The number of game license approvals has risen, with analysts optimistic about a sector valuation recovery. Reports indicate that the National Press and Publication Administration issued 483 game licenses in the second quarter, a 13% year-on-year increase. The administration also released approval information for domestic and imported online games for June 2026. In June, a total of 171 online games received licenses, comprising 163 domestic and 8 imported titles, up from 158 in the previous month. Furthermore, AI technology is deeply penetrating the entire game development chain, from NPC intelligent interaction to procedurally generated content (PGC). Leading companies have achieved over a 30% improvement in game retention rates driven by AI, with the technology's commercial potential gradually being realized. Concurrently, July marks the start of the traditional peak consumption season. The 23rd ChinaJoy will be held from July 31 to August 3 at the Shanghai New International Expo Centre, themed "Gaming with AI." Nearly 900 companies will participate, covering games, AI hardware, esports, and trendy toys, with over a hundred manufacturers showcasing cutting-edge technologies like AI-generated storylines and real-time rendering. Multiple major new games are also set to launch or begin public testing. Historical data shows that summer mobile game revenue accounts for over 25% of annual totals, with a relatively high success rate for new hit titles. The increase in game license approvals in Q2 reinforces Morningstar's positive view on the gaming sector. Senior Equity Analyst Ivan Su noted that with normalized approvals, regulatory supply is no longer a primary factor affecting developer profitability. He anticipates intensified competition in the extraction-based shooter game segment by late 2026-2027. Morningstar maintains its fair value estimates for gaming giants Tencent, NetEase, and Bilibili, stating these three companies remain undervalued. Tencent remains its top pick, as AI is unlikely to disrupt its network effect advantages.
Market Outlook
US stock indices closed lower, with semiconductor and memory sectors experiencing significant declines. Overnight, the Dow Jones Industrial Average fell by 130.76 points to close at 52,925.15, a drop of 0.25%. The S&P 500 index declined by 33.58 points to 7,503.85, down 0.45%. The Nasdaq Composite index dropped by 302.47 points to 25,818.69, a decrease of 1.16%. Most major tech stocks fell, with SpaceX down nearly 7%, Tesla down over 4%, while Meta rose over 2%. The semiconductor and memory sectors saw heavy losses, with the Philadelphia Semiconductor Index dropping over 4% and Intel down over 9%. The oil and gas sector advanced, while the precious metals sector declined. Shell rose nearly 5%. Most popular Chinese concept stocks fell, with the Nasdaq Golden Dragon China Index down 0.59%. The NYMEX WTI crude oil front-month contract rose by $3.65 to settle at $72.2 per barrel, a gain of 5.32%. The COMEX gold front-month contract fell by $50.90, or 1.22%, to $4,116.6 per ounce.
Key Focus Areas
The State Council has endorsed the "15th Five-Year Plan for Building a Strong Tourism Nation" in principle. The approval notice states that the plan's implementation should fully, accurately, and comprehensively implement the new development philosophy, adhere to tourism for the people, focus on promoting high-quality development, and advance the deep integration of culture and tourism. It involves coordinating government and market forces, supply and demand, protection and development, domestic and international aspects, and development and security. The plan aims to improve the modern tourism system, optimize tourism spatial layout, cultivate new drivers for tourism development, enrich tourism supply, unleash consumption potential, enhance service quality, promote efficient governance, deepen tourism exchanges and cooperation, accelerate the building of a strong tourism nation, and allow the tourism industry to better serve a better life, promote economic development, build spiritual homes, showcase China's image, and foster mutual learning among civilizations. This involves the Hong Kong-listed tourism industry chain.
China's central bank has increased its gold reserves for the 20th consecutive month. Central bank data shows China's gold reserves stood at 75.44 million ounces (approximately 2,346.446 tonnes) at the end of June, an increase of 480,000 ounces (about 14.93 tonnes) from the previous month. At the end of May, gold reserves were 74.96 million ounces (about 2,331.52 tonnes).
Sino Biopharmaceutical Limited (01177) has entered into an exclusive licensing agreement with AstraZeneca for TQC3721. According to the agreement, the group grants AstraZeneca an exclusive license to develop, manufacture, and commercialize TQC3721 outside of China. AstraZeneca will also receive a global exclusive license for specific development programs of TQC3721. The group is entitled to receive an upfront payment of USD 200 million, potential development, regulatory, and sales milestone payments totaling up to USD 1.9 billion, as well as tiered royalties based on TQC3721's annual net sales, potentially reaching double-digit percentages. The agreement's effectiveness is subject to customary closing conditions, including obtaining relevant regulatory approvals.
