Market Overview
Despite the Hong Kong stock market index rising by 0.41% today, the technology stocks that rebounded yesterday have suffered severe losses. This is a global phenomenon, with the Philadelphia Semiconductor Index plunging nearly 5% overnight. South Korea's KOSPI index triggered a circuit breaker amid a sharp decline, while Japan's Nikkei 225 index plummeted by over 2,700 points. A-share technology stocks in China were also heavily impacted.
The trigger was a foreign media report that China's domestic DUV lithography equipment is about to begin small-batch deliveries, with larger delivery volumes expected to start next year. Following this news, ASML shares dropped over 8% initially, closing down 5.8%. This, combined with a surge in CDS (credit default swaps) for Nvidia, Oracle, and Alphabet, created immense pressure. The selling pressure then cascaded to South Korea and subsequently to China, creating a reactive chain. Objectively, the mass production of domestic DUV equipment is still some time away, otherwise, why would SMIC (00981) also be declining? The real underlying concern is the sustainability of the AI spending model, which is burning through cash rapidly.
Additionally, the market is highly focused on the upcoming Federal Reserve interest rate meeting. Interest rate futures indicate that traders estimate a roughly 40% probability of a 25-basis-point rate hike on Wednesday, adding an extra layer of uncertainty to the market.
Financial Sector Gains from Tech Investment
The listing of ChangXin Memory Technologies (688825.SH) has been a standout, bringing significant benefits to the insurance and banking institutions that participated in its investment. In the strategic placement, four insurance companies – including PICC Property and Casualty, China Life Insurance, China Post Life Insurance, and Taikang Life Insurance – each received approximately 11.5473 million shares, with a corresponding investment amount of about 100 million yuan and an 18-month lock-up period. Based on the first-day closing price, the market value of these holdings for each insurer is approximately 566 million yuan, resulting in a paper gain of about 466 million yuan per company and a total combined book value increase of roughly 1.86 billion yuan for the four firms.
PICC P&C (02328) is set to release its interim results. Since the third quarter, there have been frequent natural disasters like typhoons, heavy rain, and floods, raising market concerns about higher payouts for property insurers. However, according to data from the Ministry of Emergency Management, cumulative natural disaster economic losses in the first half of this year were 42.14 billion yuan, a year-on-year decrease of 22.1%. This overall decline in natural disasters is expected to improve the company's claims experience in the first half, especially compared to a low loss ratio base in the same period last year. The stock rose over 8% today.
On the banking front, Industrial and Commercial Bank of China (01398), China Construction Bank (00939), Agricultural Bank of China (01288), Bank of China (03988), and Bank of Communications (03328), all participated in the investment in ChangXin Technology through their respective AIC (Asset Management Company) subsidiaries. Other banks were also involved. Based on the first-day closing price of 49.00 yuan per share, the total market value of these banks' holdings is estimated to be as high as 132.3 billion yuan. The strongest performer today was Huishang Bank (03698), which rose over 6%.
AI and Tech Sector Highlights
On the evening of July 27, Moonshot AI announced the open-sourcing of its Kimi K3 model weights, released a technical report, and simultaneously opened up three underlying infrastructure technologies (MoonEP, FlashKDA, AgentEnv) that support K3 training. The CEO of Hugging Face publicly stated that the Kimi K3 model garnered over 4,000 likes within just 30 minutes of its release, topping the platform's trend chart and setting a record for the fastest growth since the platform's inception. Chinasoft International (00354), which recently signed a "Moon Landing Plan" agreement with Moonshot AI for token sharing and joint innovation, rose nearly 5% today.
Automotive Sector
According to foreign media data, Chinese brands have captured over one-third of new plug-in hybrid vehicle sales in Europe in the first half of this year, reaching a record high. While the EU's anti-subsidy tariffs on Chinese pure electric vehicles have been implemented, plug-in hybrid models have not yet been included in the tariff scope, providing a new breakthrough for Chinese automakers in the European market. The breakout direction for auto stocks seems to be overseas. Leapmotor (09863) and Li Auto (02015) rose over 3%, while Xiaomi Group (01810) and Geely Auto (00175) gained over 1%.
The automotive industry has entered an era of intense competition in intelligent driving. The strength of leader Horizon Robotics (09660) seems to be benchmarked against the newly listed Momenta. Generally, Momenta's strength lies in software, while Horizon's advantage is its self-developed chips. However, Horizon's HSD (Horizon SuperDrive) solution is also very impressive. In 2025, Horizon's licensing and services revenue reached 1.935 billion yuan, accounting for over half of its total revenue. This segment alone is approaching Momenta's total annual revenue. Furthermore, its stronger chips, the Journey series, have shipped over 11 million units, making it the only domestically developed self-driving chip to achieve mass production of over 10 million units. In April 2026, it held a 13.6% share of the Chinese passenger car self-driving chip market, second only to Nvidia and first among domestic players. Compared to Nvidia's general-purpose chips, Horizon's chips, designed specifically for autonomous driving, have cost advantages. Combined with its localization cost benefits and service capabilities, it effectively compensates for performance gaps relative to Nvidia and is expected to continue gaining market share over the long term. Unlike many domestic competitors that only offer bare chips, Horizon has a unique advantage in combining software and hardware, providing a full-stack solution with its HSD algorithm for city NOA (Navigate on Autopilot). Its downstream customers include 25 automakers like BYD, Li Auto, Changan, GAC, Geely, Volkswagen, and Chery, spanning over 100 vehicle models, from entry-level 100,000 yuan electric cars to high-end new energy vehicles. It is a core domestic substitute. A common concern is that automakers might develop their own chips, which could impact Horizon. However, self-developed chips are limited to a few giant car companies with deep pockets. In the current highly competitive environment, partnering with a more advanced third-party like Horizon is the most economical and optimal solution. Therefore, Horizon is an unavoidable beneficiary of the intelligent driving wave. Benchmarking against Momenta, its valuation appears significantly undervalued, and the market is likely to correct this. The stock rose over 8% today.
