During the National Day holiday, the US released September nonfarm payrolls, which rose by 29,000 versus expectations of 90,000, significantly below forecasts, greatly increasing the probability that rates will not be hiked in October. However, Hong Kong stocks showed little reaction, lacking support from southbound capital and facing stronger short-selling pressure. Today, with the A-share market reopening, the main funds that had been long on Hong Kong pharmaceutical stocks during the holiday reversed to short, while technology stocks also suffered heavy losses, dragging the Hang Seng Index down 1.43%.

The Middle East has once again become a key focus of capital competition. Trump's national security team held a several-hour meeting at Camp David on October 2, part of which focused on the possibility of resuming large-scale combat operations against Iran. Bad news always seems to break just before our market opens: according to the latest media reports, the US Department of Defense has instructed US Central Command to complete preparations within days for restarting large-scale military operations against Iran. The report said the directive did not give a specific date for strikes, and US President Trump has not yet made a final decision. Sources said that if large-scale military action resumes, US forces are expected to carry out massive bombings of Iran's energy facilities, infrastructure, and nuclear targets. US-Iran negotiations have still not made progress, and mediator Qatar is still waiting for Iran's response to the latest US proposal, which includes demands for Iran to weaken its uranium enrichment capacity. Meanwhile, Naghdi, an advisor to the commander of the Revolutionary Guard, said the strait remains closed and declared the blockade of Tehran to be an "illegal" waterway.

On the other side, Turkish Maliki, spokesman for the Saudi-led multinational coalition, said in a statement on the evening of the 7th that the coalition launched large-scale military operations against Yemen's Houthi armed group, destroying 82 military targets. The Houthis used ballistic missiles and drones to attack Saudi Arabia's King Khalid International Airport in Riyadh, Abha International Airport, and multiple military bases. According to a report from the United Kingdom Maritime Trade Operations (UKMTO), on Wednesday (October 7), an oil tanker was hit by a ballistic attack near the coast of Qatar, a rare attack deep in the Persian Gulf.

Shipping tensions have intensified again, with COSCO Shipping Energy Transportation Co Ltd (HKEX: 01138) and COSCO Shipping Holdings Co Ltd (HKEX: 01919) rising more than 3%. Brent crude oil broke through $101 per barrel, while WTI crude oil rose more than 3% and is now reported at $91.02 per barrel. Shandong Molong Petroleum Machinery Co Ltd (HKEX: 00568) surged more than 16%; United Energy Group Ltd (HKEX: 00467) rose more than 12%; China Oilfield Services Ltd (HKEX: 02883) rose more than 5%; and other companies including CNOOC Ltd (HKEX: 00883), PetroChina Co Ltd (HKEX: 00857), and China Petroleum & Chemical Corp (HKEX: 00386) all rose more than 2%. Normally, small conflicts do not cause major moves in oil and gas stocks, but this time the large gains in oil and gas equipment names show the situation is quite tense. The more tense the situation, the greater the threat to energy, especially in Europe, where finding alternative energy sources becomes more urgent, and coal will become a priority option, as detailed in the sector focus section.

At the same time, new energy is bound to be a long-term plan. For example, nuclear power company CGN Power Co Ltd (HKEX: 01816) rose more than 3%; the implementation of various policy subsidies will drive growth in household storage and commercial and industrial storage. Australia's SRES expansion is expected to activate commercial and industrial energy storage demand. This area is inseparable from solid-state batteries, and related concept stocks such as equipment maker Wuxi Lead Intelligent Equipment Co Ltd (HKEX: 00470) rose more than 7%, while others including Rept Battero Energy Co Ltd (HKEX: 00666) and Jiangsu Lopal Tech Co Ltd (HKEX: 02465) rose nearly 2%. Yadea Group Holdings Ltd (HKEX: 01585) is also essentially playing the energy substitution theme, as the replacement of fuel-powered motorcycles is a trend, with large market space in Southeast Asia. The company has production bases in Indonesia, Vietnam, and Thailand, with relatively low barriers, making it worth watching. It rose nearly 5% today.

