Market Rally on Easing Tensions; Key Announcement Before Tomorrow's Opening

At a critical moment, the former US President made a significant move, stating to the media while signing an executive order at the White House that the US could end military operations against Iran within the next two to three weeks. He indicated that if an agreement is reached, hostilities might conclude even sooner, and that the US could cease military actions even without a deal. US stocks surged significantly, prompting a positive global market rebound. Hong Kong's market opened sharply higher today, maintaining steady performance throughout the session and closing up 2.04%.

The former president currently faces numerous challenges, with the most pressing being the midterm elections. According to prediction market data, the probability of the Democratic Party winning the House in the 2026 midterms has risen to 86%, and their chance of securing the Senate has increased to 52%. The likelihood of a "sweep" controlling both chambers has reached 51%. A year ago, the probability of the Republican Party retaining the Senate was over 80%. This shift occurred following the military strike against Iran initiated by the administration in early March 2026. Recent polls show the former president's approval rating has fallen to 36%, the lowest since returning to the White House. A comprehensive midterm election defeat could render the administration largely ineffective for the subsequent two years, as Congress would likely block most proposals, potentially even leading to impeachment or removal from office. This necessitates a careful balancing act.

Iran's Foreign Minister stated that he received a message from the former US President's special envoy but clarified this does not mean Iran and the US are negotiating. He emphasized that any claims of ongoing talks are untrue, citing the US's unilateral withdrawal from the 2015 nuclear deal in 2018 as an example of previous unsuccessful engagement. Whether Iran negotiates is less critical; external observers are more focused on whether the US is prepared to de-escalate immediately. The key issue remains the Strait of Hormuz. The chairman of the Iranian parliament's National Security and Foreign Policy Committee stated that the strait will definitely reopen, but not to the US; it will only open to countries complying with Iran's new laws. The core concern is that if the strait can reopen, facilitating economic activity, market anxieties would significantly ease.

Gold stocks also moved higher today, which is understandable as gold typically correlates with either easing or escalating tensions; the current trend clearly points towards de-escalation, broadly tracking oil prices and US Treasury yields. LINGBAO GOLD (03330) rose over 10%.

In sectors benefiting from easing tensions, airlines show high elasticity. Three major airlines reported year-on-year revenue growth, with CHINA SOUTH AIR (01055) achieving an attributable profit of 857 million yuan, its first annual profit since 2020; however, others remained in negative territory primarily due to rising oil costs and increased expenses from international routes. If oil prices decline and international routes normalize, the sector's fundamentals could improve. A further catalyst: several ticket agents have received notices from airlines proposing an increase in domestic fuel surcharges effective April 5. CHINA SOUTH AIR (01055) rose around 10%.

The technology sector generally benefits. A key company's latest annual report was impressive, with 2025 revenue reaching 7.24 billion yuan, up 131.9% year-on-year, and gross profit of 2.97 billion yuan, up 68.7%. As the largest domestic large model company by revenue, its full-year comprehensive gross margin reached 41%, far exceeding industry standards. Although still reporting a loss due to heavy R&D investment, future performance growth is viewed positively; its stock surged nearly 32% today. Cloud business provider also rose over 7%. Another semiconductor stock gained over 7% after its acquisition received regulatory approval.

There were several developments in robotics. A major tech giant confirmed its acquisition of a New York-based startup, marking its second robotics sector acquisition within a week and signaling its entry into the humanoid robot arena. Additionally, a leading EV maker's humanoid robot team initiated large-scale recruitment, and construction began on a mass-production factory targeting tens of millions of units. A prominent humanoid robot firm reported a highlight in its annual report: revenue from full-size embodied intelligent humanoid robots (over 160cm tall) reached 821 million yuan in 2025, a staggering 2203.7% increase from 35.62 million yuan in 2024, accounting for 41.1% of total revenue. Corresponding unit sales were 1,079. Having profitable orders is a positive sign; its stock rose over 17% today. Another robotics company announced a 241 million yuan acquisition to strengthen its core hardware capabilities in end-effectors, accelerating the iteration of multi-form robots, rising nearly 17%. A surgical robot maker saw its core product achieve breakthrough commercial progress, especially in overseas sales, gaining nearly 9%. A collaborative robot stock, selected as a top pick for April, rose nearly 7%.

