The widely discussed Greenland incident has finally reached a conclusion, allowing the stock market to breathe a collective sigh of relief. Overnight, U.S. stocks staged a broad rebound. Hong Kong's market opened higher today, filled the gap, and then fluctuated within a narrow range throughout the session, closing with a modest gain of 0.17%. On Wednesday local time, during a speech at the World Economic Forum in Davos, Switzerland, Trump unexpectedly announced: "Based on my productive meeting with NATO Secretary General Mark Rutte, we have established a framework for a future agreement regarding Greenland and the entire Arctic region. Consequently, I will not implement the tariffs originally scheduled to take effect on February 1st." He also stated that military force would not be used against Greenland. This exemplifies Trump's so-called "art of the deal": first threatening military action, then tariffs, applying maximum pressure. The tactic proved effective, as NATO promptly conceded. The latest development involves NATO discussing a compromise: Denmark would cede sovereignty over a small parcel of land on Greenland to the United States for the construction of a military base. While sovereignty appears preserved on the surface, the U.S. effectively gains significant latitude. Notably, these discussions are happening within NATO, rather than directly with the principal party, Denmark. This mirrors the Russia-Ukraine negotiations, where the U.S. and Russia talk, while the involved parties, Ukraine and Europe, are sidelined. As mentioned yesterday, it was anticipated that "Trump's speech at the Davos World Economic Forum would likely release some positive news, otherwise U.S. stocks would be in danger." More explicitly, Trump predicted that U.S. stocks would double within the next year. He also stated that Tuesday's decline in the S&P 500 was "insignificant" compared to the cumulative gains since he took office. During his Davos speech, Trump launched a barrage of criticism, essentially arguing that the U.S. protects almost every country, so what's the big deal about taking some land? In contrast, China advocates for peace and development. Media reports indicate that He Lifeng also met with JPMorgan Chase CEO Jamie Dimon, Apple CEO Tim Cook, Bridgewater founder Ray Dalio, and other corporate executives in Davos.
With the Greenland incident subsiding, gold naturally underwent an adjustment, yet market sentiment did not appear weak. This is partly due to escalating tensions concerning Iran. According to U.S. media reports on the 20th, over a dozen F-15E Strike Eagle fighter jets departed from the UK for the Middle East on the 18th. Additionally, C-17 Globemaster III transport aircraft flew from the UK to the Middle East on missions. Furthermore, the USS Abraham Lincoln aircraft carrier strike group continues to sail towards the Middle East, having already passed through the Strait of Malacca with its transponder turned off. The commercial space sector showed significant strength in today's market. Media reports citing sources indicate that Elon Musk is actively advancing the initial public offering (IPO) plan for his SpaceX, targeting a completion before July this year. Separately, Jeff Bezos' Blue Origin announced the launch of its enterprise-grade satellite internet service, TeraWave, planning to deploy its first batch of satellites by the end of 2027, with an eventual constellation of over 5,000 satellites offering communication speeds of up to 6 terabits per second. The space race is intensifying. ZhTong's January top stock pick, DRINDA (02865), announced a proposed placing of 18.682 million H shares under a general mandate. The primary use of proceeds: approximately 45% for the R&D and production of space photovoltaic cell-related products; and approximately 45% for equity investments and cooperation in the commercial aerospace sector. All funds are directed towards its core business development, and the stock rose nearly 16% today. Other aerospace-related investment targets, BBMG (02009) and GOLDWIND (02208), both gained over 6%. According to China Automotive News, the German government's electric vehicle subsidy policy is set to restart. German Chancellor Merz revealed that the government plans to allocate 30 billion euros by 2029 to support middle- and low-income families in purchasing zero-emission vehicles. MINTH GROUP (00425) is a core supplier of EV battery boxes/body structure components in Europe, with orders covering popular EV platforms from European automakers like Volkswagen, Stellantis, and Renault. The company also has a robotics concept, having signed a strategic cooperation agreement with Zhiyuan Robot to jointly develop components like joint modules and electronic skin, with small-batch samples delivered and demonstration production lines set up in its internal factories. Additionally, its AI server liquid cooling business has secured orders from a leading Taiwanese manufacturer, entering the supply chain of global semiconductor companies. A joint venture plant with Fuman Technology is planned, with mass production capability expected by the end of 2025. The stock rose nearly 14% today. Companies undergoing transformation are worth noting. DEEP SOURCE (00990), originally an investment holding company engaged in trading chemical raw materials, commodities, and organic food, announced on December 9th a major strategic shift in its business focus. It will transition completely from its original commodity trading business to the exploration, mining, and processing of mineral resources, with future emphasis on the full industrial chain operation of sulfur-iron, nickel, titanium, vanadium, phosphorus, and aluminum resources. Future focus will be on which mineral resource companies it invests in or acquires. The stock rose over 6% today. POP MART (09992) conducted another share buyback. The company announced that on January 21, 2026, it repurchased 500,000 shares for HKD 96.4896 million. On January 19th, POP MART had announced a plan to repurchase 1.4 million shares for HKD 251 million. This week, POP MART's cumulative buyback amount approached HKD 350 million. When the stock price is low, the company needs to demonstrate commitment; genuine share buybacks are more impactful than anything else. The recent decline was sharp, primarily due to weaker-than-expected consumption in North America. However, pessimism is unwarranted. Future growth will depend on new markets in the Middle East and South America, where store networks are expected to rapidly densify in 2026. These regions have large populations, certain consumption power, and room for store expansion. The stock rose over 6% today. Ultimately, consumption is highly dependent on fundamentals; if the broader environment improves positively, its expectations will receive a significant boost. As mentioned previously, Hong Kong property is performing positively. Amid the U.S. interest rate cutting cycle, Hong Kong property prices are recovering, with some new project sales receiving enthusiastic responses and market sentiment turning optimistic. Citigroup recently revised its 2026 Hong Kong residential property price forecast upwards from a 3% increase to an 8% increase, anticipating further acceleration in 2027, marking the start of a multi-year upward cycle. Hysan Development (00014), Sun Hung Kai Properties (00016), Wharf REIC (01997), and Kerry Properties (00683) all rose over 4%. Recently, the Ministry of Housing and Urban-Rural Development officially issued the "Opinions on Improving Housing Quality," which will promote the coordinated development of high-quality building material production and application, support the procurement of green building materials for subsidized housing, and encourage an increased proportion of green building materials in commercial housing. Renovation of existing homes, urban renewal, and secondary decoration are becoming core growth drivers for the industry. Related building material stocks like China Liansu (02128), Anhui Conch Cement (00914), and China Resources Building Materials Technology (01313) rose over 4%. As mentioned yesterday, ASMPT (00522) is preparing to divest or spin off other assets to focus on its semiconductor and advanced packaging business, which is positively viewed by the capital market. The stock gained over 6% again today.
