Global markets remain in a state of turmoil, with only the Dow Jones index holding up in the US, while others decline. South Korea's KOSPI index fell 4.5%, with SK Hynix dropping 10%. Japan's Nikkei 225 fell 1.6%, the Topix index fell 0.4%, and Kioxia declined 9%. A-shares showed relative resilience, but Hong Kong stocks gapped down by 1.49%. Trump claimed a deal is near, but this seems more like verbal support to temporarily boost markets rather than reality. Iran stated it is close to an agreement with Oman, with two existing shipping lanes in the Strait set to close, where "charging standards" remain a core point of contention. This effectively grants Iran implicit control over the Strait. After prolonged US engagement, Iran has not only completed a smooth power transition but also gained control of the Strait, with potential asset freezes and compensation issues still to be resolved.
The US ADP report showed private sector employment increased by just 44,000 in July, below the market expectation of 75,000 and the revised June figure of 95,000. This weak data further reduced expectations of interest rate hikes. Combined with intensifying geopolitical rivalries, gold prices continued to rise. In early Asian trade, spot gold broke through the $4300/oz mark for the first time since June 18. Lingbao Gold Group (03330) surged nearly 9%, and Wanguo International Gold Group (03939) rose over 4%. Domestic gold jewellery prices also saw a rare sharp increase, with a single-day rise of 55-58 yuan per gram, pushing Chow Tai Fook Jewellery Group (01929) up nearly 4%.
Other disruptive news included reports that Chinese tax authorities have begun to levy a 20% personal income tax on income from offshore insurance policies, though this is not yet uniformly applied and lacks clear implementation standards. Hong Kong insurance stocks came under pressure, with AIA Group (01299) falling nearly 6%. Rumors also surfaced that Contemporary Amperex Technology (03750) had halted production at its Hungarian factory due to political factors. While unverified, these rumors significantly impacted sentiment, leading to a 5% drop for the stock. China's recent targeted countermeasures have put pressure on the US, forcing a reconsideration of future policies, though this does not prevent major players from profiting. According to Hong Kong Exchange disclosures, Goldman Sachs increased its long position in ZJ Innolight (03308) H-shares from 11.65% to 12.19% on August 3, 2026, following a previous increase from 5.95% to 11.90% on July 30. JPMorgan Chase also increased its long position from 5.6% to 13.72% on July 31, 2026. This suggests a possible strategy of releasing news to depress the stock price for accumulation. The stock rose over 3% today.
The competition in large language models has officially begun. Meta launched the beta version of its first programming agent, Muse Code, and the MuseSpark1.2 model, undercutting DeepSeek's V4-Flash pricing. On the same day, DeepSeek announced plans to "significantly increase API service pricing soon." Other domestic models show signs of easing price wars, with Zhipu's GLM model also set to raise prices after promotional periods end. This price increase signals confidence in model strength and is a positive for the sector. MiniMax (00100) surged over 17%, boosted by its inclusion in the stock connect mechanism. Luxshare Precision (02475) also gained over 4% upon its inclusion.
Amidst the geopolitical tug-of-war, domestic substitution themes continue to strengthen. Silicon carbide (SiC) substrates, a critical bottleneck material for third-generation semiconductors, have long been dominated by US and Japanese companies. SICC Co Ltd (02631) has strong potential for domestic substitution, holding approximately 51% market share for 8-inch SiC substrates. Domestic power chip companies like Starpower, Sanan Optoelectronics, and China Resources Microelectronics are adopting local substrates to reduce overseas supply chain risks. Internationally, companies like Infineon, Bosch, and ON Semiconductor are qualifying and purchasing from Chinese substrate makers, which have now entered the global supply chain. The company has also introduced 12-inch SiC substrates. Its stock rose nearly 6% today.
The PCB sector, previously mentioned, remained strong intraday. Victory Giant Technology (02476) saw a wave of research reports disseminating similar information as yesterday, pushing the stock up over 4% again. Other core names like DTECH (01377) rose over 2%.
Coal stocks surged unexpectedly, driven by extreme heatwaves. The market is currently in an active destocking phase, with supply contraction intensifying. As of August 4, 61 coking coal mines in Shanxi's main producing regions had suspended operations, involving 65.2 million tonnes of capacity, with most operating mines at only 50%-70% capacity. Regional production resumption is uneven, creating a hard-to-fill supply gap. From August 5, all coal grades at the Batuta station in Inner Mongolia saw price increases of 12 yuan/tonne. Major coal mines in Shaanxi raised their starting prices by 20-35 yuan/tonne. The CCTD Bohai Rim thermal coal spot index has risen for three consecutive days, the first such increase after a ten-day period of sideways trading. The Qinhuangdao Port thermal coal price rose to 823 yuan/tonne. Expectations of rising coal prices in August and September boosted Power Assets Holdings (01277) and Yankuang Energy Group (01171), both up over 6%.
