Market Overview: Despite the ever-changing landscape, confidence in the resilience of the Chinese economy remains paramount. Today, A-shares demonstrated a V-shaped rebound, while the Hang Seng Index ended the day up 0.72%. Reports indicate that on Wednesday (22nd), Denmark, holding the rotating presidency of the EU, announced that EU member states have approved a 19th round of sanctions against Russia, which includes a ban on the import of Russian liquefied natural gas. The sanctions also impose new travel restrictions on Russian diplomats and include 117 vessels from Russia's "shadow fleet" on the list. However, this may not have much effect as the demand gap persists; various channels will lead Europe to foot the bill. India, even at the risk of U.S. tariffs, continues to purchase Russian oil for resale to Europe, and Turkey is doing likewise. Furthermore, listing 117 vessels from Russia's "shadow fleet" benefits state-owned China COSCO Shipping Energy (中遠海能, 01138). Former President Trump announced new large-scale sanctions against two of Russia's largest oil companies, which have instead led to rising oil prices, with the WTI crude oil front-month contract up 2.20% and Brent crude oil up by 2.07%.

In Sichuan Basin, a significant shale oil reserve was discovered, with China Petroleum & Chemical Corporation (中國石油化工, 00386) reporting a successful well that produced nearly 39 cubic meters of oil and 10,000 cubic meters of gas daily, directly enhancing its shale oil resource reserve. China National Offshore Oil Corporation (中國海洋石油, 00883) saw gains of over 2%, while PetroChina (中國石油股份, 00857) and Sinopec (中國石油化工, 00386) both maintained steady upward trends. Additionally, the sanctions appear ineffective in resolving the Russia-Ukraine conflict, questioning the efficacy of coercive methods to reach a truce, which seems almost ludicrous at this point after so many years; it still reflects a jungle law mentality. Given this context, resource prices are likely to remain strong. As previously mentioned, China Aluminum (中國鋁業, 02600) rose over 3%, with China Hongqiao (中國宏橋, 01378) and Luoyang Molybdenum (洛陽鉬業, 03993) also having gains exceeding 3%. Lithium, a critical resource, is seeing interesting developments, with the Passenger Car Association reporting a significant price drop for new energy vehicles in September, now averaging 158,000 yuan for the first time below 160,000 yuan in six years. The decline is primarily due to battery costs dropping about 15% compared to 2022, coupled with economies of scale from automakers.

According to CCTV News, Chinese scientists recently overcame a major hurdle in all-solid-state lithium batteries, significantly enhancing performance. Previously, a 100-kilogram battery supported a maximum range of 500 kilometers, but it now holds promise for exceeding 1000 kilometers. Supporting fundamentals showed that on October 23rd, lithium carbonate futures rose over 3%, currently priced at 79,400 yuan per ton. According to SMM, with new production lines coming online in both spodumene and salars, lithium carbonate's total output is expected to maintain growth potential in October. Ganfeng Lithium (贛鋒鋰業, 01772) surged 8%, while Tianqi Lithium (天齊鋰業, 002466) plans to invest 250 million yuan in establishing a partnership for investment in new materials, new energy, and industry chain cooperation, also seeing a rise of over 4%.

Recently, the thermal coal market has exhibited robust performance with notable price increases. Since October, influenced by a subtropical high, the "autumn tiger" continues to exert influence, leading southern regions to experience higher-than-usual temperatures, especially in Jiangnan. This starkly contrasts with the rapid temperature drops in the north, resulting in multiple locations recording new lows for the latter half of the year. This "southern heat, northern cold" climate shift significantly boosts coal demand for power generation, serving as a catalyst for the recent spike in coal prices. Kinetic Development (力量發展, 01277) and China Coal (中煤能源, 01898) both rose over 2%.

In Shenzhen, a notice was released outlining the "Action Plan for Promoting High-Quality Development of Mergers and Acquisitions (2025-2027)", aiming to exceed a total market value of 20 trillion yuan for listed companies by 2027. The goal includes nurturing 20 companies with a market value of over 100 billion yuan, with more than 200 completed merger projects totaling over 100 billion yuan, and establishing numerous industry demonstration projects. As a pioneer of reform, Shenzhen's state-owned enterprise reform has lagged behind Hubei and Anhui, necessitating intensified efforts. Shenzhen Investment (深圳控股, 00604) initially soared over 22%, closing with a gain of 4.65%.

During the Mid-Autumn Festival and National Day holiday of 2025 (8 days), Macau welcomed 1.28 million visitors, a year-on-year increase of 19%, with daily gaming gross revenue peaking at over 520 million patacas, reaching a new high for 2023. The market anticipates further growth in visitor numbers during the 2026 Spring Festival holiday, pushing evaluations of gaming stocks to heat up. The revised "Overall Plan for the Construction of the Hengqin Guangdong-Macao Deep Cooperation Zone" was published in October 2025, clarifying that "Macau gaming enterprises can establish non-gaming entertainment complexes in Hengqin.」 Sands China Ltd. (金沙中國有限公司, 01928) reported a 7.5% increase in net revenue for Q3 2025, totaling $1.9 billion, up from the $2.68 billion reported in Q3 2024. The company’s stocks rose over 4%, while MGM China (美高梅, 02282) surged over 3%.

