Hong Kong Stock Market Closing Review: Hang Seng Tech Index down 2.48%, CATL up over 8% leading lithium battery stocks

The Middle East situation remains volatile, with increased risk aversion among foreign investors, leading to significant net selling of southbound funds. The Hong Kong stock market’s three major indices opened lower and continued to decline, with the afternoon session seeing further widening of losses. The Hang Seng Tech Index once dropped as much as 3.2%, ultimately closing down 2.48%. The Hang Seng Index and the China Enterprises Index fell by 0.88% and 1.4%, respectively.

On the market, the heavy-weight tech stocks declined sharply, putting considerable pressure on the overall market. Xiaomi plunged 8.6%, Alibaba dropped over 6%; storage, semiconductor, and chip stocks all fell collectively. Leading chipmaker SMIC dropped nearly 5%, hitting a new low for the phase and marking four consecutive declines. Military, entertainment, heavy machinery, shipping, property, catering, and gas stocks all performed weakly throughout the day. Meanwhile, institutions indicate that the lithium battery industry chain’s March production has fully rebounded, with leading company CATL surging over 8% to a new high. Oil prices face increased upside risk, with the long-term blockade of the Strait of Hormuz potentially pushing prices to historic highs. Oil stocks are generally active; China National Offshore Oil Corporation (CNOOC) also hit a record high. International gold prices rebounded, with some gold stocks seeing a rally.

Specifically:

Tech stocks continued to weaken, with Xiaomi down over 8%, Alibaba down over 6%, JD.com, Meituan, and Baidu down over 1%.

Most semiconductor stocks declined, with SMIC and Fudan Shanghai down over 4%, Hard Egg Innovation, Lankeng Technology, Hongguang Semiconductor, GigaDevice, and Aisidi YuanZhi falling over 3%.

Entertainment stocks led the decline, with Emperor Entertainment Group dropping over 17%, Damai Entertainment down over 4%, and Maoyan Entertainment, NetEase Cloud Music, Tencent Music, and Yuehua Entertainment all falling.

Military stocks remained weak, with China Aerospace Holdings down over 12%, AVIC Tech down over 2%, and China Marine Shipping and CSSC Defense also declining.

Port and shipping stocks fell, with Pacific Basin Shipping down 4.3%, COSCO Shipping Development and COSCO Shipping Holdings down over 2%, Lianyun Port, China Merchants Port, and COSCO Shipping Energy also lower.

Property stocks mostly declined, with R&F Properties down over 6%, China Oceanwide, Vanke, and China Overseas Land & Investment down over 3%, and others like Jin Hui Holdings, CIFI Holdings, C&D International, Greentown China, and Longfor Group also falling.

Lithium battery stocks remained active, with CATL up over 8%, CALB and Ganfeng Lithium up over 5%, TianNeng Power and Tianqi Lithium up over 1%.

According to a report from J.P. Morgan International, lithium industry chain production fully rebounded in March, supported by post-holiday “trade-in” policies and new vehicle launches, boosting lithium battery demand for the year. UBS analysts noted that current oil price fluctuations increase the attractiveness of electric vehicles over their entire lifecycle, potentially stimulating demand. Additionally, Middle East geopolitical conflicts further boost overseas energy storage market expectations.

Oil stocks saw some gains, with CNOOC up 2.7%, PetroChina up 1.68%, Kunlun Energy and CNOOC Petroleum Services also rising.

Sportswear stocks rose, with Li Ning up 8.56%, Xtep International up 3.9%, 361 Degrees and Yuyuan Group up over 1%.

Gold and precious metals stocks finally rebounded, with Zijin Gold International up 5.51%, Shenglong International and Lingbao Gold up over 4%, and Wanguo Gold Group, China Silver Group, and Zhaojin Mining up over 1%.

In news, after a sharp decline, the precious metals market rebounded. In Asian morning trading, spot gold surged $82 intraday to $4,733 per ounce, up over 2%. Although gold prices may continue to decline in the short term, a fund manager stated that these correction phases and short-term volatility are when investors can earn real profits, as rising government debt and limited central bank actions will support long-term gold price increases.

Automobile stocks rose, with Geely up 6.43%, Great Wall Motor up over 2%, Li Auto-W up over 1%, and others like Leap Motor and BYD also gaining.

Coal stocks were active, with China Qinfa up over 4%, Yankuang Australia, South Gobi, Yida Commodities, and Yankuang Energy up over 1%.

Some photovoltaic solar stocks gained, including CSG New Energy and Xinyi Solar up over 3%, Sunlight Power and Flat Glass up over 2%, and Xinyi Glass and Junda Shares up over 1%.

In news, on March 20, a market rumor circulated that Tesla’s team plans to purchase large-scale Chinese photovoltaic equipment involving several listed companies. Subsequently, a solar company confirmed the news, revealing that the contract scale is in gigawatts.

Today, southbound funds net sold HKD 21.005 billion, with HK Stock Connect (Shanghai) net selling HKD 14.898 billion and HK Stock Connect (Shenzhen) net selling HKD 6.107 billion.

Looking ahead, Huatai Securities believes that the resilience of the Hong Kong market recently is due to three reasons: first, the current correction was relatively early; second, Hong Kong stocks have many high-dividend and cyclical stocks; third, during the previous pressure, especially on the Hang Seng Tech Index, short positions accumulated significantly, with overall short positions relative to market cap reaching about 2.44% in March, a record high.