Global equities declined last week, with the Hang Seng Index breaking below its 200-day moving average support. Sino-Japanese relations remain a key uncertainty, as Japan’s Sanae Takaichi maintained her controversial stance, prompting China’s foreign ministry to demand an immediate retraction. While geopolitical tensions continue to weigh on economic prospects, markets appear to have largely priced in the negativity, with improving sentiment likely this week if conditions stabilize.
Key positive drivers include dovish remarks from the Fed’s third-ranking official, raising December rate-cut expectations. Reports indicate the U.S. proposed a "28-point plan" to end the Russia-Ukraine conflict, setting November 27 as Ukraine’s deadline for acceptance. Russia has responded positively, and Zelensky’s softening stance suggests a higher likelihood of progress—a potential boon for global infrastructure stocks.
NVIDIA may secure approval to export its advanced H200 chips to China. While less cutting-edge than Blackwell, the H200 significantly outperforms the China-specific H20, delivering 13x higher FP16/FP8 computing power and superior AI inference and multi-GPU interconnect capabilities—bullish for semiconductor plays. NVIDIA’s strong earnings and Google’s AI breakthroughs have also eased liquidity concerns.
Regulators greenlit 16 hard-tech themed funds, including China’s first batch of AI-focused ETFs and semiconductor ETFs. Ant Group’s multimodal AI assistant "Ling Guang" topped iOS’s free tools chart within three days of launch, signaling momentum in AI applications. Huawei’s upcoming November 25 product event, featuring the Mate 80 series and Mate X7, could surprise positively for its supply chain.
**Stock Pick: INNOVENT BIO (01801)** INNOVENT BIO reported H1 2025 revenue of RMB5.95 billion (+50% YoY), turning profitable with net income of RMB1.21 billion. Its commercialized portfolio now includes 16 approved drugs across oncology, metabolic, and autoimmune diseases. Core product Tyvyt (sintilimab) delivered steady growth, while Mazdutide (GCG/GLP-1 dual agonist)—the first globally approved in its class—emerged as another growth driver. The Phase III GLORY-2 trial for severe obesity (BMI≥30) met all endpoints, positioning it as a non-surgical alternative with surgery-like efficacy. With two approved indications (weight management and type-2 diabetes), INNOVENT plans to submit a new application for the 9mg dose, capitalizing on the booming anti-obesity market—validated by Eli Lilly’s $1 trillion valuation.
**Sector Watch: Pig Farming** China’s sow inventory dipped below 40 million in October (-1% MoM), with industry losses persisting for two months. Hog prices hit decade lows (under RMB10/kg locally), extending losses likely beyond three quarters. Large producers’ expansion cycles have ended, and small farms are accelerating exits. Market consolidation favors cost-efficient players like COFCO JOYCOME (01610), WH GROUP (00288), and DEKON AGR (02419).
**Market Data** Hang Seng November futures open interest stood at 117,319 contracts (net 46,187), with expiry on November 27, 2024. The index at 25,220 shows rebound potential, as bear certificates cluster near resistance. Fed officials’ mixed signals left December rate-cut odds at 70%, supporting a bullish Hang Seng outlook.
**Closing Insight** Risk asset volatility reflects overdependence on the AI narrative. Strong U.S. jobs data and delayed Fed cuts triggered valuation resets. As CITIC strategists note, AI infrastructure spending remains tethered to Big Tech’s cash flows and debt—increasingly cyclical amid economic sensitivity. Once a defensive sector, tech now mirrors cyclical stocks due to heavy capex burdens.
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