In addition to geopolitical concerns, the market is also worried about US Treasury yields, which have been pushed to their highest level in at least 20 years, while the Nasdaq and S&P 500 continue to hit record highs. Some argue that the sharp rise in US Treasury yields is because AI is expected to boost productivity and accelerate economic growth. A second explanation is that high yields have already hurt US stocks. Either way, corporate profitability is the key. If earnings cannot keep up, no amount of stimulus will help. In addition, about one-third of US debt financing relies on foreign capital, a large portion of which comes from Japan and China. Japan has already lent "a lot of money," and now with rate hikes it wants to pull that money back. China is also reducing its holdings. Bearish voices are rising again. A market strategy head at a London investment bank issued a stern warning to investors: the AI trade may soon end, triggering the worst market crash since the global financial crisis. Such claims have existed for a long time, and many people are watching from the sidelines. Buffett has kept a lot of cash. For now, it still seems too early. After all, the latest US 10-year Treasury auction was quite hot: the bid-to-cover ratio was 2.77 times, higher than the average of the last six auctions; the awarded yield was 5.30%, lower than the pre-auction secondary market rate (stop-through -1.7bp), meaning buyers were willing to accept a slightly lower yield to get the bonds.

So why did technology stocks fall sharply today? A simple interpretation is that it reflects anxiety about the broader AI environment, as well as previously circulating rumors about optical chip price cuts, saying that current optical chip prices are already under pressure and that 1.6T supporting optical chips face downward pricing pressure. From a micro perspective, a review of computing power orders disclosed since 2023 that have completed a full one-year execution cycle found that those that ultimately failed to land effectively actually became the "mainstream." These are all factors affecting sentiment, and today almost all AI hardware and software names in Hong Kong stocks fell sharply.

Market style has quietly shifted. Pharmaceuticals are certainly unavoidable, but they have also risen too much and need time to digest positions. Today, more money turned to consumption. Data from the Ministry of Commerce show that from October 1 to 6, 2.848 million home appliances were traded in under the trade-in program, driving sales of 12.34 billion yuan. The concentrated release of the trade-in policy during the National Day holiday provided short-term data validation for the home appliance sector. Skyworth Group Co Ltd (HKEX: 00751) rose more than 6%, while Midea Group Co Ltd (HKEX: 00300) and Haier Smart Home Co Ltd (HKEX: 06690) rose more than 2%. On October 8, the Ministry of Commerce and six other departments issued the "Implementation Opinions on Promoting the Expansion and Upgrading of Commodity Consumption," proposing to cultivate green consumption, smart consumption, health consumption, and other trillion-yuan-level markets by 2030. Low-GI foods are riding the health consumption trend and becoming a new growth point for the food industry. Mingming Henmang (HKEX: 01768): a leader in the bulk snack track and China's largest chain retailer by 2024 snack food and beverage product GMV, with 2025 store GMV reaching 93.57 billion yuan and more than 20,000 stores nationwide, rose more than 5%. Bloks Group Ltd (HKEX: 00325), whose overseas expansion and margin performance in assembled character toys exceeded expectations, rose nearly 5%.

Competition in the milk tea sector is fierce, and many companies are seeking diversified operations. Milk tea shops now sell more and more items, taking business from cafes, breakfast stalls, convenience stores, and bars. This is exactly the logic of Japan's 7-Eleven, which divides the day into six segments: morning is rice balls, sandwiches, and coffee; noon is bento; afternoon is desserts; evening is prepared foods and beer; late night is instant meals. The same square meter of shelf space is used six times in 24 hours, and fresh food categories contribute about 50% of gross profit for Japanese stores. One company doing relatively well is Guming Holdings Ltd (HKEX: 01364), which rose more than 4% today.

Sector Focus

According to Zhongtai Coal: at today's midday close, the coal sector (Shenwan) rose 1.51%, up 22.81% year to date, leading electronics (21.67%) and communications (19.93%) to rank first. Upward catalysts: 1) Q3 results continue to improve year-on-year and quarter-on-quarter, and the certainty of coal profit growth accelerates allocation to dividend assets. 2) The off-season pullback has passed, and with global energy resonance plus peak winter demand, coal prices are poised to stabilize and rise. The core driver of this upward cycle comes from supply. Domestic policy tightening means the "institutional valve is being turned tighter and tighter," and the cost of overproduction has become unbearable for both regulators and producers. Restarting production without restoring volume will persist for a long time. Import supplements are limited. The impact of Indonesia's RKAB will become evident in the second half, and demand for coal and coal chemical substitution will grow under high oil prices. Overseas supply is not loose. Ultimately, coal's strength benefits from energy tightness, while its own earnings and dividends are also strong, making it a fairly good defensive category. Main Hong Kong-listed names include: China Shenhua Energy Co Ltd (HKEX: 01088), Kinetic Development Group Ltd (HKEX: 01277), Yankuang Energy Group Co Ltd (HKEX: 01171), and China Coal Energy Co Ltd (HKEX: 01898).

