**Market Overview**

During the entire National Day holiday period, Hong Kong stocks followed a familiar pattern: rising for one day, then declining for three days. This script is all too familiar and aligns with the usual trajectory. Today, the Hang Seng Index fell 0.48%.

The external environment has been far from peaceful during this period. The US government experienced a shutdown starting October 1st, with over 100,000 federal employees officially leaving their government positions. Democrats and Republicans remain at an impasse, each blaming the other side. President Trump has threatened that he might prevent some US government employees from receiving their back pay once the government reopens. On October 6th, President Trump declared a "rebellion" in Portland, Oregon, and attempted to deploy the National Guard. The current situation suggests that if the shutdown is short-term, it might be manageable, but if prolonged, negative impacts will become apparent.

Regarding the Russia-Ukraine situation, Kremlin spokesperson Peskov stated that the US potentially supplying "Tomahawk" missiles to Ukraine could become a significant escalation point in the Russia-Ukraine conflict, though it cannot change the frontline situation. Venezuela in South America is also on high alert, and Iran in the Middle East is making defensive preparations. Against this backdrop, capital flowing toward gold as a safe haven is quite natural.

Central bank data shows that China's gold reserves reached 74.06 million ounces at the end of September, an increase of 0.4 million ounces month-over-month, marking the 11th consecutive month of gold accumulation. August-end gold reserves were reported at 74.02 million ounces. COMEX gold futures closed up 0.79%.

As gold approaches $4,000 per ounce, Bridgewater Associates founder Ray Dalio stated at the Greenwich Economic Forum that gold offers better safe-haven functionality than the US dollar and should comprise about 15% of investment portfolios. Chifeng Jilong Gold Mining (06693) surged over 13%, Shandong Gold Mining (01787) rose over 7%, and October gold stock MCC (01618) gained nearly 4%.

On October 8th, spot silver's intraday gains expanded to 1%, trading at $48.32 per ounce. China Silver Group (00815) soared over 13%.

**US Auto Industry Faces Additional Challenges**

The US automotive manufacturing industry faces further difficulties as Novelis Corporation's Oswego, New York plant, which supplies up to 40% of aluminum sheets to the US automotive industry, experienced a fire on September 16th. Due to this incident, the plant's main production areas have been shut down and are expected to remain closed until early next year. Novelis stated it is mobilizing its overseas facilities to supply aluminum to US customers. The company operates rolling mills in Europe, Brazil, and South Korea, but faces the challenge of 50% tariffs on aluminum imports to the US.

US automakers were already facing competitive pressures, and with material supply issues, their future prospects look challenging, with even Tesla struggling to maintain momentum. In the early hours of Wednesday Beijing time, Tesla's official website launched the long-anticipated "simplified version" Model Y. The new Model Y is priced at $39,990, approximately 11% cheaper than the previous base Model Y, with an estimated range of about 321 miles. With reduced configurations only resulting in a $5,000 price reduction, the market clearly isn't optimistic, suggesting Tesla might as well create an entirely new, much cheaper version.

**Chinese Auto Manufacturers Show Competitive Edge**

In comparison, Chinese automakers' advantages are becoming evident. Looking at European export sales: September electric vehicle sales in nine major European countries totaled 313,000 units, up 35% year-over-year and 76% month-over-month, with growth momentum continuing to exceed expectations. Cumulative sales in nine European countries reached 2.06 million units, up 30% year-over-year. This has led to an upward revision of full-year European sales to 3.8-4 million units, representing 30-37% year-over-year growth. Additionally, with intensive new model launches starting in Q4 in Europe, 2026 is expected to maintain 30%+ growth.

XPeng (09868), Geely Automobile (00175), and BYD Company (01211), all with significant European presence, showed positive performance.

**Solid-State Battery Progress**

Solid-state batteries continue making breakthroughs. The Institute of Metal Research at the Chinese Academy of Sciences has proposed new solid-state interface control solutions, developing new materials that achieve interface integration at the molecular scale, reducing interface impedance and increasing composite cathode energy density by 86%. A team from Tsinghua University has developed a new fluoropolyether-based polymer electrolyte with energy density reaching 604Wh/kg, maintaining stable cycling for over 500 cycles at 25°C.

From October production schedules and pricing, the peak season is accelerating. October production is set to increase another 5-10%, achieving 30-50% year-over-year growth despite 2024's high base, with guidance indicating continued high prosperity through November-December. Ganfeng Lithium (01772), Ruipu Energy (00666), and Longpan Technology (02465) all gained over 4%.

**AI Sector Developments**

Despite some bearish reports from Oracle regarding AI, positive developments should be noted. On October 6th, OpenAI announced on its official website a cooperation agreement with AMD, planning to deploy a total of 6 gigawatts (GW) of AMD GPU computing power, scheduled to begin in the second half of 2026.

Additionally, Elon Musk's AI startup xAI is advancing a funding round of up to $20 billion with an innovative structure directly "linked" to chip procurement. Notably, chip giant NVIDIA will not only participate as a major equity investor with potentially up to $2 billion in investment, but the entire funding round structure is deeply tied to xAI's plans to purchase NVIDIA GPUs. This funding is primarily aimed at supporting xAI's "Colossus 2" large data center project in Memphis.

