Policy Tailwinds Lift Hong Kong Growth Stocks
6 Min. Read Time
Key News
Asian equities were higher led by Hong Kong, Mainland China, and Korea, while Japan, India and the Philippines underperformed.
Over the weekend, it was reported that August industrial profits in China rose sharply by +20.4% compared to July’s decline of -1.5%. Year-to-date (YTD), industrial profits for August increased +0.9% year over year (YoY), up from July’s decrease of -1.7%. This reversal provided a tailwind for markets in today’s session.
It remains difficult to assess the exact impact of the recent anti-involution campaign on the August data, though some optimists viewed it as a catalyst for the day’s strong price action. Additionally, polysilicon futures on the Guangzhou Futures Exchange climbed to Renminbi (RMB) 51,500 from RMB 30,300 in late June, which should bolster profitability for solar stocks. Power supply companies also benefited, with notable jumps in electricity and heat profits in August.
The State Administration for Market Regulation held a meeting on Friday focused on promoting the healthy development of online catering, including restaurant delivery. This sector has pressured net income and share prices for names like JD.com and Meituan, but reports of regulatory support lifted JD.com by +3.09% and Meituan by +2.19%. Alibaba gained +4.14% following an analyst upgrade, with trading volume rising to 134 million shares, well above the 52-week average of 105 million shares.
The most significant development was the release following the Communist Party of China (CPC) Central Committee meeting with President Xi Jinping to study and formulate major aspects of the upcoming 15th Five-Year Plan for National Economic and Social Development. The session also set dates for the fourth plenum in Beijing: October 20–23. The official release included positive messaging:
- “Adhere to high-quality development, lead development with new development concepts, develop new quality productive forces according to local conditions, and promote sustainable and healthy economic development and social comprehensive progress.”
- “We will adhere to comprehensive deepening reform.”
- “Expand high-level opening-up.”
- “Effectively prevent and resolve various risks.”
Another driver was the National Development and Reform Commission (NDRC) announcement that RMB 500 billion had been allocated to promote better financial services for the real economy. The NDRC also mentioned the Artificial Intelligence Plus initiative, noting that 254,000 new private companies have been established in artificial intelligence software research and development in the first quarter of 2025. The commission pledged support for domestic computing power models and will offer subsidies to companies using computing power services.
Growth stocks and policy-favored sub-sectors such as internet, semiconductors, non-ferrous metals, and precious metals led today’s gains in both Hong Kong and Mainland China. CATL rose +3.11% and BYD gained +1.97%, although performance among auto and electric vehicle stocks was mixed. DeepSeek’s release of its version 3.2 likely contributed to today’s growth momentum. Brokerages saw strong interest as the People’s Bank of China (PBOC) maintained accommodative monetary conditions, while insurance stocks also performed well.
Golden Week tourism-related industries, including Macau casino stocks, hotels, and restaurants, surged in advance of China’s long holiday week. The release of the “Work Plan for Stabilizing Growth in the Nonferrous Metals Industry (2025–2026)” boosted non-ferrous metals stocks. Zijin Golden International’s anticipated Hong Kong initial public offering (IPO) saw shares trading up +48% in over-the-counter transactions.
Southbound Stock Connect experienced a rare outflow, driven by significant redemptions in the Hong Kong Tracker ETF. However, Mainland investors remained net buyers of Alibaba. Mainland China saw similar outperformance in growth stocks and policy-driven sub-sectors, although the local market was not as strong as Hong Kong.
