market focus, and inflows from southbound funds. During market adjustments, some Hong Kong-listed companies have shown a “buy more as prices fall” behavior, with over HKD 20 billion repurchased since 2026.

CITIC Securities believes that geopolitical conflicts have caused short-term adjustments in global financial markets. Current sentiment-driven declines are sufficient; if tensions do not escalate further, markets will quickly revert to long-term trends driven by domestic economy, policies, and liquidity. Focus will shift to sectors benefiting from AI computing power and capital expenditure, with core stocks leading the way. Industrial Securities emphasizes that policy benefits and AI industry transformation will drive a valuation re-rating of Hong Kong tech stocks. Valuations are at historic lows, and with sustained southbound capital inflows, long-term investment value is evident.