Yesterday the market was watching the US midterm elections. Although some outcomes were anticipated, Trump's intraday remarks directly triggered a sharp rebound, with ChiNext surging over 4%, the Shanghai Composite up more than 2%, and Hong Kong stocks gaining 1.67%.
At 1 a.m. on November 4, the in-person voting for the US midterms basically concluded, and states will continue to count and release results. According to media projections, Democrats will secure 52 of the 100 Senate seats, retake control of the Senate, and are expected to retake the House as well, regaining control of Congress. The final results will take time to emerge, but the outcome is decided, and Republicans have no path back. The result was not surprising: various polls showed that the issues voters care most about, such as the cost of living, government corruption, inflation, and the Iran conflict, all worked against the incumbent administration. In particular, the strikes on Iran drove oil prices higher, lifted inflation, and fueled growing public discontent. Add to that Trump's preference for loyalists over competence, with candidates in some states lacking ability, and money could not fix everything, as Musk spent more than $400 million to no avail, leaving Democrats to simply pick up the pieces. As a saying goes: a fortress often falls from within. According to the market's common script, a Democratic sweep of both chambers is negative for equities, because investors fear Trump will stir trouble, and the damaging impact of the Capitol Hill riot after his previous election loss is still vivid. There is also concern about a hit to AI-related areas. These were the worries, so the morning session was indecisive. But at midday, Trump's remarks were widely reported: "I congratulate the Democrats and look forward to working with you for the good of our country." At the same time, Trump said that if Democrats make progress in this election and win control of Congress, he may use the presidential veto to force them into a bipartisan agreement. In addition, White House officials insisted that Trump will not interfere in the election by declaring martial law or encouraging officials not to certify results. That directly removed two concerns: he will not stir trouble, but he will veto Democratic proposals. Although Congress can override a veto, it is extremely difficult, requiring a two-thirds vote. Turning to another topic, after losing Congress, the market may worry that Trump will adopt more extreme foreign policies to restore his authority, and that possibility exists, such as stepping up strikes on Iran on a larger scale. But there is a precondition: even if Republicans lose both chambers, the margin must not be too lopsided. Trump likely already sees that the defeat will be too severe, and pushing radical moves could trigger internal defections, such as impeachment. The new House Speaker said: "America is back. The American people have made clear they have had enough of extremism and enough of corruption." He unveiled two main lines of the House's 100-day agenda: lowering the cost of living, and launching oversight investigations into the Trump administration to hold those responsible accountable. Although impeachment has not yet been mentioned, the possibility is high. If Trump goes too far, it could be triggered, with severe consequences: being impeached and removed during his term would not simply mean leaving office, but would likely lead to later reckoning. Look at his latest stance on Israel: halting $4 billion in military aid to Israel. That signal indicates a certain cooling. In sum, this midterm election will bring major changes in many aspects of the United States, especially imposing many constraints on Trump, making it likely difficult to push various radical measures. For the market, that is a major positive. At the same time, we must clearly see that there are many areas of bipartisan consensus that will not change, and the risk of great-power rivalry has not diminished because of this; only the forms and methods may be slightly adjusted. The Russia-Ukraine conflict is even less likely to end, because that conflict was initiated by Democrat Biden, and US-Europe relations will become closer, with aid to Ukraine increasing. There are also variables on Iran, because Israel's Netanyahu faces huge obstacles in forming a cabinet and may need to provoke war to continue as caretaker prime minister. If things escalate, will the US intervene? Many in both parties are pro-Israel. In any case, many uncertainties have been removed, the market sees the opportunity, and big money is actively entering, with the sudden afternoon rally serving as a signal. Meanwhile, Hong Kong IPOs