The Hang Seng Index has shown signs of stabilization after a two-week decline, jumping 1.57% today. The heavy selling pressure typical of month-end appears to have subsided. While geopolitical tensions persist over the weekend, the market largely remains unconcerned about a significant escalation. Domestically, the People's Bank of China conducted a 300 billion yuan overnight reverse repo operation on June 29, alongside a 157.5 billion yuan 7-day reverse repo, aiming to ease liquidity pressures at the half-year end.
A sustained recovery for Hong Kong stocks hinges on a halt in the decline of major heavyweights, a point we have consistently emphasized. Today brought some encouraging developments. At its June 26 shareholder meeting, Meituan (03690) CEO Wang Xing stated the company would "actively exit" external investments under suitable conditions, naming invested companies like Zhipu AI and Li Auto Inc. (02015). CFO Chen Shaohui added that the total book value of these listed and unlisted holdings, including Unitree Robotics, exceeds 65 billion yuan, and the company plans to consider monetization after lock-up periods and conduct share buybacks. Meituan shares surged over 5% today.
NetEase, Inc. (09999) announced last Friday its selection to become a dual-primary listed company in Hong Kong, effective tomorrow (June 30). A key benefit is the potential eligibility for inclusion in Southbound Stock Connect, as dual-primary listing is a prerequisite. Its shares rose over 6%.
Market rumors suggest Baidu, Inc.'s (09888) AI chip subsidiary, Kunlunxin, is planning a Hong Kong listing targeting a valuation of around $50 billion. Baidu has not publicly commented. Baidu shares gained over 5%. Other major tech stocks like Tencent Holdings Ltd (00700) and Alibaba Group Holding Ltd (09988) also advanced over 2% and nearly 4%, respectively. These large-cap stocks, having suffered significant declines, are taking measures to stabilize their share prices.
While there are concerns about AI stocks peaking, new catalysts have emerged. Reports indicate Apple Inc. is lobbying the US government to approve purchasing memory chips from Chinese manufacturer ChangXin Memory Technologies (CXMT). This suggests Apple is seeking alternatives to surging Korean memory prices and signals recognition of Chinese memory chips. GigaDevice Semiconductor (Beijing) Inc (03986) was reactivated, soaring over 14%.
Samsung Electronics and SK Hynix announced a landmark domestic investment plan nearing 2,000 trillion won over the next decade. Samsung plans to build 4-5 wafer fabs in Gwangju, while SK Hynix will also establish 4-5 front-end wafer fabs there. ASM Pacific Technology Ltd (00522) is a direct beneficiary, providing core equipment like TCB for HBM stacking and advanced die bonding, with its shares jumping over 11%. Domestic foundries followed suit: Huahong Grace Semiconductor Manufacturing Corporation (01347) rose nearly 8%, and Semiconductor Manufacturing International Corporation (00981) gained over 6%.
A separate wave of capital, cautious on tech, continued targeting pharmaceutical stocks. On June 29, China's National Healthcare Security Administration released the preliminary review list for the 2026 National Basic Medical Insurance, Maternity Insurance, Work Injury Insurance, and Commercial Insurance Innovative Drug Directories. 557 drugs passed the basic medical insurance初审 (initial review), and 54 passed the commercial insurance初审, with a record-high pass rate of 92%. New policies include an 8-year price protection mechanism and a pre-submission system, significantly alleviating pricing pressure on innovative drugs. Approved drugs will enter negotiations for inclusion in the national reimbursement drug list (NRDL), leading to rapid commercial expansion. The commercial insurance目录 offers a secondary sales channel for high-priced drugs. This benefits Hong Kong-listed innovative drug companies with new drug/indication applications, robust pipelines, and multiple commercialized products, and is expected to boost orders for CXOs.
Related stocks surged: RemeGen Co., Ltd. (09995) up over 14%, Akeso, Inc. (09926) up over 10%. Among CXOs, Asymchem Laboratories (Tianjin) Co., Ltd. (06821) led with an over 11% gain, and WuXi AppTec Co., Ltd. (02359) rose over 5%, both hitting annual highs. The model animal sector is also thriving as domestic companies seize a key window for global expansion. Biocytogen Pharmaceuticals (Beijing) Co., Ltd. (02315) surged nearly 16%.
Data assets are gaining market attention. XtalPi Inc. (02228) recently announced the operational launch of its "Intelligent Physical/Chemical Adsorption Analysis Autonomous Experimental Workstation," developed with Sinopec (Shanghai) Research Institute of Petrochemical Technology and Beijing JWGB Sci. & Tech. Co. It integrates high-throughput data collection and autonomous experimental decision-making into an "AI + Robotics + Multi-Agent" intelligent system, marking a key step towards physical AI. Data is becoming the core asset for future AI development. Its shares rose over 14%.
Xunzi Limited (03317): The company's TokenOS covers the entire data pipeline from cleaning and modeling to real-time computing and model adaptation, outputting standardized Tokens that drive business decisions, applicable in high-premium sectors like healthcare and energy. Additionally, a special resolution passed at the June 26 AGM grants the board a general mandate to repurchase up to 10% of issued H shares. Its shares climbed nearly 16%.