Sinopec Oilfield Service Corporation (01033) announced that its wholly-owned subsidiary, Sinopec Petroleum Engineering Construction Co., Ltd., has won the bid for the first section of the Heihe-Daqing and Daqing-Changling natural gas pipeline construction general contracting project. The winning bid amount is approximately RMB 1.772 billion, representing about 2.2% of the company's 2025 operating revenue under Chinese accounting standards.
Tiangong International Company Limited (00826) announced that its indirect subsidiary, Jiangsu Tiangong Cemented Carbide Technology Co., Ltd., has initiated a construction project named "Annual Production of 300 Tons of Ultra-Fine Grain PCB Tool Special Bar Expansion."
Guanghe Technology Co., Ltd. (01989) expects its net profit attributable to shareholders for the first half of the year to increase by approximately 85.12% to 95.29% year-on-year. The company anticipates a net profit attributable to shareholders of approximately RMB 910 million to RMB 960 million. The overseas factory, Delton Technology (Thailand) Co., Ltd. (Thailand Guanghe), has become a second engine driving the company's computing power product sales growth, with profitability significantly improving as key customer certification and product introduction progress, and the utilization rate of Thailand Guanghe's Phase I capacity continues to increase.
Hong Kong Stock Exchange data shows that on July 6, Hallgain Management Limited reduced its holding in Kingboard Holdings Limited (00148) by 9.328 million shares at an average price of approximately HK$90.393 per share, involving a total amount of about HK$843 million. The latest shareholding after the reduction is approximately 359 million shares, representing a 31.98% stake.
China Merchants Securities Co., Ltd. (06099) expects its net profit attributable to shareholders for the first half of the year to increase by 93% to 112% year-on-year. Preliminary estimates by the company's finance department indicate a net profit attributable to shareholders in the range of RMB 10.0 billion to RMB 11.0 billion.
Convergence Technology Co., Ltd. (01729) issued a positive profit alert, expecting its net profit for the first half of the year to increase by approximately 150% to 170% year-on-year. This is primarily due to increased revenue from the data center and server segments within the wire assembly division and an increase in share of profits from associates.
Shanghai Fudan Microelectronics Group Company Limited (01385) issued a positive profit alert. For the six months ended June 30, 2026, it expects operating revenue to be approximately RMB 2.2 billion to RMB 2.4 billion, an increase of about 19.64% to 30.52% year-on-year. It anticipates net profit attributable to owners of the parent to be approximately RMB 800 million to RMB 1.0 billion, an increase of about 313.19% to 416.49% year-on-year.
New Stock Grey Market Performance
MOMENTA-W (06880) closed at HK$294.6 in grey market trading, with trading volume exceeding HK$172 million. The company is scheduled to list on the Hong Kong Stock Exchange on July 8.
Basic Semiconductor Co., Ltd. (09971) closed up over 17% in grey market trading at HK$37.10, compared to an offer price of HK$31.62. Per lot of 200 shares, the profit before fees is HK$1,096. The company is set to list on July 8.
Eastern Technology (01770) closed up 4.53% in grey market trading at HK$82.2, compared to an offer price of HK$78.64. Per lot of 50 shares, the profit before fees is HK$178. The company is set to list on July 8.
Yikong Zhijia (07687) closed up nearly 9% in grey market trading at HK$95.8, compared to an offer price of HK$87.92. Per lot of 50 shares, the profit before fees is HK$394.
Baogai New Material Co., Ltd. (08090) closed up over 6% in grey market trading at HK$6.61, compared to an offer price of HK$6.22. Per lot of 500 shares, the profit before fees is HK$195. The company is set to list on July 8.
Stock Spotlight
ANTA SPORTS (02020): Analysts are optimistic about the potential positive contribution from Puma's China business. The Chinese sportswear industry faced challenges in Q2 2026, with cooling consumer demand after the Lunar New Year, unfavorable weather, and a subdued 618 shopping festival, leading to a slowdown in retail sales compared to Q1, with low visibility for H2. Analysts note that ANTA has demonstrated robust execution, with its multi-brand portfolio gaining market share from mass to premium segments, while global expansion is still in its early stages. Daiwa forecasts ANTA's 2026 sales growth at 9%, with the ANTA brand, FILA, and other brands growing by 3%, 6%, and 25% respectively. Gross margin is expected to remain largely stable, as pressure from raw material costs and discounts is offset by faster growth from higher-margin brands. Full-year net profit is projected to grow by 4%, with growth potentially accelerating to 14% in 2027. Citi expects that upon completion of the Puma acquisition, ANTA will technically consolidate Puma's China business, which will contribute positively to ANTA's earnings for the full year 2027. The bank believes the potential positive contribution from Puma's China business will largely offset the negative impact on ANTA's associate business line in 2027 (related to its 29% stake in Puma). Consequently, Citi has raised its net profit forecasts for ANTA for 2026 and 2027 by 2% and 3% respectively.
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