Today’s market reversal in the late trading session is linked to the restart of US-China talks. Both sides agreed that He Lifeng, a member of the Central Political Bureau and Vice Premier of the State Council, will lead a delegation to Malaysia from October 24 to 27 for economic and trade consultations with the US. Also, the Fourth Plenary Session of the 20th Central Committee of the Communist Party of China took place from October 20 to 23, 2025, approving the "14th Five-Year Plan" proposal. Though the specific details of the "14th Five-Year Plan" have not yet been released, the market's immediate response to the public notification reflects a push for the concept of "lucid waters and lush mountains are invaluable assets," aiming for carbon peak and neutrality, promoting carbon reduction, pollution control, greening, and economic growth while solidifying ecological safety.

Key focus areas include water resource protection, which underlines the logic of rising water prices due to over 30% aging of pipelines in many regions. Enhanced sewage treatment (for instance, first-class A standards) and reforms such as water resource tax adjustments in areas like Fujian and Shaanxi have escalated operational costs. Several regions issued new water pricing management regulations: for example, Sichuan province will implement new guidelines starting October 1, 2025, and in Hetian, Xinjiang, the basic water price for rural residents will drop from 2.3 yuan to 1.83 yuan per cubic meter effective November 1, 2025. Related stocks in environmental equipment, such as Tianjin Chuangye Environmental Protection (天津創業環保, 01065), surged over 24%, Tibet Water (西藏水資源, 01115) gained over 10%, and Dongjiang Environmental Protection (東江環保, 00795) and Dazhong Gongyong (大眾公用, 01635) rose over 7%. In green energy, particularly in the photovoltaic sector, GCL Technology (協鑫科技, 03800) saw increases of over 2%.

Of course, domestic demand development is also of vital importance, with Li Ning (李寧, 02331) and Tabo (滔博, 06110) both rising around 6%, while Xiao Cai Yuan (小菜園, 00999) increased over 4% as mentioned yesterday.

Sector Focus: On October 22nd, Google announced a breakthrough in quantum algorithms in the journal Nature, claiming to have achieved verifiable quantum advantage with its Willow chip. The new algorithm, named 「Quantum Echoes,」 reportedly runs 13,000 times faster than the best current supercomputers. On October 23rd, reports emerged that several quantum computing companies are negotiating with the U.S. Department of Commerce to offer equity in exchange for federal funding, indicating that the Trump administration is expanding its intervention in what it deems critical economic sectors. Quantum technology is at the forefront of innovation, crucial for leading future global technological transformations. Key stocks in the Hong Kong market include GOFINTECH QUANT (國富量子, 00290), which has made strategic investments in Shenzhen Liangxuan Technology (a leading domestic superconducting quantum chip enterprise), exported superconducting quantum chips to the Middle East in 2023, and launched the world's first "true random number" quantum encrypted hardware wallet, with its quantum encryption solution being piloted in finance and government sectors, including partnerships with local banks to develop a quantum-secure cross-border payment system.

Individual Stock Insights: Cathay Pacific Airways (國泰航空, 00293): Passenger volume has seen a year-on-year increase, and the airline’s profitability is expected to grow further. Last month, Cathay Pacific and Hong Kong Express carried over 2.7 million passengers, representing a 20% increase compared to September 2024. In the first nine months of 2025, passenger volume rose by 27% year-on-year. For the first half of 2025, Cathay reported a net profit attributable to shareholders of HK$3.7 billion, with revenues increasing approximately 9.5% year-on-year. Comment: With the traditional peak season for air cargo approaching, airline profitability is expected to increase further. Cathay's air cargo volume in September 2025 saw a 1% increase compared to September 2024, with available cargo ton kilometers rising 4% year-on-year. In the first nine months of 2025, cargo volume grew by 10% compared to the same period last year. Hong Kong Express saw nearly 530,000 passengers in September 2025, an increase of 16% year-on-year, with available seat kilometers increasing by 11%. In the first nine months of 2025, passenger volume rose by 31% compared to the equivalent period in 2024. Cathay Pacific announced in September that it would initiate direct passenger services between Hong Kong and Changsha starting November 4, 2025, bringing its total domestic routes to 24. The airline will also increase flights to Beijing, Guangzhou, Chengdu, and Shanghai this winter. Subsequently, the group will operate more than 330 return flights between Hong Kong and the mainland every week. Recently, the company’s management revealed that discussions are ongoing with major shareholders about a new round of aircraft procurement, which will cover the narrow-body jets, regionally sized wide-body aircraft, and freighters needed over the next decade. Cathay has invested over HK$100 billion, mainly for new aircraft purchases. The group has a fleet of approximately 230 aircraft, with an additional 150 ordered or subject to purchase options. In the first half of 2025, Cathay and its subsidiary Hong Kong Express launched or announced 19 new destinations, bringing the total number of destinations to over 100. Earlier this year, Cathay launched direct services between Hong Kong and Dallas/Fort Worth International Airport, further expanding its North American route network, marking the sixth passenger destination in the U.S. and increasing its North American destinations to eight. In Europe, new destinations such as Brussels, Munich, and Rome have also been announced. Cathay operates flights to North America, the Middle East, Africa, Asia, and Australia, including nearly 300 weekly return flights covering over 20 cities in mainland China. The industry sees consistently high load factors, with strong demand for domestic and international routes leading to ongoing positive ticket price adjustments, indicating significant recovery in unit revenue for airlines.