Zhitong Hong Kong Stock Analysis | Favorable situation with strong exchange rate boost, market flourishing comprehensively, pharmaceuticals worth lurking

[Market Dissection]

The current stock market shows a somewhat alternating trend; yesterday, U.S. stocks began to lose momentum, and today, the domestic stock market started to strengthen. Hong Kong stocks gapped up today and strongly oscillated upwards, closing with a gain of 1.84%. This recovers a significant portion of the lost ground.

The various countermeasures we have launched intensively in the past two days have caused considerable headaches for the Trump administration. Various attempts to soothe the market and calls for calm have temporarily stabilized the situation, but this does not mean the issue has been resolved. The Federal Reserve is very clear about the seriousness of the problem and has to come out to boost confidence. Powell stated on Tuesday that policymakers will decide on further interest rate cuts on a "meeting-by-meeting" basis, and the Fed may be close to ending its quantitative tightening policy. The meaning is clear: ending balance sheet reduction means starting QE, and the meeting-by-meeting decision essentially means deciding on interest rate cuts based on current conditions without much consideration for the future. It is almost certain that there will be rate cuts at every subsequent meeting. Even so, U.S. stocks have not shown much improvement.

The focus of the contradictions has now shifted to sanctions and counter-sanctions. Taking rare earths as a countermeasure, not only the U.S. but also the EU faces this issue. According to a report from Politico's European edition on the 14th, the EU has brought in the G7 to seek a united response to China's new regulations. Looking at Trump's latest tweet, he mentioned considering terminating some trade relations with China, including edible oils. It really feels like a desperate move to bring up not purchasing edible oils. The U.S. has run out of options, and Europe is even less equipped to handle this; it's not a problem that can be solved just by having more people involved.

The countermeasures regarding shipping fees also have a significant impact. According to a report by Yonhap News on the evening of October 14, the South Korean presidential office stated that the South Korean government has initiated economic and trade communication channels with China, hoping to minimize the losses that South Korean companies will suffer. They won't be honest unless pressured. Next, we will see how Europe, South Korea, and Japan respond. The situation is favorable for us, which is the confidence behind today's rebound. Insurance stocks have become the main force driving the market under the catalyst of performance, with New China Life (01336) and China Pacific Insurance (00966) both rising over 8%.

The Financial Times quoted a central bank monetary policy official stating that there is a solid foundation for medium- to long-term exchange rate stability, which will strengthen expectation guidance and prevent excessive exchange rate fluctuations. This morning, the RMB central parity rose to a strong level of 7.10 yuan, the first time since November last year. The RMB/USD central parity was reported at 7.0995, up 26 points; the offshore RMB surged sharply. A stronger exchange rate is beneficial for aviation. Additionally, in October 2025, international oil prices continued to decline, with WTI crude oil futures prices dropping from $72 per barrel in September to around $58 per barrel, a decline of over 19%. Under the dual benefits of stimulation, China Eastern Airlines (00670), China Southern Airlines (01055), and Air China (00753) all saw gains of over 7%.

Yesterday, we talked about the "Bay Chip Exhibition." Although New Kylin did not directly release news regarding lithography machines, there were still surprises. Its subsidiary Qiyunfang released two domestically developed electronic engineering EDA (schematic and PCB) design software with completely independent intellectual property rights. Additionally, its subsidiary Wanliyan released a high-speed oscilloscope. The former breaks through the blockade of foreign software and is completely independently controllable, while the latter is also impressive; oscilloscopes are indispensable tools in the development of technology-intensive industries such as electronic information, semiconductors, and integrated circuits, and this technology can be used to support R&D for advanced processes of 3nm and 5nm These two products are of great significance for domestic chip design and improving chip yield rates. Today, Hua Hong Semiconductor (01347) and SMIC (00981) both rose over 5% and nearly 4%, respectively; Jiangsu Changjiang Electronics Technology Co., Ltd. (01888): The PCB design software from Qiyunfang has improved automatic routing efficiency by 4 times compared to traditional tools when handling 128-layer high-speed server PCBs, which will directly drive the demand for high-end products from Jiangsu Changjiang Electronics. It also rose over 6%.

A few days ago, we mentioned the mutual investment and cooperation among American giants, and domestic companies have begun to follow suit. SenseTime (00020) and Cambricon (688256.SH) signed a strategic cooperation agreement, focusing on promoting the deep adaptation of Cambricon's latest cloud inference chip (such as MLU370-X8) with SenseTime's "Daily New" large model, jointly creating a full-stack service solution for the computing power market. After the announcement, SenseTime rose over 5%, and Cambricon's A-shares increased nearly 4%. We look forward to more cooperation among giants in the future, which can enhance valuations.

On October 14, JD.com (09618) announced a collaboration with GAC Group (02238) and CATL (03750) to launch a new energy vehicle. This cooperation model has pioneered a full-chain collaborative innovation paradigm of "e-commerce platform + traditional car manufacturers + battery giants." According to the plan, the new car will be exclusively sold during JD.com's Double 11 shopping festival, with GAC responsible for vehicle R&D and manufacturing, CATL providing battery and battery swap support, and JD.com integrating online and offline channel resources. This cooperation directly addresses market pain points: the new car is positioned as affordable, with a range of 400-500 kilometers and supports fast charging, aligning with the trend of consumption upgrades, and is expected to quickly capture 15-25 million yuan mainstream market share. GAC Group (02238) rose over 11%. It looks promising, but the key is whether a best-selling model can be produced.