Stock Spotlight

China Overseas Grand Oceans Group Ltd (HKEX: 00081): sellable inventory structure continues to optimize, and profit side is the first to return to positive growth. Recently, the State Council executive meeting studied and introduced policies to stabilize the real estate market. China Overseas Grand Oceans Group Ltd announced that it has signed a "Lease Framework Agreement" with China State Construction Engineering Corporation. In 2026H1, the company's operating revenue was 14.1 billion yuan, down 3% year-on-year; net profit attributable to shareholders was 330 million yuan, up 15% year-on-year; net profit attributable to shareholders accounted for 91% of total net profit, up 17 percentage points year-on-year. In 2026H1, the company achieved a net profit margin attributable to shareholders of 2.3%, up 0.4 percentage points year-on-year. Comment: the company's profit side was the first to return to positive growth, with gross margin rising 2.5 percentage points year-on-year to 11.8%, maintaining a counter-cyclical recovery trend, mainly benefiting from high-gross-margin projects acquired after 2022 gradually entering the settlement period. The sellable inventory structure continued to optimize. In 2026H1, quality projects acquired after 2022 accounted for 69% of contracted sales. The company completed full-caliber contracted sales of 19.1 billion yuan, up 15% year-on-year, ranking 18th in the industry and continuing to improve; of that, attributable sales were 16.5 billion yuan, accounting for 86%, ranking 14th in the industry; sales area was 1.65 million square meters, up 12% year-on-year; average selling price was 11,619 yuan per square meter, up 3% year-on-year, with residential average selling price at 12,725 yuan per square meter. Relying on operational strength, brand reputation, and product power, in 2026H1 the company ranked among the local top three in sales in 18 cities, and had a full-caliber sales market share of more than 20% in 8 cities; the company's overall market share across 40 full-caliber cities was 9.6%, continuing to rise from 7.9% for full-year 2025. In July 2026, monthly contracted sales were 2.936 billion yuan (+44%), and in August 2.348 billion yuan (+10.1%), maintaining positive single-month growth. In 2026H1, the company's average delivered unit area was 192 square meters, up 13% year-on-year, fully matching the improvement-oriented customer demand in the cities where it operates. In 2026H1, the company added new land reserve gross floor area of 480,000 square meters, down 64% year-on-year; total land acquisition cost was 2.1 billion yuan, down 66% year-on-year, of which attributable land cost accounted for 100%; investment intensity calculated as land acquisition amount/sales was 11%; the floor price-to-sales ratio calculated as current-year average selling price/new land reserve floor price was 2.7, preserving reasonable profit space. As of the end of 2026H1, the company's total land reserve gross floor area was 11.43 million square meters, down 16% year-on-year; excluding sold but unsettled area, it was 8.65 million square meters, with coverage of 2.6 times relative to sales scale, still relatively ample; attributable area accounted for 86% of total land reserves, remaining at a relatively high level. In 2026H1, the company achieved sales collections of 18 billion yuan, with a collection rate of 94%; commercial property operation business (including non-consolidated projects) revenue was 270 million yuan, up 11% year-on-year, supporting steady operations; net cash flow from operating activities was 6 billion yuan, remaining positive. As of the end of 2026H1, the company had monetary funds of 31 billion yuan, accounting for 27% of total assets; the cash-to-short-term-debt ratio was 3.6; the debt-to-asset ratio excluding advances from customers was 60%; and the net debt ratio was 19%, all continuing to improve. In 2026H1, the company's weighted average financing cost was 3.3%, down 0.2 percentage points year-on-year, remaining at a low level in the industry. The real estate market is in a bottoming phase, and core cities are expected to stabilize and recover first.