On June 29, global leading physical AI company Momenta disclosed its global offering document, officially launching its IPO. The offering attracted 14 cornerstone investors, including Singapore's GIC and Fidelity International. As a top-tier provider of autonomous driving software and a leader in city NOA, it partners with 9 of the world's top 10 automakers, focusing on pure software.
Domestic autonomous driving companies are also active. On June 26, Horizon Robotics (09660) announced its domestic passenger vehicle ADAS domain control chip installations reached 60,000 units in April. NVIDIA led with over 30,000 installations (50.9% share), while Horizon jumped to second place with over 8,000 installations (13.6% share). CEO Yu Kai stated on Weibo that their HSD offers the best smart driving assist experience in China, with HSD 2.0 launching soon. Horizon shares surged over 14%.
Last Friday's sector focus highlighted continued "national subsidies," with the third batch of 62.5 billion yuan in ultra-long-term special treasury bonds for consumer goods trade-ins recently allocated. A new stimulus emerged as a record heatwave sweeps Europe, causing hundreds of deaths. Since June 21, over 1,300 excess deaths in Europe have been linked to the heat. Chinese air conditioners are selling out in Europe, with Midea Group's (00300) sales up 37% in Germany and 108% in Spain/France. Second-hand prices have even exceeded retail, with consumers driving 200 km and paying a 100-euro premium for the last unit. Overall AC penetration in Europe is only about 20%, far below the US's nearly 90%. Hisense Home Appliances Group Co., Ltd. (00921) rose over 7%, and the previously mentioned Midea Group (00300) gained over 4%.
Key Sector to Watch
Over the weekend, state media reported the power semiconductor industry is undergoing its second comprehensive price adjustment this year, with some products up 20-30%. Lead times have generally extended to 30-50 weeks (some high-voltage models are out of stock). Main reasons: 1) Surging AI demand is squeezing capacity from other segments, as overseas suppliers like Infineon, ON Semiconductor, and STMicroelectronics shift capacity to high-end AI applications. 2) Strong/stable demand for all categories of power semiconductors from industrial and automotive sectors. 3) Foundry bottlenecks, as they prioritize higher-margin products like BCD and MCUs. 4) Tight upstream 8-inch wafer fab capacity and low willingness to expand after years of industry consolidation. Key stocks to watch: Tianyue Advanced Materials Co., Ltd. (02631), Naxin Microelectronics Corp., Ltd. (02676), Innoscience (Zhuhai) Technology Co., Ltd. (02577), Solargiga Energy Holdings Ltd (00580).
Stock Spotlight
Semiconductor Manufacturing International Corporation (00981): Capacity Expansion Proceeds Orderly, Foundry Price Hikes Intensify. TSMC has notified customers of price increases for advanced nodes by about 5-10%, potentially boosting global foundry revenue by over 20% this year. The company recently completed a 40.6 billion yuan private placement, making SMIC North a wholly-owned subsidiary. Q1 2026 revenue reached 17.617 billion yuan, up 8.07% year-on-year and 0.7% sequentially. Net profit attributable to shareholders was 1.361 billion yuan, up 0.36% year-on-year.
Analysis: TSMC's price hikes across advanced nodes could drive global foundry revenue up over 20% this year. SMIC is the only domestic producer with mass production of advanced nodes, with stable 14nm FinFET production (yield ≈92.7%) and a monthly output of about 92,000 wafers. It is a global leader in mature nodes, covering 28/40/55/90nm with yields of 95%–98%. AI is boosting chip industry景气度 (sentiment). With ample capacity (3 8-inch, 7 12-inch fabs), monthly capacity increased from 1,058,800 8-inch equivalent wafers in Q4 2025 to 1,078,300 in Q1 2026. Q1 capacity utilization was 93.1% (95.7% previous quarter, 89.6% year-ago). Capital expenditure was 10.8 billion yuan, with热门 (hot) process nodes (14/28nm) requiring产能 (capacity) to be locked three months in advance. To capture local manufacturing demand, SMIC is steadily推进 (advancing) its expansion plan, with improving capacity utilization. It added about 50,000 12-inch monthly wafer capacity in 2025 and expects to add 40,000 in 2026. Full-year 2025 capital expenditure reached $8.1 billion, with 2026 plans roughly flat. Capacity utilization of 95.7% represents a 10.2 percentage point year-on-year increase, remaining high despite growing capacity, indicating robust downstream demand. On the demand side, while low-end consumer electronics (phones, PCs) remain weak, the company is actively adjusting its mature node platforms.凭借 (Leveraging) its technological储备 (reserves) and领先 (leading) advantages in segments like BCD, analog, memory, MCU, and mid-to-high-end display drivers, it maintains a favorable position in this industry cycle. The AI chip boom has led to shortages in power management, driver, and transmission chips. Capacity utilization exceeds 95%, with continuous price hikes and improving毛利率 (gross margins). The company's orderly capacity expansion,充足 (ample)订单 (orders), widening supply-demand gap, and order visibility covering all of 2026 (with some extending to 2027) provide a solid growth foundation. Long-term agreements with customers lock in future demand, ensuring steady growth momentum.
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