To The Moon

Hong Kong's three major stock indices moved in divergent directions on August 27th. By the midday break, the Hang Seng Index had fallen 0.42% to 25,544.93 points, while the Hang Seng Tech Index rose 0.19%. The Hang Seng China Enterprises Index also declined, dropping 0.61%.

On the market, internet and tech stocks showed mixed performance, with Baidu surging more than 6% while Xiaomi dropped over 2%. Chip stocks strengthened significantly, led by Montage Technology which climbed more than 10%. AI application stocks were also active, with Zhipu gaining over 8%. Meanwhile, mainland Chinese banking stocks came under pressure, as Agricultural Bank of China fell by more than 2%.

The rally in chip stocks was fueled by NVIDIA's strong guidance, which boosted the AI computing chain. NVIDIA reported second-quarter revenue of $96.2 billion for its fiscal year 2027, marking a 106% year-over-year increase and an 18% sequential rise. The company guided third-quarter revenue to a midpoint of $108 billion, up nearly 90% year-over-year. More notably, it provided an unprecedented early forecast for fiscal year 2028, projecting revenue growth of approximately 70%, significantly above market expectations of 45%. CFO Colette Kress emphasized that supply constraints would remain a bottleneck for growth at least through fiscal 2028, highlighting "three-year visibility" for the high-demand AI computing sector.

AI application stocks were buoyant, with Zhipu advancing more than 8%. On August 26, Zhipu announced the launch and open-sourcing of GLM-5.3-Flash (320B-A18B), its first native multimodal model in the GLM-5 series. The model is priced at one-tenth of GLM-5.3, with a limited-time discount bringing it to one-twentieth of GLM-5.3's price and just one-fortieth of Opus 4.8's cost. Previously, GLM-5.3-Flash was tested anonymously as model "Ox-Alpha" (referred to as "Niu Lai" in Chinese tech communities) on OpenCode and OpenRouter, setting new records for call volume on both platforms. All of this traffic was powered by domestically produced chips.

Mainland Chinese bank stocks declined, with Agricultural Bank of China falling over 2%. After hitting record highs in late July, these banking stocks are now experiencing a trend of "profit-taking" during the earnings season, which continues to weigh on share prices. Despite Agricultural Bank of China posting a 4.52% increase in first-quarter net profit, the stock has struggled to resist selling pressure amid the broader market correction. Market expectations of a prolonged low-interest-rate environment are likely to further compress the net interest margins that banks rely on for profitability. Additionally, banks' recent introduction of low-cost, long-term large-denomination deposit products has intensified concerns about their earnings outlook.