Hong Kong Stock Market Analysis | Semiconductors Face Sudden Short-Selling Pressure as "15th Five-Year Plan" Heats Up Early

Stock News
Oct 09

**Market Overview**

A-shares opened aggressively after the holiday, while Hong Kong stocks continued to adjust downward due to adverse external factors, closing down 0.29%, though the structural performance wasn't poor. American farmers are anxious as "China hasn't purchased a single soybean," and the US House "Select Committee on Strategic Competition between the United States and the Chinese Communist Party" proposed multiple policy recommendations targeting semiconductor exports to China. This indicates intensifying competition. However, fundamentally speaking, implementing blockades now is too late, as domestic lithography machines have achieved significant breakthroughs, with only time remaining as a factor.

Funds continue to favor domestic substitution themes. Early in the session, Hua Hong Semiconductor (01347) and SMIC (00981) performed well, but the situation changed dramatically in the afternoon, with both closing down over 6%. The reason was that investors received notifications from Orient Securities via SMS that starting October 9th, the conversion rate for SMIC (688981.SH) held in margin accounts would be adjusted from 0.70 to 0.00, and the conversion rate for Bawei Storage (688525.SH) would be adjusted from 0.50 to 0.00.

Customer service confirmed this information, explaining that according to exchange regulations, if a stock's static P/E ratio exceeds 300 times or is negative, the margin trading conversion rate is set to zero. Both stocks have static P/E ratios exceeding 300 times. This regulation has been implemented since 2016 and continues today. Simply put, SMIC can no longer be purchased with financing, only with proprietary funds. This effectively cancels leverage. This isn't inherently problematic, while Hua Hong wasn't affected. Some Hong Kong stock investors took profits accordingly, which is normal.

Regarding whether the chip rally has ended, market views are divided. Some believe bubbles are serious, while others see normal corrections. Looking at TSMC's situation, September sales reached NT$330.98 billion, up 31.4% year-on-year and down 1.4% month-on-month. Third-quarter revenue increased 30% year-on-year to NT$989.9 billion, exceeding analysts' average expectation of NT$962.8 billion. TSMC serves as a bellwether and continues strong performance.

Additionally, the logic differs between China and the US. The US relies more on capital games and financial engineering, while China's overarching logic is comprehensive domestic substitution, with a future as vast as the starry sea. Therefore, stocks like ASMPT (00522) and Buildmore (01888) are strengthening. Computing equipment supplier ZTE Corporation (00763) surged over 12%, and Lenovo Group (00992) also rose over 7%, demonstrating continued high prosperity in the AI direction.

China is responding tit-for-tat to the US. The Ministry of Commerce announced Bulletin 2025 No. 62, implementing export controls on rare earth-related technologies. The key provision prohibits providing any substantial assistance or support to overseas rare earth mining, smelting separation, metal smelting, magnetic material manufacturing, and rare earth secondary resource recycling activities without permission. This aims to close loopholes in overseas rare earth development. Galaxy Magnetic (06680) rose over 8%.

On October 9th, the Ministry of Commerce website published an announcement about adding anti-drone technology companies and other foreign entities to the unreliable entity list. The invisible battlefield of economic competition is escalating.

Capital fears this uncertainty. The innovative drug sector is particularly sensitive. Innocare (09969), which should have surged on yesterday's positive news, opened higher but was sold down, closing down over 11%. A host of pharmaceutical stocks with overseas businesses were dragged down, including SMOORE INTERNATIONAL (06969), which fell over 12%.

Trump's efforts to secure a Nobel Peace Prize by facilitating a ceasefire agreement between Hamas and Israel caused gold prices to retreat on Thursday (October 9th). However, gold-related stocks remained strong, with China Gold International (02099) continuing to rise over 9% and Zijin Mining (02899) up over 5%. The underlying factors are de-dollarization and yen weakness.

Today's market officially launched "15th Five-Year Plan" speculation, led by high-speed rail construction. The Baotou-Ordos-Yulin high-speed railway has been included in the "15th Five-Year Plan" by China Railway Group. This 276.1-kilometer line is designed for 350 km/h speeds. The Nanjing-Hangzhou high-speed railway second channel is also confirmed as a key railway project for the "15th Five-Year Plan" period, spanning 290 kilometers and significantly alleviating transport capacity constraints on the Beijing-Shanghai and Nanjing-Hangzhou lines.

Related stocks performed well: China Railway Group (00390) rose over 10%, and CRRC Corporation (01766) signed major contracts worth approximately RMB 54.34 billion from July to September, accounting for about 22% of 2024 revenue, rising over 5%. Times Electric (03898) rose nearly 5%.