As discussed recently, funds are heavily flowing into the pharmaceutical sector due to its relative insulation from external volatility. The logic has been reiterated: Hong Kong's innovative drug stocks are currently in a window with low positioning, low valuation, and low expectations. An innovative drug ETF surged over 7%, with related stocks rising over 11%. Other selected pharmaceutical stocks gained over 6%.

In retail, a well-known figure revealed specific progress regarding offline stores for an e-commerce firm, stating the first offline store will open in Beijing in April. After standardizing the flagship store, numerous offline teaching centers nationwide will batch-open similar stores. Self-operated products will comprise about one-third of the merchandise, with the remainder being quality goods from across the country. The market views this online-to-offline expansion positively; as a top April pick, the stock surged over 10%.

Another April top pick, TCL ELECTRONICS (01070), announced its wholly-owned subsidiary signed a framework agreement with Sony. It will invest approximately 3.8 billion HKD to take a controlling stake in Sony's home entertainment business. If cooperation proceeds smoothly, TCL ELECTRONICS could surpass Samsung to become the global leader in color TV market share within 2-3 years. The current situation is favorable, as South Korean TV businesses reported losses in 2025 and are unlikely to wage intense price wars in 2026, creating space for Chinese brands to increase volume and profits in the European and American high-end markets. The stock rose over 8% today.

According to comprehensive reports, the White House stated the former President will deliver a national address at 21:00 Eastern Time on April 1 (09:00 Beijing Time on April 2) to provide an "important update" on Iran. Note this timing is before the market opens; watch for potential surprises. The Defense Secretary emphasized diplomacy as the priority but noted military pressure is escalating, stating the coming days will be decisive.

In a published interview, the former President said he is "seriously considering" withdrawing the US from NATO after allies refused assistance regarding Iran. When asked, he replied, "Oh, yes, I would say it no longer requires thought. I have never been swayed by NATO. I always knew they were paper tigers, and by the way, Putin knows it too." He also strongly criticized the British Prime Minister and disparaged the UK's military strength, claiming it lacks a proper navy and has outdated, faulty aircraft carriers. An immediate US withdrawal from NATO is unlikely as it offers little benefit; the larger aim is likely pressure for greater financial support. However, such threats are taken seriously by allies, making enhanced self-defense an urgent priority, which is expected to stimulate the defense sector. Key Hong Kong stocks in focus include AVICHINA (02357).

SANY INT'L (00631): Significant Surge in Net Profit; Strong Order Growth. The company reported 2025 revenue of 24.334 billion yuan, up 11.06% year-on-year, and attributable profit of 1.779 billion yuan, a substantial increase of 61.47%. It also announced a final dividend of 35 HK cents per share. Excavator exports grew strongly in January-February, indicating likely solid Q1 performance. A total of 35,934 excavators were sold in the first two months of 2026, up 13.1% year-on-year. Analysis: The annual results met the upper end of guidance, slightly exceeding expectations. The comprehensive growth reflects sustained enhancement of core competitiveness and significant progress in diversified business layout and international strategy. Export volumes remain high. Leading construction machinery companies continue steady overseas growth, with overseas sales share approaching or exceeding 50%. The acquisition of a lithium energy business completed in July 2024 provides a new revenue stream. Comprehensive digital and intelligent operations, alongside efficiency measures, have improved profit margins. Products are sold across Asia, Europe, Africa, and the Americas. Highlights: Explosive overseas orders for mining trucks exceeded 4 billion yuan in H2 2025, including a single project in Indonesia over 1 billion yuan. Port equipment saw high growth with strong large port machinery order books and double-digit delivery growth, accelerating in 2026, alongside accelerated electrification of small port machinery. Overseas business contributes over 50% of revenue, with margins 5-10 percentage points higher than domestic. Orders are concentrated in Indonesia, West Africa, and Australia. Overseas growth appears sustainable, while domestic coal mining equipment demand is expected to stabilize. Looking ahead, the company's 2025 overseas strategy is clear, with competitive products likely to further expand market share and achieve rapid international growth. Strong profit growth and positive shareholder return policies have significantly boosted investor confidence.