The 4,200-point level for the Shanghai Composite Index appears to be a hurdle, with the index reaching a high of 4,199 points today before halting and declining, ultimately falling over 2%. Hong Kong stocks were also affected, closing down 1.03%. Southbound capital recorded a net sell-off of approximately HK$6.105 billion today. Today's decline cannot be attributed to Trump. On the 20th, he stated he was willing to wait a few more days for Iran's response if a deal could be reached. Regarding market concerns about the USS Nimitz entering the Caribbean threatening Cuba, Trump said the situation "will not escalate, and I don't think it's necessary." Consequently, international crude oil futures settled sharply lower, down over 5.5% on Wednesday, lifting airline stocks. AIR CHINA (00753) and CATHAY PAC AIR (00293) both rose over 3%. In Europe, reports indicate the European Commission is accelerating the development of a new trade tool to address China's "overcapacity." Chinese Ministry of Commerce spokesperson He Yadong responded, questioning whether EU exports of cars, pharmaceuticals, wine, and cosmetics are also "overcapacity" if trade surplus is the criterion. The market is concerned about potential countermeasures.
Today's decline was primarily in the tech sector. Late on the 20th, Samsung Electronics' labor-management negotiations, which resumed that afternoon, concluded with a tentative agreement signed. South Korean stocks surged, triggering a circuit breaker, and continued rising afterwards. Yesterday's rally was driven by strike concerns; with easing tensions, a decline is natural. The core issue is the excessive overheating in the tech sector, requiring a cooldown. Looking at capital flows, leveraged funds aggressively added semiconductor stocks. As of May 20th, total market margin financing balance reached RMB 2.88 trillion, an increase of RMB 6.532 billion from the previous day, marking the third consecutive day of growth. By industry, the semiconductor sector was most concentrated, with 22 stocks seeing net purchases exceeding RMB 100 million. Overcrowding makes adjustment normal. For example, CIG (06166) fell over 8%. Another factor affecting sentiment was the stock price of WELLCELL H-NEW (02477) plummeting over 83%. Post-split, it seems to facilitate selling.
NVIDIA's latest earnings report showed quarterly core metrics mostly exceeding Wall Street expectations. Revenue growth accelerated to 85% year-over-year from 73.2% last quarter, also surpassing the 62% growth from the November quarter. Adjusted EPS also beat expectations. However, the stock rose only 1.3%, indicating the market remains demanding: whether Vera Rubin can achieve mass production as scheduled in Q3, whether its ramp-up slope surpasses Blackwell, whether CPU revenue can realize nearly $20 billion visibility this year, and the threat from custom chips (ASICs) to NVIDIA. Low tolerance itself signals a cooling trend.
Nevertheless, HANS CNC (03200), mentioned in yesterday's stock picks, defied the trend, rising nearly 9%. Today's hotspot is intelligent driving. Tesla officially announced on May 21st the latest deployment plan for its supervised Full Self-Driving (FSD) capability, noting it can be used in China. The FSD V14.3 version that ignited the market was first launched in North America in April. This move is expected to accelerate technological iteration in China's intelligent driving supply chain and further expand terminal application scenarios and market demand. Related Tesla concepts were directly catalyzed. For sensors/in-vehicle electronics (perception layer): SUNNY OPTICAL (02382), a leader in automotive cameras and a core supplier for Tesla's pure vision FSD solution, rose over 9%. Nexteer Automotive (01316): a global steering/suspension giant and Tesla supplier. Zhejiang Shibao (01057) rose over 10%.
It also significantly stimulated Robotaxi. WeRide (00800): Q1 revenue reached $16.5 million, up 58% year-over-year. Product revenue surged 116%, benefiting from expanded sales of L4 autonomous vehicles like Robotaxi. The launch of pure unmanned Robotaxi commercial operations in Dubai and Abu Dhabi, the launch of public Robotaxi operations in Singapore, and Slovakia becoming its fourth European market were positive factors, with the stock rising over 7% today. XPENG (09868), a top-tier domestic intelligent driving player in direct competition with FSD, welcomed the benchmark, emphasizing localized intelligent driving advantages. XPENG's fundamental rationale for adhering to the pure vision route is that its second-generation VLA technology solution has been fully validated on actual roads. On May 20th, XPENG's first full-size new tech flagship SUV, the XPENG G9, officially launched. The limited-time offer price starts from RMB 269,800, with the main sales price range being RMB 279,800 to 359,800, over RMB 100,000 lower than the previously announced pre-sale price. Core competitors in this price segment include: AITO M7, AITO M8, Lynk & Co 09, NIO ES8 (battery rental), Leda L90, IM LS8, IM LS9, Li Auto L8, Li Auto i8, Denza N8L, essentially covering mainstream family users' core options for large six-seater models. With hardware specifications of a RMB 500,000-level vehicle, the XPENG G9 enters the core RMB 300,000 battlefield, directly raising the competitive threshold for the new generation of flagship SUVs. Q1 earnings will be disclosed on May 28th. The stock rose over 4% today.
