To The Moon

Hong Kong's three major stock indices closed lower in today's session. The Hang Seng Index finished down 1.4% at 24,493.95 points, while the Hang Seng Tech Index dropped 2.24% and the Hang Seng China Enterprises Index fell 1.62%.

Technology stocks were broadly weaker, with shares of Kuaishou, Baidu, Meituan, and Bilibili all declining more than 3%. The commercial space sector was a notable gainer, with Junda shares rising over 7%. In contrast, pork stocks were among the laggards, with Muyuan shares falling more than 2%. Property developers also faced selling pressure, with Sunac China Holdings dropping over 7%. Aluminum stocks weakened, with China Hongqiao Group shares declining more than 7%.

Sector Performance Overview

The commercial aerospace sector was a top performer, led by Junda shares which gained over 7%. This strength follows a major breakthrough in the global commercial space industry, highlighted by rocket and satellite firm SpaceX's successful Nasdaq listing with a fundraising round valuing it at $750 billion. SpaceX's shares surged more than 10% in pre-market trading and have climbed over 40% since its debut, boosting Elon Musk's net worth past $1.3 trillion.

Pork Stocks Under Pressure

Pork stocks were among the day's worst performers, with Muyuan shares down over 2%. Analysis from GF Securities indicates that current hog prices are significantly below the industry's cash cost level, leading to a gradual accumulation of financial pressure across the sector. Furthermore, recent weakness in piglet prices has pushed sales back into a loss-making state. With the industry experiencing deep losses and policy signals in May aimed at positively regulating hog production capacity, there is potential for industry inventory adjustments and a move away from the bottom. Market observers suggest closely monitoring the implementation of subsequent policies. The combination of severe industry losses and policy adjustments is expected to gradually accelerate the reduction of sow capacity, making the elasticity and sustainability of a new industry cycle more promising. According to Yongyi Consulting, the stock of breeding sows in May fell by 0.85% month-on-month, indicating a clear acceleration in the decline. As the hog cycle reaches a bottoming phase and sector valuations are at relatively low levels, the value of bottom-fishing is becoming increasingly apparent, with a focus on leading companies possessing cost advantages.

Property Developers Decline

Mainland property stocks retreated, with Sunac China Holdings dropping over 7%. Data released this morning by the National Bureau of Statistics showed that from January to May, national real estate development investment totaled 3.0356 trillion yuan, a year-on-year decrease of 16.2%. Residential investment accounted for 2.3426 trillion yuan of this, down 15.6%. Over the same period, the sales area of newly built commercial housing was 313.2 million square meters, a decline of 10.8% year-on-year, with residential sales area down 12.1%. Sales value for newly built commercial housing was 2.9366 trillion yuan, falling 13.5%, with residential sales value down 14.1%.

Aluminum Sector Weakens

Aluminum stocks weakened, with China Hongqiao Group shares falling more than 7%. According to a recent Bank of America report, the International Aluminium Institute estimates China's annualized aluminum production for April at approximately 44.7 million tonnes. In contrast, estimates from Shanghai Metals Market place the figure at 46 million tonnes, while official government data reports a much higher 47.6 million tonnes, creating a discrepancy of nearly 3 million tonnes between the different sources. Bank of America Securities uses the 46 million tonne figure as its baseline assumption in its supply-demand model, leading to a forecast of a modest global aluminum market deficit of around 153,000 tonnes for 2026. However, if the official government data proves accurate, the global market would shift into a surplus.