The renewed collaboration between giants in AI investment indicates sustained momentum in this sector. NVIDIA graphics card partner Pal Energy Group (01263) rose over 12%, server housing and cabinet supplier Kerry Logistics Network (01050) has shown significant recent gains, and 800V DC power supplier Innoscience (02577) also performed well. Among chip stocks, SMIC (00981) and Hua Hong Semiconductor (01347) continue to warrant attention.

**Nuclear Fusion Developments**

Nuclear fusion developments have provided significant stimulus. In early October 2025, the Compact Fusion Energy Experimental Device (BEST) project in Hefei, Anhui achieved a key breakthrough with the successful installation of the main unit's core component dewar base, marking the project's entry into a new phase. Germany announced cumulative investment of 2 billion euros by 2029 to build the world's first nuclear fusion power plant.

An important conference is approaching: The International Atomic Energy Fusion Energy Conference (FEC2025) will be held in Chengdu from October 13-18, 2025, with market expectations of major progress announcements. Nuclear fuel supplier China General Nuclear Mining (01164) rose nearly 8%, and core material supplier Tiangong International Company (00826) gained over 3%.

**Sector Focus**

On October 8th, InnoCare Pharma (09969) announced that its wholly-owned subsidiary Inno Care Pharma Inc. signed a licensing agreement with Zenas Bio Pharma, Inc., granting Zenas paid licensing rights to develop, produce, commercialize, or otherwise utilize its proprietary product orelabrutinib and two preclinical assets.

The transaction includes a $100 million upfront payment and 7 million common shares, plus potential R&D and registration milestone payments totaling over $2 billion. Additionally, the company is entitled to tiered royalty payments of up to high teens percentage based on annual net sales of licensed products. The agreement takes effect from signing and continues until the end of sales licensing periods for licensed products.

This agreement directly benefits InnoCare Pharma (09969)'s global development and commercialization of orelabrutinib and other pipeline products. Other stocks with potential milestone payments are expected to be stimulated, including ABBISKO-B (02256), HBM Holdings-B (02142), Sino Biopharm (01177), and CSPC Pharma (01093).

**Individual Stock Analysis**

**MCC (01618): Overseas Business Continues Growth, Resource Value Faces Revaluation**

The company's new contract signings from January to August 2025 totaled RMB 679.57 billion, down 18.2% year-over-year, with new overseas contracts of RMB 64.22 billion, up 8.9% year-over-year.

Analysis: Copper demand continues growing annually, while supply-side challenges include declining ore grades in producing mines, insufficient exploitable resources, and obvious cost increase trends, leading to expanding supply-demand gaps. Overseas business maintains growth with overseas contract amounts up 8.9%-38% year-over-year, reaching RMB 57.75 billion in new signings.

The company currently operates three overseas mines producing nickel, cobalt, copper, lead, zinc, and gold metals. In the interest rate cutting cycle, valuations are expected to improve. These contributed RMB 550 million in net profit in H1 2025, accounting for 17.7%. The Aynak and Saindak copper mine projects are progressing actively.

Aynak copper mine has proven reserves of 12.36 million tons with an average grade of 1.56%, making it a rare undeveloped world-class high-grade copper mine. Project preliminary work has restarted, with 8.9 kilometers of mine access road completed. The supporting Baghdara hydroelectric station has signed cooperation agreements and entered construction phase, progressing actively under Chinese-Afghan cooperation.

Saindak copper mine reserves have grown to 3.78 million tons through multiple exploration rounds, located about 100 kilometers from the producing Sandak copper-gold mine. The project company has moved in, Pakistani approvals are essentially complete, and pre-construction work progresses smoothly. Based on producing Sandak copper-gold mine data, the two major copper mines could generate expected annual net profit of RMB 4.1 billion after production begins.

Additionally, the company's new materials business subsidiary Zhongxin High-tech primarily develops and produces electronic-grade polysilicon and various silicon-based materials, mainly used in integrated circuits and optical communications industries, with multiple products filling domestic gaps. The completed Phase I of Mengjin new plant is expected to achieve sales revenue of RMB 500 million and profits exceeding RMB 100 million after reaching production capacity, with Phase II expected to exceed RMB 2 billion in revenue. In H1 2025, Zhongxin High-tech achieved revenue of RMB 150 million, up 71.4% year-over-year.

In summary, copper metal prices are expected to enter an upward cycle driven by long-term supply-demand gaps and short-term Fed rate cut expectations, leading to revaluation of the company's multiple overseas producing mines. The company's Afghan Aynak copper mine preliminary work restart is progressing actively, with supporting hydroelectric stations entering construction phase. The acquired Pakistani Saindak copper mine project has increased reserves through exploration and is actively advancing preliminary work, with both copper mines expected to generate substantial net profits. Additionally, the company maintains industry-leading advantages in silicon-based semiconductor new materials, offering long-term investment value.