**Market Overview** Last week, Hong Kong stocks digested bearish factors such as stronger-than-expected US nonfarm payrolls and the Bank of Japan’s 25bps rate hike to 0.75%—a 30-year high—before rebounding mid-week. With Western markets entering Christmas holidays later this week, negative disruptions are unlikely. Instead, potential Fed Chair nominations (likely dovish) may buoy sentiment.

**Key Developments** - **China Shenhua (01088)**: Plans a RMB133.5bn asset purchase from parent National Energy Group, funded via share issuance, which may pressure liquidity and dilute equity. - **Consumer Sector**: China’s Commerce Ministry pledged to boost spending, expand premium goods/services supply, and promote cultural exports (e.g., anime, gaming). Hainan Free Trade Port remains a thematic catalyst. - **SpaceX IPO Talks**: Morgan Stanley leads discussions; commercial aerospace (e.g., China’s Long March 12A launch timeline) emerges as a US-China rivalry arena. - **Robotics**: Wang Leehom’s concert featuring Unitree G1 robots (endorsed by Elon Musk) spotlighted breakthroughs in AI-driven mobility. Focus remains on "brain" (AI) advancements. - **Autonomous Driving**: Changan Auto (000625) secured China’s first L3 license for its Deepal SL03, powered by in-house "Tianshu" ADAS. Sector overheated—caution advised.

**Stock Pick: MAN WAH HLDGS (01999)** Acquired US furniture brand Gainline ($32m, 1.3x P/B) to expand North America presence post-Vietnam/Mexico. Synergies include: - **Cost Savings**: Leveraging integrated supply chain/automation to turn around Gainline’s $9.7m FY25 loss. - **Revenue Upside**: Cross-selling to Gainline’s 1,000 retail clients (e.g., Southern Motion, Fusion Furniture). - **Valuation**: 6.2% dividend yield, 50% payout ratio; trades below A-share peers with higher beta to property/consumption recovery.

**Sector Spotlight: Autonomous Driving** China approved first L3 models (Changan Deepal SL03, BAIC’s Alpha S with Huawei ADS), aligning with 2025 targets (15.5m NEV sales, +20% YoY). Key trends: - **Standardization**: L3 mandates modular control for steering/braking/differential systems. - **Democratization**: BYD’s "Eye of God," Geely’s "Vast Distance" systems drive sub-100k RMB ADAS adoption. L2+ penetration rose to 59% in H1 2025. - **Stocks**: Horizon Robotics-W (09660), Black Sesame (02533) for chips; Nexteer (01316), ZHEJIANG SHIBAO (01057) for steer-by-wire. LiDAR plays Robosense (02498), Hesai (02525) benefit from L3’s irreplaceability in high-end ADAS.

**Data Watch** - Hang Seng Index (HSI) Dec futures: 110,797 open contracts; net 45,432. - HSI support at 25,200; bullish bias as bear certificates cluster near mid-range.

**Sentiment Check** Historical "Christmas-Spring Festival" rallies (80% odds since 2011; median +4.7% HSI, +6.3% tech) and record southbound inflows (RMB1.39tn) underpin optimism. AI, high-dividend stocks, and ADAS policy tailwinds offer structure—but geopolitical risks warrant selectivity.