The Hong Kong market has recently shown signs of moving independently, with its current trend aligning well with its internal structure. While the A-share market declined, Hong Kong stocks have become a relative safe haven, rising 1.4% today.
U.S. inflation cooled more than expected: June's CPI saw its first month-on-month decline in six years, while the core CPI unexpectedly showed zero month-on-month growth. Following the CPI release, traders pushed back their expectations for the next Federal Reserve rate hike to October. However, Fed Chair Wash's first congressional testimony struck a hawkish tone, indicating the Fed would act based on data even amid criticism from former President Trump, and that June's CPI cooling does not mean the inflation fight is "mission accomplished." The signal conveyed is a commitment to independence, with less emphasis on forward guidance.
In other news, former U.S. President Trump reportedly discussed a large-scale offensive plan against Iran aimed at gaining control of the Strait of Hormuz, though success is considered unlikely. A proposal to impose a 20% fee on cargo passing through the strait was met with widespread criticism, leading to a revised proposal today: a trade and investment agreement with Gulf nations to replace the "American compensation fee." It's all business, after all.
The Baltic Exchange Dry Index rose for a fourth consecutive session on Tuesday. Pacific Basin Shipping Ltd (02343), highly sensitive to this index, surged over 5%.
Technology stocks fell sharply today, especially in the A-share market, which was hit hard by almost indiscriminate selling. Even the strong performance of the South Korean market failed to provide support. The root cause is the capital drain from the massive IPO of Longxun. Longxun's (688825.SH) IPO price has been set at 8.66 yuan per share, with online and offline subscriptions starting July 16. Its estimated post-listing market cap is around 5.79 trillion yuan. This pricing acts as a significant valuation anchor for the latest tech giant, creating immense pressure. Many stocks, found to be overvalued upon comparison, triggered a broad sell-off. Hong Kong stocks fared relatively better, as their valuations were less inflated to begin with, resulting in smaller declines.
Some beneficiaries of this IPO include the joint sponsors and lead underwriters, CICC (03908) and CSC Financial (06066), which both rose over 5% today. CICC announced on the evening of July 14 that its major asset restructuring plan involving a share swap to absorb Dongxing Securities and Cinda Securities has been accepted for review by the China Securities Regulatory Commission. In terms of performance, CICC previously forecasted a net profit attributable to shareholders of 7.708 billion to 8.227 billion yuan for the first half of 2026, representing year-on-year growth of 78% to 90%. Brokerage stocks performed well overall, with underwriting fees and co-investment opportunities being key attractions.
The market has shifted focus to pharmaceuticals and consumer sectors. As mentioned yesterday, the innovative drug sector is seeing more selective, stock-specific plays rather than broad sector momentum. The focus remains on CXO (Contract Research, Development, and Manufacturing Organization) stocks, which were unexpectedly stirred by news of "lab monkey" prices reportedly soaring to 200,000 yuan each, comparable to a mid-range car.
On the evening of July 14, JOINN Laboratories (06127) forecasted first-half revenue of 6.69 billion to 7.39 billion yuan, a year-on-year increase of 0% to 10.5%. Its adjusted net profit attributable to shareholders was projected to be 561 million to 842 million yuan, skyrocketing by 2,334.2% to 3,551.3%. A key reason is the price increase for the company's lab monkeys. The assessed price per monkey dropped to 70,000-90,000 yuan in 2024, recovered to 100,000-120,000 yuan in Q4 2025, rose to 120,000-150,000 yuan in Q1 2026, and is expected to approach the upper end of that range in Q2. The company holds substantial lab monkey resources, and the key going forward is whether the rising monkey costs can be successfully passed through to project pricing. Its shares surged nearly 24% today.
BD (Business Development) news added fuel to the fire. On July 15, HENLIUS (02696) announced a strategic collaboration alliance with Bora Pharmaceuticals. The potential total value of the collaboration could exceed $2.5 billion if fully implemented. Beyond this deal, HENLIUS recently secured other significant BD agreements with SK Biopharmaceuticals (total value over $2.5 billion), Takeda (up to approximately $600 million), and China Medical System Holdings (up to approximately 1.2 billion RMB). Additionally, last night saw three major BD deals from Dizal Pharmaceutical, InnoCare Pharma, and INNOVENT BIO (01801) landing on the same day, covering cutting-edge fields like ADC, bispecific antibodies, and metabolic diseases, each worth billions of dollars. This is not isolated activity but a systematic wave, directly catalyzing the CXO sector's surge.