Brain-Computer Interface and Consumer Sectors
The brain-computer interface concept, mentioned yesterday, continues to gain traction. The China Disabled Persons' Federation revealed a key piece of information: it will work to include technology-assisted disability products in relevant subsidy programs to lower the barrier for users. This means brain-computer interface rehabilitation equipment could be included in government procurement or the medical insurance payment system, transforming from "lab black technology" into an affordable rehabilitation tool for ordinary patients. Institutions estimate the market size will grow from $2.41 billion in 2025 to $12.11 billion by 2035, with a compound annual growth rate of 15.8% over the forecast period, indicating substantial long-term growth potential. NANJING PANDA (00553) rose nearly 5% again.
June social retail data showed a 1.2% year-on-year increase in catering revenue, an improvement of 0.6 percentage points month-on-month, indicating a marginal recovery. Xiaocaiyuan (00999), after its restructuring, has shown positive results. Its VIP membership system has stimulated a recovery in dine-in traffic, increased member repurchase rates, and led to a lighter restaurant model. Furthermore, its supply chain is improving, with the first food production line at its Ma'anshan central factory starting production in May. The entire line is expected to be fully operational this year, with projected annual revenue exceeding 700 million yuan, further strengthening cost and scale advantages and supporting store expansion. The stock rose nearly 6% again today, while YUM CHINA (09987) gained nearly 4%.
Other consumer stocks also performed well. Mingming Henmang (01768), which operates a chain store model, surged over 11%. Eastroc Beverage (09980) announced a plan to invest 1 billion yuan in a new production base in Zhengzhou, including six high-end beverage production lines, and rose over 7%. Summer is the peak season for education and training, with increased demand for adult education and online courses. China East Education Holdings (00667) and Tianli Education (01773) both rose by 5%.
Sector Focus
According to CCTV International News, the Japan Meteorological Agency reported that at around 4:27 PM local time on July 28 (3:27 PM Beijing time), a 7.1-magnitude earthquake struck Kumamoto Prefecture, Japan. The maximum seismic intensity was "Shindo 7," the highest level on Japan's 10-level intensity scale, with a depth of 10 kilometers. The Kyushu/Tohoku region of Japan is a core global production area for semiconductor materials, mature process nodes, and automotive-grade chips. Japan holds a dominant global monopoly in areas like photoresists, silicon wafers, power devices, and MLCCs. Reports indicate that TSMC's Kumamoto factory evacuated personnel following the earthquake. The full impact on related factories is still unknown, and the market is watching for potential tsunamis or further strong aftershocks. This situation favors domestic substitution beneficiaries: SMIC (00981), HUA HONG GRACE (01347), ASMPT (00522), and Tianyue Advanced (06882).
Featured Stock Pick
SF HOLDING (06936): Overseas Logistics Growth Continues; Share Buyback Boosts Confidence
Recently, the company spent approximately HK$14.33 million to repurchase 434,000 shares. SF Holding reported Q1 2026 revenue of 74.142 billion yuan, a year-on-year increase of 6.14%, and net profit attributable to shareholders of 2.526 billion yuan, up 13.05% year-on-year. Total revenue for June 2026 was 27.88 billion yuan, a year-on-year increase of 6.19%.
Commentary: SF Holding's net profit margin is continuously improving, with growth rates remaining high and accelerating quarter by quarter. The company's express logistics business generated 20.017 billion yuan in revenue in June, with a business volume of 1.389 billion parcels. The revenue per parcel was 14.41 yuan, rising year-on-year for four consecutive months. Overseas logistics continue to grow at a high speed. Supply chain and international business, the company's second growth curve, generated 7.863 billion yuan in revenue, a year-on-year increase of 24.97%, and is the core driver of overall growth. The company operates Asia's largest privately-owned cargo airline, with a fleet of 111 all-cargo aircraft, 90 of which are self-owned, and holds scarce civil aviation rights and slot resources. It has consistently handled about 33% of China's domestic air cargo volume. The Ezhou Huahu Airport, Asia's only dedicated cargo aviation hub, enables overnight delivery nationwide and connectivity to the world within two days. In 2025, cargo throughput increased by 44% year-on-year, with international cargo throughput surging by 85%. Its B2B customer base is solid, with multiple sub-segments achieving independent profitability. These include logistics services for over 95% of China's top 500 companies, support for manufacturing firms going overseas, cross-border independent stations, and new energy foreign trade logistics. It maintains stable partnerships with large cross-border e-commerce platforms like SHEIN and Temu, serving independent station sellers and foreign trade factories. It operates automated facilities like the New Balance Shanghai Smart Warehousing and Distribution Center, a nationwide network of over 100 cold chain warehouses and trunk lines covering temperature-controlled transport for fresh produce in over 340 cities, and is one of the few logistics providers with a full-chain national GSP medical cold chain qualification, covering high-margin temperature-controlled transport for biologics, insulin, and vaccines. It holds long-term framework agreements with several listed pharmaceutical companies. The company has a cross-shareholding arrangement with J&T Express, with SF Holding responsible for cross-border air and sea freight and J&T Express providing last-mile delivery in Southeast Asia. SF Holding is also undertaking projects for Chinese enterprises abroad, including overseas spare parts warehouses and local delivery, with supply chain centers established in Thailand, Australia, and Europe. The company has developed its own AI large model for logistics, continuously reducing unit operating costs across its network. SF Holding has spent 5.934 billion yuan to repurchase 158 million shares, demonstrating its confidence in the company's future.
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