are also slowing. According to statistics, as of November 3, at least 78 companies have postponed, withdrawn, or abandoned listing plans this year, with about a quarter of prospective issuers failing to complete deals. This withdrawal rate is the highest since the 2008 financial crisis, when it reached 40%, while over the past decade an average of only about three companies withdrew listings each year. The strongest rebound was in technology names, especially those focused on domestic demand, such as Ingenic Semiconductor Co.,Ltd. (300223) and INGENIC (03223), Hua Hong Grace Semiconductor Limited (688347) and HUA HONG GRACE (01347), BIREN TECH (06082), ILUVATAR COREX (09903), and KB LAMINATES (01888), all up more than 11%. Others dependent on North American supply chains also rose, but mainly on sentiment, since US data center construction for AI faces significant uncertainty. In pharma, there are new expectations: Republicans want to expand restrictions from "research projects receiving federal funding" to purely commercial drugmakers' own-funded orders, fully banning US drugmakers from cooperating with domestic CXOs. Many moderates within the Democratic Party oppose this aggressive expansion, agreeing only to constrain federally funded projects and not wanting the commercial new-drug R&D supply chain to be directly cut off, to avoid raising US new-drug R&D costs and drug prices. JOINN (06127), WATTS INT'L (02258), and Zhitong's November pick PHARMARON (03759), as well as WUXI APPTEC (02359), all rose more than 12%. Gold names also rebounded strongly after earlier steep declines, aided by falling US Treasury yields and the World Gold Council's November 3 third-quarter Global Gold Demand Trends report, which showed global central banks and other official institutions net bought 321 tonnes of gold, up 42% year on year, the highest quarterly level since the fourth quarter of 2024; in the first three quarters of this year, cumulative purchases reached 675 tonnes, up 6% year on year. China's central bank had increased gold holdings for 23 consecutive months through September. CHIFENG GOLD (06693) and LINGBAO GOLD (03330) rose more than 17%. Democrats winning congressional control in the midterms is expected to dispel market worries about early cuts or termination of new-energy tax credits, boosting new-energy demand. Previously the market feared Republicans would cut or repeal IRA clean-energy tax credits. After a big Democratic win, tax incentives for solar, storage, wind, and SOFC under the IRA framework are expected to remain intact, medium- and long-term capex expectations for green-power operators will be solidified, and US new-energy installation forecasts are likely to be revised upward. Specifically, in solar, subsidy expectations are stable and demand has room for upward revision. Greater policy stability for the ITC investment credit and 48C domestic manufacturing subsidy will help large utility-scale plants and commercial and industrial distributed projects advance long-cycle financing and PPA signings. Related names include FLAT GLASS (06865), XINYI SOLAR (00968), and GCL TECH (03800); others include US utility-scale storage demand and compliant supply-chain opportunities, with names such as CATL (03750) and upstream GANFENGLITHIUM (01772). A Democratic midterm win may improve medium- and long-term North American wind construction expectations, tightening the overall overseas wind supply-demand balance and improving the competitive landscape, creating more room for Chinese companies to expand abroad, such as GOLDWIND (02208) and Goldwind Science&Technology Co.,Ltd. (002202).
Sector focus
Hong Kong Exchange announced it will launch 12 new stock futures contracts on January 18, 2027, with SFC levies waived for the first six months. HKEX said the new stock futures will complement some of its most actively traded single-stock options and enrich the range of derivatives linked to these stocks. The underlying assets of the 12 new contracts include MINIMAX-W (00100), LENOVO GROUP (00992) and Lenovo Group Ltd. (LNVGY), HUA HONG GRACE (01347), CHINAHONGQIAO (01378), INNOVENT BIO (01801), ZIJIN GOLD INTL (02259), WUXI APPTEC (02359), Z.AI (02513), ZJ INNOLIGHT (03308) and Zhongji Innolight Co.,Ltd. (300308), CATL (03750) and Contemporary Amperex Technology Co., Limited (300750), YOFC (06869) and Yangtze Optical Fibre And Cable Joint Stock Limited Company (601869), and POP MART (09992) and Pop Mart International Group Limited (PMRTY). Although launching single-stock futures does not necessarily drive gains, the included names are highly representative and liquid, and institutional attention will be stronger, so investors may want to focus on them.
