Hong Kong Stocks Mixed, Geely Auto Surges Over 7%

Market Watcher10-22

On October 22, the Hong Kong stock market showed mixed performance. The Hang Seng Index (HSI) rose by 0.10%, the Hang Seng Tech Index (HSTECH) climbed by 0.66%.

Among individual stocks, GEELY AUTO surged by 7.06%. The company plans to acquire the entire equity of Ningbo Passenger Car for approximately 124 million yuan. The overall performance of Hong Kong automotive stocks was positive, with XPENG-W rising by 2.79% and LI AUTO-W increasing by 4.99%.

BYD ELECTRONIC dropped by 3.19%. CHINASOFT INT'L also saw a decline of 2.79%. On the other hand, MIDEA GROUP rose by 3.67%, and CHINA GAS HOLD increased by 1.63%.

ZTE experienced a significant drop of 8.03%. Meanwhile, CHINA LIT rose by 3.11%, and CHINA LONGYUAN increased by 3.78%. LENOVO GROUP fell by 2.77%, while ZOOMLION gained 3.51%.

UBTECH ROBOTICS saw a remarkable increase of 20.07%, while BIDU-SW fell by 2.91%. Citigroup analysts expect Baidu's third-quarter revenue to be lower than expected, with core advertising revenue declining by 4.1% year-on-year and profit margins potentially under pressure. Citigroup has lowered its core adjusted operating profit forecast for Baidu by 13%. Although China's stimulus policies may improve advertising spending sentiment in the fourth quarter, Baidu's core advertising revenue will still face pressure as new product-driven growth takes time. Citigroup maintains a buy rating on the stock but has lowered the target price from $144.00 to $143.00.

Short selling in Hong Kong stocks is the least active in three and a half years, after a series of Chinese stimulus measures drove a rally on the city’s bourse.

Turnover in short positions fell to 9.7% of the market’s total Friday, marking the lowest level since April 2021, according to Bloomberg’s calculations based on exchange data. It recovered slightly to 10.7% Monday.

The weaker appetite in short selling comes as the benchmark Hang Seng Index has rebounded 20% from a September trough, following a broader Chinese stock rally triggered by Beijing’s stimulus blitz. The initial euphoria has since faded a bit, with investors awaiting stronger support steps such as ramped-up fiscal spending.

The risk-reward ratio for Hong Kong and mainland Chinese equities is now skewed toward the upside, said Billy Leung, an investment strategist at Global X ETFs. “That means the risk of shorts is higher now, and hence lower short selling positioning.”

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