Yesterday, the sector focused on robots, and today the market has rumors that Tesla has placed an order worth $685 million for Optimus linear actuators with Chinese supplier Sanken Electric. In response, Sanken Electric's securities department stated that the company has noticed the rumor and is urgently verifying it internally. If the news is untrue, they will refute it through official channels. Currently, cooperation with Tesla is progressing smoothly, but specific details cannot be disclosed due to confidentiality agreements. The stock price surged, with Sanken Electric (02050) rising over 11%, and the mentioned MicroPort Scientific Corporation-B (02252) also rising over 8%.

The issuance of 1.3 trillion yuan of ultra-long special government bonds planned for 2025 was completed on October 14, with funds primarily directed towards infrastructure. This policy directly boosts market expectations for demand for building materials such as cement and steel. China National Building Material (03323) and Anhui Conch Cement (00914) rose over 7%, while construction machinery companies like SANY International (00631) and Zoomlion Heavy Industry Science and Technology Co., Ltd. (01157) both rose over 5%. Steel stocks also performed strongly overall, as China has a high degree of autonomy in iron ore purchasing, and BHP has begun to compromise. Our investments in African iron ore are also expected to yield results soon, and iron ore prices will no longer be high, significantly improving the profit margins of steel stocks. Ansteel Group Corporation (00347) and Maanshan Iron & Steel Company (00323) both rose over 7% There are also many stimulating news for consumer stocks. On October 14th, Mixue Group (02097) had its beer priced at 5.9 yuan per cup trending on Weibo. During the National Day holiday, Mixue Ice City announced the acquisition of 53% equity in Xianpi Fulu Jia for a total price of 297 million yuan. Mixue Group (02097) rose over 6%, driving Gu Ming (01364) up nearly 7%; the Hong Kong listing application of Yujian Xiaomian has been filed with the China Securities Regulatory Commission, and restaurant-related stocks also performed positively, such as Guoquan (02517) rising nearly 12%. Haidilao (06862) rose over 5%.

【Sector Focus】

The 2025 European Society for Medical Oncology (ESMO) annual meeting is scheduled to be held in Berlin, Germany from October 17th to October 21st. As a top event in the global oncology field, this meeting is expected to gather multiple significant clinical research results, with the heavyweight oral presentations (LBA) from domestic innovative pharmaceutical companies becoming the market's focus. Funds have already begun to lurk in advance.

Related varieties: 1. Kelun-Biotech (06990): ROP2ADC Lukanasa Monoclonal Antibody (Jiatailai®) has two Phase III clinical studies selected for LBA oral presentations, one of which is a heavyweight presidential symposium oral presentation.

1. Fuhong Hanlin (02696): The final analysis results of the Phase III study (ASTRUM-002) of anti-PD-1 monoclonal antibody H drug (Surulimumab) combined with chemotherapy as first-line treatment for non-squamous NSCLC have been selected for ESMO LBA oral presentation.

2. Kangfang Biologics (09926): The registrational Phase III study (HARMONi-6) comparing PD-1/VEGF dual antibody Ivosidenib (AK112) with Tislelizumab combined with chemotherapy as first-line treatment for advanced squamous non-small cell lung cancer (sq-NSCLC) has been selected for LBA oral presentation.

3. Rongchang Biologics (09995): The RC48-C016 Phase III clinical study of Vedolizumab combined with Toripalimab as first-line treatment for urothelial carcinoma has been selected for LBA oral presentation.

【Stock Picking】

Geely Automobile (00175): Profits Expected to Continue Growing, Sales Hit Record High

Geely Holding Group's total sales in the first three quarters of 2025 reached 2,953,452 vehicles, a year-on-year increase of 29%; new energy vehicle sales reached 1,590,866 units, a year-on-year increase of 68%, with a new energy penetration rate of 54%, both total sales and new energy vehicle sales hitting record highs. In the third quarter, sales reached 1,020,913 vehicles, a year-on-year increase of 28%; new energy vehicle sales reached 588,110 units, a year-on-year increase of 59%, with a new energy penetration rate of 58%.

Comment: Geely Holding Group's quarterly sales have surpassed one million vehicles for the first time, and the new energy penetration rate continues to rise, maintaining strong momentum in electrification transformation. The company is entering 2025 with even stronger momentum. In the first half of this year, Geely Automobile's operating income was 150.3 billion yuan, a year-on-year increase of 27%, setting a record for the same period; the company's core net profit attributable to the parent was approximately 6.66 billion yuan, a year-on-year increase of 102%. The company's overall revenue and net profit attributable to the parent are expected to continue to grow. Geely Automobile has raised its originally planned annual sales target by about 11%, from 2.71 million to 3 million vehicles. From January to September 2025, Geely Automobile's sales reached 2.17 million vehicles, a year-on-year increase of 46% Among them, new energy vehicle sales reached 1.168 million units, including 794,000 pure electric vehicles and 374,000 plug-in hybrids, representing year-on-year growth of 141% and 73%, respectively. By brand, Geely brand sales were 1.785 million units, a year-on-year increase of 55%, Lynk & Co brand sales were 241,000 units, a year-on-year increase of 23%, and ZEEKR brand sales were 144,000 units, a year-on-year increase of 1%. Overseas exports were 296,000 units, a year-on-year decline of 7%. The older models 001 and 009 equipped with lidar under ZEEKR will launch the "Qianli Haohan H7" assisted driving upgrade crowdfunding plan next month. Recently, Geely Auto plans to implement a share repurchase plan with a maximum expenditure of HKD 2.3 billion, which, if successfully implemented, will strengthen the market's confidence in Geely Auto's ability to successfully navigate the industry cycle. As the company enters a new phase of strategic transformation, the new car cycles of brands such as Galaxy, ZEEKR, and Lynk & Co are strong, and sales are expected to continue to grow rapidly