Infrastructure development boosts cement demand. Huaxin Cement (06655) and West China Cement (02233) both rose over 6%. Metal demand is also strengthening: Jiangxi Copper (00358), China Nonferrous Mining (01258), and China Molybdenum (03993) all rose over 7%. China Metallurgical Group (01618) also rose over 5%.

**Sector Focus**

In consumer applications, the recent MetaConnect conference showcased multiple new smart glasses products. Advanced Semiconductor Materials (02631) previously released 12-inch substrates, with each wafer capable of producing 10-12 lenses, bringing silicon carbide optical applications from high-end to consumer markets. The company is closely advancing product integration with global optical leading customers, stating "silicon carbide optical glasses will soon enter the market, with future silicon carbide optical waveguide glasses potentially reaching hundreds of millions of units in market scale."

Reports indicate NVIDIA is replacing silicon with silicon carbide for intermediate substrate materials in CoWoS advanced packaging for its next-generation Rubin processors to improve thermal performance, with large-scale adoption expected from 2027. Advanced Semiconductor Materials (02631) rose over 7%.

China and India will resume direct flights by the end of October. China Eastern Airlines (00670) and China Southern Airlines (01055) both rose over 6%.

Hang Seng Bank (00011) announced this morning that HSBC Asia Pacific, as the offeror, has requested the Hang Seng Bank board to present a proposal to scheme shareholders for privatizing Hang Seng Bank through a scheme of arrangement under Section 673 of the Companies Ordinance. Under the proposal, if the scheme is approved and becomes effective, Hang Seng's scheme shares will be cancelled, and shareholders will receive HK$155 in cash per scheme share (subject to dividend adjustments, if any). Hang Seng Bank (00011) rose nearly 26%, while HSBC Holdings (00005) fell nearly 6%.

**Sector Spotlight**

The second Hydrogen Industry Conference will open in Shanghai on October 10th, accelerating the industrial closed loop of "green power hydrogen production + energy storage peak shaving." Industry calculations show that 200 planned green hydrogen projects domestically will create new photovoltaic installation demand exceeding 50GW, directly benefiting photovoltaic module companies.

Industry authorities recently released reports indicating that starting from Q4 2025, the "lowest price era" that has persisted for a year and a half in the global photovoltaic market will end, with module prices expected to rise approximately 9%. Under policy guidance, new polysilicon capacity is restricted, supply-side proactive contraction, combined with China's expected cancellation of the 13% VAT export rebate for photovoltaic modules, multiple factors are driving photovoltaic module prices toward recovery, helping the domestic photovoltaic industry escape the "losing money while making noise" vicious cycle.

Key stocks: Goldwind (02208), Flat Glass (06865), XINYI SOLAR (00968), GCL Tech (03800).

**Individual Stock Analysis**

**SINOTRUK (03808): Steady Performance Growth, Strong New Energy Heavy Truck Production and Sales**

In the first half, the company achieved revenue of RMB 50.878 billion, up 4.21% year-on-year. Profit attributable to equity shareholders reached RMB 3.427 billion, up 4.03% year-on-year. SINOTRUK's 2025 interim profit distribution plan proposes distributing RMB 3.15 (including tax) in cash dividends per 10 shares to all shareholders, with total expected cash dividends of RMB 370 million (including tax).

**Analysis**: With the introduction of 2025 heavy truck "trade-in" policies, domestic heavy truck sales are expected to gradually recover, with projected 2025 sales of 1.067 million units, up 18% year-on-year. The company maintained steady performance growth in the first half. The heavy truck division, as the group's core business, achieved total revenue of RMB 44.229 billion, up 4.0% year-on-year, accounting for 86.9% of group revenue.

New energy heavy truck production and sales are thriving. In terms of sales volume, the group sold 136,514 heavy trucks in the first half, up 9.2% year-on-year, with sales growth exceeding revenue growth. The light truck and other divisions also performed brilliantly, achieving total revenue of RMB 7.252 billion, up 7.1% year-on-year. The group sold 62,816 light trucks, up 10.4% year-on-year, with volume growth exceeding revenue growth.

The new energy heavy truck sector became the biggest highlight, with the company's new energy market business entering harvest phase. The company leads heavy truck exports, with overall market share rising to around 25% due to overseas export growth. In the first half of 2025, the company's export performance exceeded industry levels, with exports accounting for nearly 50% of total sales.

Currently, export business maintains good development momentum, with market share remaining at the industry forefront. Export products mainly cover key regions including Africa, Southeast Asia, Central Asia, and the Middle East, while continuing progress in emerging markets. The company highly values shareholder returns, with dividend ratios further increased compared to previous years, accounting for 55% of first-half net profit attributable to parent company.

With continued industry prosperity recovery and policy benefits, SINOTRUK will benefit from domestic market warming and sustained overseas export growth, with second-half performance expected to achieve high-speed growth.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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