As long as tensions persist, Hong Kong stocks are unlikely to show strong performance, and fears were exacerbated by recent crises at small U.S. banks, with the Hang Seng Index (HSI) breaking below its six-month support level last week. In a pivotal moment, former President Trump shifted his stance, stating that 100% high tariffs are unsustainable, confirming that both sides will meet in South Korea. Subsequently, trade teams from China and the U.S. held a video call and agreed to convene for a new round of trade talks as soon as possible. This week, discussions will take place in Malaysia to pave the way for a high-level meeting. The market anticipates a strong likelihood of leaders from both sides meeting before October 31. Additionally, a significant conference is set to occur this week, which could boost market confidence through the 14th Five-Year Plan. The Ministry of Finance recently arranged 500 billion yuan from the central government to local authorities from the ceiling of local government debt reserves. There are signs that fiscal stimulus will accelerate as the year-end approaches. Overall, the market shows signs of easing, and last week’s decline is expected to recover.

In terms of hot sectors, technology stocks are receiving considerable attention. According to the Shanghai Stock Exchange, the IPO of Mu Xi Integrated Circuits (Shanghai) Co., Ltd. will enter the listing review committee on October 24. Moreover, reports indicate that Micron Technology plans to halt the supply of server chips to Chinese data centers, with operations still not recovering from the 2023 ban. Domestic replacements are being strengthened, particularly following cyberattacks targeting China's national timing center; Wang Chuang from Zhiyuan Robotics noted that revenue could increase more than tenfold this year, with their humanoid robots surpassing those of Elon Musk. The adjustment in robotics appears to be well underway. There are reports that China and BHP Billiton have reached an agreement to use the renminbi for iron ore spot trading starting next quarter, which could benefit the steel sector.

In this week’s recommended stock: Chow Tai Fook (01929) has shown a narrowing same-store sales decline. From July to September, Chow Tai Fook's retail value increased by 4.1% year-on-year, with mainland China up 3.0% and markets outside of the mainland up 11.4%. Same-store sales in mainland China rose by 7.6% compared to a decline of 3.3% in the second quarter, primarily due to relatively stable gold prices and consumers gradually digesting the high prices. The company has actively optimized its store layouts and product structure to capture consumption trends; same-store sales outside of the mainland grew by 6.2% year-on-year, with sequential acceleration. The proportion of priced gold continues to rise. Analyzed by category, from July to September in mainland China, jewelry embedded products and gold jewelry increased by 7.2% and 10.6% year-on-year, respectively, with jewelry embedded products seeing positive growth for the first time, largely due to a near doubling in jade jewelry sales. The retail value of priced gold climbed 43.7% year-on-year, raising its proportion to 29.9% (up from 24.8% in July to September 2024, and 18.8% in April to June 2025), aligning with the current trend toward premium gold consumption, demonstrating strong capabilities in product development and design. Offline channels continue to contract, while online performance remains robust. In terms of offline stores, Chow Tai Fook closed 300 stores in mainland China from July to September (slightly down from 311 closures in the previous quarter), ending with a total of 5,663 stores. Analysts expect that the number of store closures in the second half of the fiscal year will significantly narrow compared to the first half. Furthermore, the company continues to open new image stores, now totaling eight. Online sales saw a year-on-year increase of 28.1% from July to September, maintaining a strong performance. Other insights from the earnings meeting include: 1) During the National Day period, same-store sales in mainland China are expected to grow over 40%, with priced gold performing significantly; 2) Gold price impact: currently, the cautious sentiment from the recent surge in gold prices is not as pronounced as before, indicating that consumers are gradually adapting, and the company anticipates completing price adjustments for gold products within October; 3) Pricing strategy for gold: maintaining a 20%-25% proportion for the year, with ongoing market uncertainties that will require sustained efforts; 4) Channel strategy: reducing store closures going forward while continuously improving the quality of existing and new stores, with a core focus on enhancing store performance.

Regarding industry observations, September express delivery data indicates improved operating conditions for various delivery companies, with SF Holding, YTO International Express (06123), Yunda, and Shentong seeing increases in average revenue per ticket of 0.06, 0.01, 0.006, and 0.006 yuan, respectively, resulting in sequential growth rates of 4.5%, 5.2%, 2.8%, and 2.9%. Specifically: average revenue per ticket (yuan/ticket): SF Holding 13.87 > YTO 2.21 > Shentong 2.12 > Yunda 2.02; ticket revenue growth (yuan/ticket): SF 6 > Yunda 1 > YTO 0.6 = Shentong 0.6; volume growth (%): SF +31.8% > YTO +13.6% > Shentong +9.5% > Yunda +3.6%. In July, during the peak of price competition, average revenue per ticket was SF 13.55 > YTO 2.08 > Shentong 1.97 > Yunda 1.91; year-on-year decline: Shentong -1.5% > Yunda -3.5% > YTO -7.1% > SF -14%; volume growth: SF 33.7% > YTO +20.8% > Shentong +11.9% > Yunda +7.6%. On July 8, 2025, the Post Bureau held a meeting emphasizing the need for the express delivery industry to "combat over-competition," with clear and targeted directives to shift from a "price war" to orderly and healthy competition. With price increases gradually taking effect across various regions, express delivery companies can expect improvements in their average profit per ticket: August's average ticket revenue has begun to recover, with price hikes expanding nationwide in September, and Guangzhou being the first to implement a second round of increases on October 20, likely optimizing business conditions for the sector and prompting a potential revaluation of the segment. SF Holding (06936): volume remains high, with ticket prices rapidly recovering; YTO (06123): both volume and price growth rates are robust; Yunda: price increase effects are gradually manifesting, possibly exceeding expectations; Jitu (01519): benefits from booming Southeast Asian e-commerce and domestic price increases; Zhongtong (02057): gains from major e-commerce promotions and price adjustments in a gradually expanding pricing landscape (with price increases rolling out nationally since September and a further increase in Guangzhou on October 20).

According to data from the Hong Kong Stock Exchange, as of October, the total number of open contracts for the Hang Seng Futures October contract stood at 125,739, with a net number of open contracts at 49,753. The settlement date for the Hang Seng Futures is set for October 30, 2024. The Hang Seng Index is positioned at 25,247 points, with a dense area of bearish certificates above, indicating potential for a rebound. As China-U.S. trade negotiations continue and the Federal Reserve is expected to lower interest rates, the outlook for the Hang Seng Index this week is optimistic.

In conclusion, overseas Chinese assets such as Hong Kong internet stocks and Chinese concept stocks are unlikely to see significant short-term gains. The static valuations of large assets demonstrate weaker risk resistance amid changes in the international environment and the upcoming third-quarter report disclosures; the sentiment for profit-taking from giants like Alibaba is inevitable in the short term. The core opportunity for tech giants remains in advancing the narrative around technology, suggesting that after a round of adjustment, a resumption of growth would signify a healthier trajectory.