Other CXO stocks mentioned yesterday, including Pharmaron, Asymchem, and WuXi AppTec, all gained around 5%. Fund companies are also intensively increasing stakes in innovative drug firms. E Fund and Fullgoal Fund, two top-tier public funds, simultaneously increased their holdings in BioMap, triggering disclosure requirements. BioMap's shares rose over 11% today, with its strong investment thesis having been discussed previously. Kelun-Biotech Biopharmaceuticals, in which China Universal Asset Management increased its stake, rose over 7%. XtalPi, focused on AI-driven drug discovery, gained over 5%. GenFleet Therapeutics announced a proposed placement of 13.6 million new H shares at HK$34.69 each, a discount of about 9.71% to the previous close. The net proceeds of approximately HK$467 million will be used primarily (about 75%) to advance its core product, a RAS inhibitor, and other innovative therapies. Such promising projects nearing revenue generation attract eager capital subscription, and its shares rose over 10% today.
In the consumer direction, leading consumer ETFs saw strong gains. China Universal's large-scale consumer ETF surged over 3%, with turnover quickly exceeding 360 million yuan. Its latest size as of July 14 exceeded 14.7 billion yuan. Kweichow Moutai rose nearly 3%. The Hong Kong Stock Connect Consumer ETF also rose over 1%, with most of its popular constituents gaining: China Tourism Group Duty Free rose over 5%; Midea Group and Haier Smart Home gained over 2%. Eastroc Beverage and China Mengniu Dairy, which advertised on CCTV and Migu, rose over 6% and 2%, respectively. Anjoy Foods, whose performance is expected to reach an inflection point, rose nearly 8%. Ming Ming Is Busy, a rapidly expanding chain, rose over 4%.
Stephen Chow's directorial work "Kung Fu Women's Soccer," released on July 11, 2026, has broken nine Chinese box office records with an opening day of 287 million yuan and over 5.79 million viewers, becoming a phenomenal hit of the summer season. Its total box office has now surpassed 800 million yuan. Latest projections from Dengta AI suggest the film's final box office could exceed 2 billion yuan, while Maoyan Professional predicts 1.865 billion yuan. Using a conservative estimate of 1.8 billion yuan, the leading producer and exclusive distributor, Maoyan Entertainment (01896), is expected to see investment income of nearly 180 million yuan or more, boosting profits by over 30%. Its shares rose over 7% today. Another company, China Ruyi, saw its C-live visual effects team secure a 190 million yuan special effects outsourcing order for the film. Additional long-tail revenue includes box office share from its own cinema chain and streaming rights revenue from its Pumpkin Movie platform, with total expected revenue just over 200 million yuan, boosting total profits by about 12%. Its shares rose over 2%.
Sector Spotlight
According to a Shenwan Hongyuan research report on light industry: High-cost overseas pulp mills continue to be phased out. On July 14, Canfor announced the permanent closure of its Northwood pulp mill in Canada (annual capacity: 300,000 tons of bleached softwood pulp). Arauco announced price increases for its Silver Star pulp and decreases for its Star pulp. Softwood pulp prices have stabilized and begun to recover, while hardwood pulp adjustments align with previous expectations. Supply and demand for containerboard and corrugated paper are improving with cost support: Imports and domestic supply increments are gradually contracting, while export-driven demand is improving beyond expectations. Tight domestic wastepaper supply (due to rainy season and recycling disruptions) provides cost support, leading to continuous paper price hikes even during the off-season. As of July 14, the average prices for containerboard and corrugated paper were 3,869 yuan/ton and 3,258 yuan/ton, respectively, up 310 yuan and 551 yuan from April lows. Paper mill inventories are low. At the end of June, containerboard and corrugated paper mill inventories were 9 days and 6.9 days, down 0.8 days and 0.9 days from the previous month. By end-June, inventory days for Nine Dragons Paper, Lee & Man Paper, and Shanying Paper were 7.8, 5.4, and 4.8 days, respectively. The second half is the traditional peak season, suggesting continued price increases. Key Hong Kong-listed players: Lee & Man Paper Manufacturing Ltd (02314) and Nine Dragons Paper (Holdings) Ltd (02689).