Hong Kong stocks favour companies with generous dividends. Wharf Real Estate Investment Company (01997) announced that its interim underlying net profit increased by 6% to HK$3.311 billion. The board decided to raise its payout ratio from 65% of recurring core underlying net profit to 90% starting from 2026, leading to a 38% increase in underlying dividends. The first interim dividend of HK$0.94 per share represents a 42% increase year-on-year, with a total payout of HK$2.854 billion, accounting for 90% of Hong Kong investment property and hotel underlying net profit. The dividend is payable on September 10, 2026. This high interim payout far exceeds bank deposit rates, resulting in a surge of over 14% for the stock. If more companies followed this model of profit-sharing with investors, market confidence would be stronger. Auntea Jenny (02589) also offered attractive dividends, with an interim dividend of 210 million yuan for 2026, representing a 65.5% payout ratio, up from 35% last year, with a payout of 2 yuan per share scheduled for September 29.
Innovative drug companies continue to deliver strong results. BeiGene (06160) reported a 32.3% year-on-year increase in first-half revenue to $3.219 billion, with adjusted net profit surging 110.7% to $820 million, both exceeding market expectations. Genscript Biotech Corporation (01548) plans to hold a board meeting on August 15 to approve its interim results, with the stock rising over 5% on expectations of positive surprises. SKB Bio (06990) saw its stock rise over 3% after its new dual-payload ADC drug, SKB565, received clinical trial approval for advanced solid tumours.
As previously mentioned, Envision Green (01783) continues to feature multiple catalysts. Its first power battery processing plant has recently been completed, using German patented technology to efficiently convert retired batteries into recyclable raw materials, eliminating the need for overseas processing. The company has a robust global recycling network with over 70 service points across 28 countries. Its business model, involving the sale of black mass and cascade energy storage PACKs, along with recycling service fees, is highly profitable. Additionally, the company plans to acquire Shanghai Youfuyun for 2.5 billion yuan, entering the AI computing rental space. The target company has access to high-performance GPU procurement and can build a "green energy + digital infrastructure" business model. It has already signed a five-year service agreement with a Chinese tech company valued at no less than 2.4 billion yuan. This combination of scarcity, monopoly, stable earnings, and AI themes explains its continued strength, with the stock rising over 8% today.
Key Sector Focus
Reports indicate that NVIDIA is urgently seeking AI base station suppliers in China to develop 6G AI-RAN base stations, which handle both communication connections and AI computing. Industry insiders suggest NVIDIA is accelerating its entry into the telecom operator market and is searching for Chinese base station manufacturers to collaborate on developing 6G base stations for overseas markets. The timeline is described as "urgent," with a target of entering trial networks by 2027 or 2028. Relevant Hong Kong-listed companies include ZTE Corporation (00763), ZJ Innolight (03308), Foxconn Interconnect Technology (06088), and AsiaInfo Technologies (01675).
Stock Spotlight: MMG (01208)
MMG reported strong second-quarter copper production of 137,800 tonnes, up 8% quarter-on-quarter. For the first quarter of 2026, the company posted revenue of $2.28 billion, a 45.2% increase year-on-year, and net profit attributable to shareholders of $420 million, a staggering 218.3% increase. This performance is driven by higher copper prices, stable mine production, and significantly increased contributions from cobalt and precious metal by-products. As a state-owned flagship overseas copper platform with mines in Peru, the DRC, and Australia, copper accounts for about 80% of its revenue. Its crown jewel is the Las Bambas world-class open-pit copper mine in Peru, one of the top ten largest globally. The company's multi-mine production capacity is well-layered, with the Kinsevere copper mine in the DRC undergoing expansion to reach full capacity of 80,000 tonnes of copper and 4,000 tonnes of cobalt by 2026. New mines in South Africa and Australia are also releasing capacity in phases. With total resources of 82 million tonnes of copper, 15 million tonnes of zinc, and 130,000 tonnes of cobalt, the company has ample long-term production capacity. Las Bambas targets 380,000-400,000 tonnes of copper production for 2026, with Q1 output exceeding 100,000 tonnes. Kinsevere's expansion is ramping up towards an annual capacity of 80,000 tonnes of cathode copper, with cobalt by-products for external sale. The company benefits from its longest-ever period of stable production, with a mine life extending to 2041 and only 17% of its mining rights explored, indicating significant potential for resource growth. Its C1 cash cost of $0.55 per pound in the first half of 2026 positions it in the low-cost quartile globally, further supported by by-product credits from molybdenum, gold, and silver. Total zinc production was 55,538 tonnes, flat year-on-year. Las Bambas produced 109,000 tonnes of copper concentrate in Q2, in line with its full-year guidance of 380,000-400,000 tonnes. The Khoemacau mine produced 22,000 tonnes in the first half, representing 42%-46% of its annual guidance. With improved equipment utilization, new mining equipment, and higher ore grades, production is expected to grow in the second half. The company anticipates stable operations across its mines in the second half, with Las Bambas likely to reach the upper end of its guidance. Eased social stability concerns following the Peruvian presidential election should further support production and cost improvements, driving continued profit growth.
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