US inflation data came in hotter than expected, once again shifting market expectations around Federal Reserve rate hikes. Although remarks from Kevin Warsh offered some reassurance and briefly eased pressure, the underlying risk has not been removed.
Last week the Hang Seng Index staged an intraday rally but ultimately pulled back and traded in a choppy range. Risks in the Middle East remain unresolved, and geopolitical tensions in Asia are heating up again.
The bigger concern is the technology sector. After Anthropic released its latest financial data, some existing investors and potential IPO investors said they are considering marking down the company's valuation. As financing for AI companies becomes increasingly expensive, tech hardware names are drawing the most investor attention.
On the domestic front, PBOC Governor Pan Gongsheng said at the Annual Conference of Financial Street Forum that the central bank will work with the National Financial Regulatory Administration and the China Securities Regulatory Commission to roll out a large-redemption liquidity support tool for non-bank institutions, providing backing for liquidity.
Third-quarter GDP growth of 4.5% released on Monday came in slightly above the market expectation of 4.4% and also rebounded from 4.3% in the second quarter. Against the current weak backdrop, policy and data offer some support, but whether tech stocks can truly stabilize is the key question.
The ESMO Congress runs from October 23 to 27, a major global oncology event. Investors will be watching clinical data for innovative drugs (ADC, bispecific antibodies, IO) and overseas licensing deals by Chinese innovative drugmakers.
On the geopolitical front, Japan and the United States will hold the large-scale joint military exercise "Keen Sword 27" across multiple locations in Japan from the 19th to the 29th, with Australia, Canada, France, Germany, the Philippines and others also participating. Sanae Takaichi sent an offering to Yasukuni Shrine, and some cabinet members and lawmakers visited to pay respects. This could provide a catalyst for defense-related names.
Giants are ramping up their robotics push. Nvidia open-sourced its robotics Harness, and integration with GPT-6 Astra broke every benchmark overnight. OpenAI is set to enter the humanoid robot space. DeepSeek plans to lead the seed round of Chinese embodied intelligence company WinverseAI, with the two sides set to collaborate deeply on robotizing large models and multimodal interaction. In the first eight months of the year, Shenzhen's exports of separately listed robotics products totaled 11.13 billion yuan, up 12.2 times year on year.
This Week's Top Pick
Hansoh Pharma (03692) announced on October 19 a strategic collaboration and licensing agreement with Roche, covering two preclinical ADC programs as well as multiple programs based on targets proposed by Roche and developed on Hansoh's proprietary ADC platform.
Hansoh will receive an upfront payment of US$400 million, a first-anniversary payment of US$110 million, potential downstream milestones exceeding US$15 billion, and tiered royalties based on future potential product sales. The shift from single-program licensing to portfolio development marks further recognition of the platform's value.
Following the 2025 licensing of the CDH17 ADC program HS-20110 (US$80 million upfront, up to US$1.53 billion in total), Hansoh has once again expanded its collaboration with Roche. This deal moves further upstream into target selection and new program development, reflecting Roche's recognition of Hansoh's ADC platform's ability to consistently generate output. Multi-program collaboration is expected to broaden the platform's commercialization path and enhance the sustainability of translating future innovations.
Multiple innovative drugs have successively gone overseas, with globalization efforts continuing to deepen. Hansoh has already licensed ex-Greater China rights to HS-20089 (B7-H4 ADC) and HS-20093 (B7-H3 ADC) to GSK, and reached an ex-Greater China licensing deal with Roche for HS-20110 (CDH17 ADC). In the metabolic space, the global rights to oral GLP-1 receptor agonist HS-10535 were licensed to Merck, while ex-China mainland, Hong Kong and Macau rights to the GLP-1/GIP dual receptor agonist HS-20094 were licensed to Regeneron. Teaming up with Roche again this time extends single-product overseas licensing to ADC platform collaboration, which is expected to strengthen the ability to continuously translate innovations and open up global development and long-term revenue potential.
Industry Watch
At equivalent quality, AI production costs have fallen to roughly one-tenth of traditional animation. According to the Beijing Animation and Game Industry Association, AI has cut the production cost of a single anime title to below 10% of traditional methods, with per-minute costs reaching the hundreds-of-yuan level and production cycles compressed to days. Cost is no longer a source of differentiation among producers, and competition has shifted back to content itself. Story strength and visual completion determine the share of breakout hits, with the gap between works coming down to narrative solidity and visual presentation.
In the first half of 2026, Douyin added 221,900 native AI drama and anime titles, of which 1,055 surpassed 100 million views in the same period, a breakout rate of 0.48%, showing that supply expansion has not raised that rate. Platform validation: in February 2026, within Douyin Group's short drama copyright center revenue-sharing coefficient policy, AI simulated live-action drama received a coefficient of 60, while 3D and 2D anime dramas received 50. Solid stories combined with professional animation teams are more likely to produce hits.
On October 16, the 2026 Yuewen Creation Conference unveiled its first batch of four premium AI animations: "Cyber Hero Chronicle," "Unscientific Beast Taming," "The Adjudicator," and "Town Demon Museum." It was the industry's first three-way collaboration of "web novel IP + AI technology + professional animation capability." The company also announced that its premium AI video matrix covers anime dramas, animation, "live-action + AI" short dramas and medium-to-long dramas.
China Literature (00772) reported first-half revenue of 430 million yuan from short dramas and AI anime dramas, up 230% year on year, and IP copyright revenue of 1.61 billion yuan, up 41.9% year on year. China Literature has started development of the premium AI animation "Cyber Hero Chronicle," whose teaser drew attention both domestically and overseas. In the first half, its short drama hit rate was four times the market average. To date, more than 660 anime dramas have surpassed 10 million views, and 107 have exceeded 100 million.
China Literature's premium AI video matrix already includes "live-action + AI" short dramas and medium-to-long dramas. With external production capacity brought in, the company's role is extending toward IP operator, and the value of a single project goes beyond one-off revenue sharing to multi-format, long-term development. Hong Kong stock investors should focus on China Literature (00772), Kuaishou (01024), Meitu (01357) and Duiba (01753).
Data Watch
Data released by Hong Kong Exchanges and Clearing shows that total open interest in October Hang Seng Index futures stood at 130,009 contracts, with net open interest at 37,327 contracts. The settlement date for Hang Seng Index futures is October 29, 2026.
With the Hang Seng Index at 24,187 points, bull-bear certificates have deviated from the midline, and Hong Kong stocks are relatively hesitant. The Hang Seng Index should focus on the impact of the US Nasdaq, especially the trend in large-cap AI tech stocks, and is seen falling this week.
Editor's Take
Overseas AI supply chains have corrected collectively, and bearish funds have added to positions accordingly. Short-selling turnover in Hong Kong stocks once approached a historic high of nearly 20%, with star AI names becoming the main target of short sellers, showing a pattern of shorting more as prices fall further.
The Hang Seng TECH Index has just added AI, robotics and advanced hardware to its constituents in an attempt to shed its "consumer internet" label, but the market simply is not buying it. When overseas tech falls, it is the first to kneel, and when domestic demand is weak, it also comes under pressure. Its pricing inertia is far more stubborn than imagined.
Recently Hong Kong stocks have been a game of "who falls the least." Industrials, raw materials and tech have been badly beaten, while consumer discretionary, financials and utilities have held up steadily. Innovative drugs, meanwhile, have decoupled from the broader market on upward earnings revisions, becoming one of the few bright spots in a weak market. Sure enough, in a choppy market, certainty is the hard currency.
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