Stock spotlight
GANFENGLITHIUM (01772) and Ganfeng Lithium Group Co.,Ltd. (002460): energy-storage cells are sold out at full production, and overseas lithium mine capacity is being released. In the first three quarters of 2026, Ganfeng Lithium's revenue was RMB 36.159 billion, up 147.24% year on year; net profit attributable to shareholders was RMB 5.012 billion, up 19,540.5% year on year; non-GAAP net profit was RMB 4.636 billion, up 592.14% year on year. BlackRock recently raised its H-share stake from 6.67% to 8.62%. Comment: Ganfeng Lithium's first-three-quarter performance was strong, with net operating cash flow of RMB 2.295 billion, improving significantly year on year, as lithium salt prices recovered and energy-storage cell shipments surged. The company's global multi-resource layout diversifies cyclical risk: Argentina salt lakes, Mali spodumene, Australia, and domestic lepidolite across multiple points, with diverse resource types, gradually raising self-sufficiency to more than 45 million tonnes LCE, among the world's top. Full-year 2026 LCE output: 230,000-250,000 tonnes (+30% or more). Overseas lithium mine capacity release: 1) Argentina Cauchari-Olaroz (CO salt lake, 51% stake), 24.58 million tonnes LCE, the world's second-largest salt lake. Phase 1 capacity 40,000 tonnes/year lithium carbonate; Phase 2 passed environmental review in 2026, construction to start in 2027. 2) Argentina Mariana salt lake (100% owned), 8.12 million tonnes LCE, Phase 1 capacity 20,000 tonnes/year lithium chloride, production started in February 2025, ramping in 2026, contributing 10,000+ tonnes. 3) Mali Goulamina spodumene mine (wholly owned), 7.14 million tonnes LCE, lithium oxide grade 1.37%, Phase 1 capacity 506,000 tonnes/year lithium concentrate. Capacity and shipments are growing rapidly. Lithium salt capacity: lithium carbonate/lithium hydroxide 200,000+ tonnes, planned 250,000+ tonnes in 2026; Phase 2 to start at end-2026, production in 2027. 4) PPGS salt lake: construction to start in the second half of 2026, production in 2028. Lithium metal: the world's largest, with capacity continuing to expand. Customers include CATL, BYD, LG, Tesla, and other global leaders. With a diversified resource layout, the company has made progress in multiple areas, including lithium batteries for electric ships, the Congo-Bouma potash project's one-time construction of 2 million tonnes of potassium chloride capacity (expected to start production in 2027), adsorption lithium extraction technology with total recovery above 90%, and a lithium sulfide production line gradually releasing capacity. The energy-storage business ramp is the core incremental driver, with energy-storage cells sold out at full production. The company has added 35-40GWh of energy-storage capacity (the 588Ah line ramping in Q3), with full-year shipments of 50GWh+, becoming the largest profit source, gaining global share and contributing RMB 3-4 billion in net profit, with storage orders booked through mid-2027, 2026 capacity fully contracted, volume increasing at year-end, and 648Ah continuing to advance. Solid-state batteries are being mass-produced at scale (10GWh level), with energy density of 450-500Wh/kg, entering high-end autos plus consumer electronics, opening a trillion-level space. Order scheduling: full-year 2026 plus the first half of 2027 are fully booked, with new capacity locked in early. In addition, the company's high-safety, low-temperature-resistant solid-state lithium batteries have been sent in batches to internationally renowned mobile phone companies for sample validation. Institutions expect lithium prices to remain strong in the second half of 2026, maintaining a target price forecast of RMB 250,000/tonne, implying about 50% upside from the current lithium carbonate price. The company's first-half results grew strongly, and institutions are bullish on a seasonal rebound in lithium prices. The company's energy-storage orders are full, with overseas storage and domestic utility-scale storage demand driving cell shipments continuously higher.
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