Hong Kong stocks maintained relative stability last week against the backdrop of volatility in A-shares and South Korean markets, suggesting risk capital favors the safer haven of the Hong Kong market.
Over the weekend, former President Trump halted strikes on Iran, with foreign media reporting progress in negotiations concerning the Strait of Hormuz. Brent crude oil fell sharply in dark trading to $87. The Federal Reserve will announce its interest rate decision this Wednesday, with the market expecting the federal funds rate target range to remain unchanged at 3.50% to 3.75%. The latest inflation data this week will be crucial for determining the Fed's potential actions in September.
The most significant event this week remains the Politburo meeting scheduled for late July. While no major easing policies are generally expected, minor adjustments are possible, with attention on potential stimulus measures for property, consumption, and infrastructure. A key technology focus is the listing of Changxin Technology on Monday. Newly listed stocks have no price limits for the first five trading days. As the latest "valuation anchor" for the tech sector, stability is crucial; significant volatility is not desirable.
Major companies including SK, Samsung, Microsoft, and Meta are reporting earnings this week. Following the lesson from Google last week, the market is no longer anchoring on capital expenditure increases but is instead focused on AI business revenue and customer order growth significantly outpacing capex expansion, while maintaining stable profit margins and free cash flow. On the positive side, the Korea-San Francisco AI Summit disclosed a five-year cooperation plan totaling $950 billion. This includes $200 billion between Samsung Electronics and Broadcom for advanced memory and AI chip foundry intentions, and $750 billion between SK Group (primarily SK Hynix) and US companies like Nvidia, Microsoft, and Anthropic for long-term HBM memory supply cooperation. This indicates a firm US commitment to advancing AI in partnership with South Korea.
Last Friday evening, CATL announced a surprising plan to repurchase A-shares worth 200 billion to 400 billion yuan for cancellation and capital reduction, with a maximum repurchase price of 573 yuan per share, 49.6% above the current price. This is the largest stock buyback plan in A-share history and is expected to trigger positive follow-up effects.
This Week's Golden Stock
For Ctrip.com International Ltd (09961), penalties have been imposed and the stock awaits recovery. In the short term, accommodation business performance is in line with expectations. The front-end "Jinte Card" label has been removed, but the underlying hotel cooperation logic has not changed significantly, with commission rates showing no major adjustments. New hotels no longer have exclusive low-price channels. The lowered revenue forecast for Q2 2026 is mainly due to rising fuel costs affecting domestic transportation, while accommodation business met expectations. The lower Q2 2026 profit margin is a dilution effect from high overseas growth. Summer booking trends are currently average, with hotel group revenue per available room (RP) under slight pressure. Accommodation business still has room for adjustment. Hotels' demand for Ctrip's high-quality user traffic and services remains, and they may gradually generate revenue through innovative transaction models like products and advertising. Long-term, Ctrip's competitiveness has not been fatally impacted, and overseas markets offer significant growth potential. Currently, Ctrip's domestic business is relatively mature, with the pace of online penetration slowing. Domestic growth is expected to slightly exceed the tourism market's growth rate. Based on a mid-term domestic profit expectation of 200 billion yuan and a conservative 12x PE, a market cap of at least 2700 billion HKD is supportable. Pure overseas revenue is growing at over 50% with shrinking losses. According to Tianfeng Securities, the Asia-Pacific market alone could achieve nearly 40% of domestic profit levels, with even greater potential from Europe and the US.
Industry Observation
Disruptions at Chilean mines have exceeded expectations, tightening non-US copper inventories. Global copper inventories fell by 41,000 tons this week, with SHFE inventories down 11,000 tons, social inventories down 11,000 tons, LME inventories down 20,000 tons, and COMEX inventories up 12,000 tons. A severe winter storm in central Chile caused multiple deaths and impacted major copper mine operations and port shipping. Chilean copper production from January to May fell by 200,000 tons year-on-year due to declining ore grades and insufficient concentrator capacity. Overall, copper mine production decreased by over 500,000 tons in the first half of the year, and Chilean output is unlikely to recover significantly in the second half. On the demand side, as the peak season approaches, domestic social and exchange inventories have fallen to low levels compared to historical periods. Non-US copper inventories are tightening again, raising the possibility of a squeeze in the second half. Recommended stocks include China Gold International Resources Corp Ltd (02099), CMOC Group Ltd (03993), China Nonferrous Mining Corporation Ltd (01258), and MMG Ltd (01208).
Data View
HKEX data shows that open interest for Hang Seng Index futures (July) totals 120,460 contracts, with net open interest at 49,860 contracts. The settlement date for HSI futures is July 30, 2026. The Hang Seng Index is at 24,963 points, with a dense bull certificate zone near the midline and bear certificates deviating above, indicating bearish momentum. US Treasury yields have hit new highs since April 2024, signaling financial stability concerns. The data suggests a bearish outlook for the Hang Seng Index this week.
Editor's View
The index's tug-of-war around the 25,000-point level persists. Upward momentum lacks sustained capital inflows, while downward pressure is cushioned by valuation floors and high-dividend stocks, making a unilateral trend unlikely. The interim reporting season is about to begin, but the momentum for earnings upgrades has already cooled. The market is shifting from "speculative expectations" to "verifying fundamentals." Metals, non-bank financials, and electronics have the highest proportion of positive earnings surprises, while the consumer sector remains under pressure. Simultaneously, the largest-ever lock-up expiration wave and ongoing IPO expansion create dual supply pressures, intensifying market divergence. Core assets with earnings support can absorb selling pressure through shareholder lock-ups, while concept stocks lacking fundamentals will continue their valuation correction. On the capital flow front, southbound funds have shifted from trend-chasing to bargain-hunting, and foreign capital inflows are slowing, leading to a clear stock-picking environment. Allocation should remain balanced, with high-dividend stocks forming a solid base. Growth sectors like technology and innovative drugs should wait for confirmation from both earnings and liquidity signals. This week is best suited for patient observation, awaiting resonance signals from the FOMC, PMI data, and increased trading volumes before making directional decisions.
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