Foreign institutional investors may have contributed to Hong Kong’s strength ahead of quarter-end portfolio disclosures, potentially increasing their allocations to Hong Kong growth stocks.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | 1.9% |
| Hang Seng Tech | HSTECH Index | 2.1% |
| Hong Kong Turnover | HKTurn Index | -4.5% |
| Hong Kong Short Sale Turnover | HKSST Index | -6.6% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 13.2% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 0 |
| China (Shanghai) | SHCOMP Index | 0.9% |
| China (Shenzhen) | SZCOMP Index | 1.5% |
| China (STAR Board) | Star50 Index | 1.4% |
| Mainland Turnover | .chturn Index | 0.8% |
| Northbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | Not Available |
| Jing Daily China Global Luxury Index | CHINALUX Index | 1% |
| Japan | NKY Index | -0.7% |
| India | SENSEX Index | -0.1% |
| Indonesia | JCI Index | 0.3% |
| Malaysia | FBMKLCI Index | 0.1% |
| Pakistan | KSE100 Index | 1% |
| Philippines | PCOMP Index | -0.5% |
| South Korea | KOSPI Index | 1.3% |
| Taiwan | TWSE Index | -1.7% |
| Thailand | SET Index | 0.7% |
| Singapore | STI Index | 0.1% |
| Australia | AS51 Index | 0.9% |
| Vietnam | VNINDEX Index | 0.3% |
| Indicator | Hong Kong | Mainland |
|---|---|---|
| Today's Volume % of 1-Year Average | 129% | 129% |
| Advancing Stocks | 397 | 3486 |
| Declining Stocks | 92 | 1457 |
| Outperforming Factors | Liquidity, Buyback, EPS Revision | EPS Revision, Liquidity, Momentum |
| Underperforming Factors | ||
| Top Sectors | Materials, Discretionary, Communication | Materials, Industrials, Financials |
| Bottom Sectors | Tech | Energy |
| Top Subsectors | Steel, Non Ferrous Metals, Semis | Securities, Precious Metals, Base Metals |
| Bottom Subsectors | Consumer Durables/Apparel, Tech Hardware, Telecommunication Services | Education, Motorcycle, Coal |
| Southbound Connect Buys | Alibaba (Very Large), Tencent, Xiaomi (Large), Li Auto (Large), SMIC (Small) | |
| Southbound Connect Sells | HK Tracker ETF (Very Large), Hua Hong Semi, Meituan, XtalPi (Small) |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 152 | 2.12 |
| Communication Services | 9 | 2.29 |
| Consumer Discretionary | 28 | 2.86 |
| Consumer Staples | 13 | 1.96 |
| Energy | 6 | 1.21 |
| Financials | 24 | 2.11 |
| Health Care | 12 | 1.26 |
| Industrials | 21 | 1.18 |
| Information Technology | 10 | -0.8 |
| Materials | 10 | 4.59 |
| Real Estate | 7 | 2.04 |
| Utilities | 12 | 0.28 |
| Mainland China Listed | 395 | 1.65 |
| Communication Services | 7 | 0.74 |
| Consumer Discretionary | 29 | 1.12 |
| Consumer Staples | 24 | 1.61 |
| Energy | 13 | -0.21 |
| Financials | 64 | 1.72 |
| Health Care | 32 | 0.12 |
| Industrials | 61 | 2.43 |
| Information Technology | 90 | 1.61 |
| Materials | 54 | 3.18 |
| Real Estate | 6 | 0.04 |
| Utilities | 15 | 0.1 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | 2.5 |
| Alibaba HK | 9988 HK Equity | 4.1 |
| JD.com HK | 9618 HK Equity | 3.1 |
| NetEase HK | 9999 HK Equity | 0.7 |
| Yum China HK | 9987 HK Equity | 1.3 |
| Baozun HK | 9991 HK Equity | -4.1 |
| Baidu HK | 9888 HK Equity | 1.9 |
| Autohome HK | 2518 HK Equity | 0 |
| Bilibili HK | 9626 HK Equity | 2.8 |
| Trip.com HK | 9961 HK Equity | 2.7 |
| EDU HK | 9901 HK Equity | 7.9 |
| Xpeng HK | 9868 HK Equity | -1 |
| Weibo HK | 9898 HK Equity | 2.5 |
| Li Auto HK | 2015 HK Equity | -1.5 |
| Nio Auto HK | 9866 HK Equity | -1.6 |
| Zhihu HK | 2390 HK Equity | -2.5 |
| KE HK | 2423 HK Equity | 4.2 |
| Tencent Music Entertainment HK | 1698 HK Equity | 1.8 |
| Meituan HK | 3690 HK Equity | 2.2 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ALIBABA GROUP HOLDING LTD | 4.1 |
| XIAOMI CORP-CLASS B | -2 |
| TENCENT HOLDINGS LTD | 2.5 |
| SEMICONDUCTOR MANUFACTURI-H | 4.9 |
| MEITUAN-CLASS B | 2.2 |
| HUA HONG SEMICONDUCTOR LTD-H | 5.6 |
| POP MART INTERNATIONAL GROUP | -1.6 |
| LI AUTO INC-CLASS A | -1.5 |
| KUAISHOU TECHNOLOGY | 4.4 |
| AIA GROUP LTD | 3.7 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| EAST MONEY INFORMATION CO-A | 5.8 |
| ZHONGJI INNOLIGHT CO LTD-A | 0.7 |
| CITIC SECURITIES CO-A | 5.9 |
| LUXSHARE PRECISION INDUSTR-A | 0.9 |
| SUNGROW POWER SUPPLY CO LT-A | 4.8 |
| EOPTOLINK TECHNOLOGY INC L-A | 3.8 |
| CONTEMPORARY AMPEREX TECHN-A | 4.5 |
| SEMICONDUCTOR MANUFACTURIN-A | 2.8 |
| WUXI LEAD INTELLIGENT EQUI-A | -3.6 |
| ZHEJIANG SANHUA INTELLIGEN-A | 8.1 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 7.12 versus 7.13 Friday
- CNY per EUR 8.34 versus 8.34 Friday
- Yield on 10-Year Government Bond 1.89% versus 1.88% Friday
- Yield on 10-Year China Development Bank Bond 2.00% versus 1.96% Friday
- Copper Price -0.57%
- Steel Price -1.02%