Stock Focus
Midea Group (00300): Extreme European Heatwave Catalyzes Sustained Growth in Overseas AC Orders
Persistent extreme heatwaves in Europe have triggered explosive growth in air conditioner demand across multiple countries. Midea Group has received nearly 200,000 new air conditioner orders for the European market in the past month. Its Wuhu factory fulfilled an urgent order for 30,000 portable air conditioners from a French client, completing the process from order confirmation to first shipment in just 7 days. J.P. Morgan recently increased its stake in Midea's H-shares to 13.94%. The company continues its A-share buyback program, having cumulatively repurchased over 6.1 billion yuan worth of shares.
Analysis: Recent sustained heatwaves impacting Europe, with temperatures exceeding 35°C in Spain, France, and Germany, have led many Europeans to share stories of air conditioner purchasing frenzies on social media. The company's air conditioners are in high demand in Europe, with overseas orders growing continuously. This year, sales of its PortaSplit models have already doubled compared to the whole of last year, with shipments exceeding 200,000 units. In Q1 2026, over 500 million Midea home appliances across all categories had internet connectivity capability, with over 140 million smart home appliances connected globally, serving more than 150 million smart users, and completing AI integration across over 150 product categories. The company has successfully transformed from an appliance maker to a technology group, focusing on AI, robotics, and new energy. Its ToB (business-to-business) segment is experiencing explosive growth, forming a second growth curve with a scale in the hundreds of billions, growing significantly faster than the ToC segment and with higher gross margins. Driven by a dual-engine strategy (ToC + ToB), ToC (67% of business) includes a 35% market share in air conditioners and high-end brands COLMO and Toshiba, with high-end revenue targeted to exceed 200 billion yuan in 2025, accounting for over 15%. ToB (33%, high growth) achieved revenue of 122.8 billion yuan in 2025 (+17.5%); in Q1 2026, Building Technologies revenue was 10.8 billion yuan (+10.1%) and Robotics revenue was 8.2 billion yuan (+11.8%). The company has a global presence with 29 R&D centers and 43 manufacturing bases in over 50 countries. Overseas revenue in 2025 was 195.9 billion yuan (+16%), accounting for 43%. It possesses a full industry chain, with in-house R&D and production of core components like compressors, motors, and controllers, resulting in costs 10%-15% lower than peers and shorter delivery cycles. It operates 6 Lighthouse Factories (ranked first in the home appliance industry), with its Chongqing Building Technologies factory being the world's first fully integrated AI Lighthouse Factory in the central air conditioning industry. In robotics, KUKA and its in-house humanoid robot have orders exceeding 20 billion yuan, with concentrated deliveries in H2 2026. For new energy vehicle components, orders exceed 50 billion yuan, supplied to leading automakers. For AI and premiumization, the target AI home appliance penetration rate is 40% by 2026; COLMO has over 2,000 stores, with high-end revenue targeted to exceed 20%. The company is deepening globalization with its OBM (Own Brand Manufacturing) strategy for overseas expansion, showing high growth in Southeast Asia, North America, and the Middle East. Midea's business covers over 200 countries and regions. Strong growth in overseas and ToB businesses is expected, with ToB growth projected to outpace ToC. Recently, Midea and Alibaba Group initiated their first collaboration to jointly build core capabilities for whole-home smart solutions, focusing on three areas: the home AI brain, interoperability between IoT ecosystems and lifestyle service scenarios, and popular smart hardware. The company offers high dividends and substantial share buybacks, aiming to return 100% of net profit to shareholders (via dividends and buybacks). The expected dividend yield for 2026 is approximately 5%. Continued large-scale share repurchases, robust earnings growth, and proactive shareholder return policies have significantly boosted investor confidence.
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