In a recent thematic research report from Barclays, a seemingly "anti-tech" yet decisive judgment is repeatedly emphasized: the real bottleneck in the AI race is shifting from chips to power. Among all currently feasible solutions, gas turbines are becoming the most binding critical link. This is not because gas turbines are particularly cutting-edge, but恰恰相反, precisely because they are mature technology, yet difficult to rapidly scale up production. The power demand from AI data centers is undergoing a structural change. The issue is no longer just "how much power is needed," but "whether power can be delivered at the right time and in a sufficiently stable manner." The tight power constraints facing AI are unlikely to ease significantly in the short term and may persist until around 2030. Key Hong Kong-listed players include: Dongfang Electric (01072), Harbin Electric (01133), and Shanghai Electric (02727).
SMIC (00981): Benefiting from Localization Wave, Strong Computing Demand Accelerates Domestic Substitution. For the first three quarters of 2025, the company achieved revenue of RMB 49.510 billion, a year-on-year increase of 18.22%; net profit attributable to shareholders of RMB 3.818 billion, up 41.09% YoY; and adjusted net profit of RMB 3.177 billion, up 44.40% YoY. For the third quarter of 2025 alone, revenue was RMB 17.162 billion, up 9.95% YoY and 6.95% quarter-on-quarter; net profit attributable to shareholders was RMB 1.517 billion, surging 43.15% YoY and 60.64% QoQ; adjusted net profit was RMB 1.273 billion, up 39.74% YoY and 73.52% QoQ. Analysis: Accelerated supply chain shifts and ongoing channel inventory replenishment led the company to actively cooperate with customers to ensure shipments. This resulted in a 4.6% QoQ increase in wafer sales volume to 2.499 million 8-inch equivalent wafers in Q3 2025. Concurrently, due to changes in the product mix, with increased shipments of more complex process products, the average selling price (ASP) of wafers rose 3.8% QoQ. This combination of volume and price growth drove the sequential and yearly revenue increase. Higher capacity utilization and increased output offset the impact of rising depreciation, leading to a better-than-expected gross margin of 25.49% in Q3 2025, up 1.57 percentage points YoY and 4.79 percentage points QoQ. The net profit margin was 14.00%, improving 3.81 p.p. YoY and 7.48 p.p. QoQ. Capacity utilization reached 95.8% in Q3, up 3.3 p.p. QoQ. The company possesses a rich portfolio of process technology platforms, currently with mass production capabilities for logic circuits, power/analog, high-voltage drivers, embedded non-volatile memory, non-volatile memory, mixed-signal/RF, image sensors, and more, while continuously advancing process iteration and product performance upgrades. In the first three quarters of 2025, its specialty process technology showed steady progress across multiple platforms. The ultra-low-power 28nm logic process entered mass production, offering customers lower power consumption and higher quality solutions. CIS and ISP processes underwent continuous iteration, improving light sensitivity, image quality, and signal-to-noise ratio, while developing optical process platforms covering more wavebands. The embedded memory platform expanded from consumer markets to automotive-grade and industrial MCU fields. In specialty memory, NOR Flash and NAND Flash processes provided higher density, smaller size, and lower power consumption with high reliability. Furthermore, the company seized growth opportunities in the automotive chip market, launching automotive-grade processes for sensors, BCD, MCU, RF, memory, display, and others, providing system-level solutions for customers. In summary, as the leading wafer foundry in mainland China with a diverse range of process technologies and continuous advancement in process iteration and product upgrades, SMIC stands to benefit significantly from the urgent need for wafer manufacturing self-sufficiency amid intensifying international geopolitical conflicts, the acceleration of consumer electronics localization, and the robust demand for AI computing power, given its possession of the most advanced process technologies in mainland China.
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