On May 21st, Tesla Vice President Tao Lin posted that at the Fremont factory in California, Elon Musk and owners of Model S/X Signature Edition witnessed the final rollout of these models from this production line, which will soon be converted into a production line for Tesla's humanoid robot. Almost synchronously with Tesla's production line switch, another humanoid robot leader, Figure AI, showcased the continuous operational capability of its humanoid robot in real industrial scenarios through a "marathon" live stream. The Elon Musk robot industry chain collectively strengthened. Sanhua Intelligent Control (02050): supplies rotary joint assemblies and linear actuators, rose over 3%. Zhaowei Machinery & Electronics (02692): supplies dexterous hand drive modules, rose nearly 5%. Estun Automation (02715): supplies servo motors, drivers, joint motion control, and some industrial robot bodies, surged over 10%. UBTECH Robotics (09880) rose over 2%.
An announcement last night stated that BOE signed a memorandum of cooperation with Corning. The two will collaborate in key areas including glass-based packaging substrates, foldable glass, perovskite glass substrates, and optical interconnect applications. MicroLED is expanding from the display field into optical communication, breaking the limitations of traditional laser solutions and copper connections, and has entered the industrial implementation stage. BOE Varitronix (00710), BOE's automotive display and high-end panel platform, directly benefits from technological synergy between its parent company and Corning. Foldable screen UTG and automotive glass substrates can be prioritized for cooperative solutions. The stock rose 3% today.
Joinn Laboratories (06127) recently held its Q1 2026 earnings briefing. The company secured new orders worth approximately RMB 910 million, a significant year-over-year increase of 111.6%. As of the end of Q1, the company had ample order backlog, reaching RMB 3.1 billion, up 40.9% year-over-year. Capacity utilization remained high. The stock rose over 5%.
Hong Kong China Travel (00308) announced on May 20th its plan to spin off its Hong Kong and Macau cultural tourism business via a distribution in specie and list it independently on the Main Board of the Stock Exchange by way of introduction. The Stock Exchange has confirmed the company may proceed with the proposed spin-off. On May 20th, the Hong Kong and Macau cultural tourism entity submitted its listing application. The stock rose 5.76%.
Sector Focus: On May 21st, US quantum computing concept stocks surged collectively in pre-market trading, with IBM up over 8%, and RGTI, QBTS, QUBT up over 10%. Reports indicate the US will allocate $2 billion to nine quantum computing companies, with the government receiving equity. IBM will receive $1 billion under this agreement, while GlobalFoundries will receive $375 million to advance the emerging quantum computing industry. Mainstream Hong Kong-listed players include Guofu Quantum (00290) and others like Huake Intelligent (01140).
Stock Pick: Sanhua Intelligent Control (02050): Robot Mass Production Drives Core Orders; Strong Order Backlog The company's Q1 2026 report showed operating revenue of RMB 7.774 billion, up 1.36% year-over-year; net profit attributable to shareholders of RMB 928 million, up 2.68%; and non-GAAP net profit of RMB 986 million, up 15.52%.
Commentary: Sanhua Intelligent Control's Q1 non-GAAP net profit surged 15.52%, a standout performance. The company benefits from the resonance of its three growth drivers: automotive, liquid cooling, and robotics. It is the global leader in air conditioning valves, a top player in new energy vehicle thermal management valves, and holds over 55% global market share in household appliance electronic expansion valves and four-way reversing valves. It has 100% coverage of the global top 5 home appliance makers: Gree, Midea, Haier, Daikin, Panasonic, with partnerships generally over 25 years. The home appliance segment enjoys stable annual bulk orders and steady cash flow. For new energy vehicles: it holds over 53% market share in automotive electronic expansion valves and over 65% in heat pump integrated modules. Automotive thermal management is a high-growth engine. Increasing new energy vehicle penetration and the adoption of 800V high-voltage platforms are raising per-vehicle value from RMB 3,000 to over RMB 5,000. Automotive business revenue is projected to exceed RMB 140 billion in 2025, with growth over 25%. CO2 transcritical heat pump: stable heating at -30°C. The company secured a contract for the Tesla Cybertruck. It continues to receive large orders for thermal management across multiple Tesla platforms. The ramp-up of 800V high-voltage platform models is ongoing, with Sanhua's 800V high-voltage heat pump technology leading peers by 2-3 years. AI liquid cooling and energy storage thermal control represent the fastest growth segments. The company is the exclusive/core supplier for NVIDIA's data center liquid cooling. Revenue from liquid cooling and energy storage is projected at RMB 2 billion in 2025 (up 100% year-over-year); targeting 50% to 100% growth in 2026, with orders continuously ramping up. AI server liquid cooling demand is exploding from major cloud providers like Microsoft and Alibaba Cloud. Leading cloud vendors are placing batch orders, ensuring strong growth certainty for 2026. For humanoid robot actuators, it is a core supplier for Tesla Optimus (50%-70% share). Tesla's robot mass production drives core orders. Tesla previously officially announced the start of mass production for its Optimus humanoid robot in Q2. As a core supplier for its rotary actuators, covering 14 rotary joints with a per-unit value of RMB 28,000, Sanhua has already secured orders exceeding RMB 2.2 billion. Its Mexican factory has a monthly capacity of 30,000 units. Other leading robots are undergoing sample testing, with potential for batch implementation later. The company is increasing its global market share, releasing overseas capacity, replacing Japanese and Korean manufacturers, and continuing to gain market share. With a strong order backlog, performance for 2026-2027 is largely secured, ensuring high growth certainty.
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