Last week, markets once again traded on the direction of peace talks, providing a respite for global stock markets. The Hang Seng Index even broke through the 26,000-point level at its peak. However, the negotiation outcomes were not ideal. US Vice President Vance stated that after 21 hours of talks with Iran, no agreement had been reached, as Iran chose not to accept the US conditions. China's Ministry of Foreign Affairs has already advised Chinese citizens to temporarily avoid traveling to Iran, indicating that the situation may become more tense following the breakdown of US-Iran negotiations. The focus now is on whether the US will relaunch an offensive. It is expected that stock markets will return to a relatively tense state. The ability to withstand pressure will depend on whether upcoming economic data provides support. This week will see the dense release of China's Q1 GDP, March import and export figures, industrial value-added, retail sales, and real estate data. On April 16, the State Council Information Office will hold a press conference on the performance of the national economy. At this stage of developments, many factors have already been priced in. New emerging themes deserve more attention. For example, last Friday, HSBC and Standard Chartered's anchor financial entity received Hong Kong's first batch of stablecoin licenses, expected to be rolled out in phases by mid-year for use in instant personal transfers and payments. Additionally, media reports revealed that Iran is collecting fees for passage through the Strait of Hormuz using cryptocurrency, which is "not easily seized or frozen," and this is expected to further stimulate activity in virtual currency trading. Related stocks are worth watching.

The robotics sector is heating up. The 2026 Humanoid Robot Half-Marathon Test Event officially commenced on April 19. Unitree Robotics achieved a speed of 10 meters per second, approaching peak human performance, and trended on Baidu's hot search. Beijing has developed the world's first fully autonomous tennis-playing humanoid robot. Elon Musk stated that Tesla's new robot will be released in April. The GPT-6 model, codenamed "Potato," is rumored to be released on April 14, boasting a 40% performance increase and a 2 million token context window, internally defined as the "final 20%" push towards AGI. Simultaneously, GPT-Image 2 made a stunning debut, with image generation effects that are remarkably realistic. Combined with this week's earnings report from lithography giant ASML and TSMC's Q1 earnings conference call, the AI sector is expected to attract market attention once again.

SMOORE INTL (06969) reported its Q1 2026 results. Revenue reached RMB 3.856 billion, a year-on-year increase of 41.7%. Net profit attributable to owners of the parent increased by 36.6% year-on-year to RMB 263 million. After adjusting for share-based compensation expenses, net profit attributable to owners of the parent increased by 10.7% year-on-year to RMB 347 million. Excluding losses from the healthcare business, adjusted net profit increased by 25.7% year-on-year to RMB 467 million. Q1 HNB revenue was RMB 660 million. Under the export tax rebate window, ODM revenue for vapor e-cigarettes grew rapidly. Looking specifically at Q1 revenue: 1) HNB: Revenue reached RMB 660 million, driven by the scaled promotion and volume increase of GloHilo in markets like Japan, Poland, and Italy. 2) Vapor E-cigarette ODM: Revenue increased 21.8% year-on-year to RMB 2.52 billion. As the photovoltaic export tax rebate includes e-cigarette categories, some small and medium-sized clients accelerated export shipments during the policy window, while international tobacco clients were supplied by overseas production capacity; China International Capital Corporation (CICC) expects stable shipment rhythms. 3) APV: The company intensified efforts to expand its self-branded open-system products in European and US markets, with revenue increasing 14.3% year-on-year to RMB 580 million. 4) Vaporization Healthcare: Revenue decreased slightly by 1.7% year-on-year to RMB 80 million. Profits from vapor e-cigarettes and HNB grew rapidly in sync, and the operational trend of the vaporization healthcare business warrants attention. Excluding share-based compensation expenses and early-stage incubation losses from the healthcare business, the company's adjusted net profit attributable to owners of the parent in Q1 2026 was RMB 467 million, a year-on-year increase of 25.7%, maintaining a synchronous rapid growth trend with revenue. CICC believes that with the volume growth of HNB, stable orders from international tobacco ODM clients, and improved cost control efficiency, the company's adjusted profit in 2026 is expected to grow rapidly in line with revenue. The healthcare business is still in its early incubation stage, and progress in the R&D pipeline and capital operations are expected to drive operational improvements. CICC analysts expressed optimism about the diversified development trend of the HNB technology platform and the accelerated cultivation of the new vaporization healthcare business growth curve. 1) Mature Business: Vapor e-cigarettes are expected to achieve steady growth in 2026, with emerging brand clients being the core driver. 2) Emerging Businesses: For HNB, Japan increased the tobacco tax rate on HNB products effective April 1. Against the backdrop of industry-wide price increases, GloHilo's selling price remained stable. In the short term, sales velocity and market share in Japan are expected to increase. In the medium to long term, the company's HNB technology platform capabilities are continuously strengthening, and the pace of new client and new product launches is expected to be positive. For vaporization healthcare, the US team is accelerating the R&D pace of the drug-device combination platform, and FDA submission and approval processes are advancing, which is expected to become a new growth curve for the company.

CITIC Securities recently reviewed and summarized the Q4 2025 performance of Hong Kong-listed technology and internet companies. The revenue side remained stable, but a return to an investment phase put pressure on profits. In terms of revenue, the combined revenue of major domestic internet companies in Q4 2025 increased by 4.6% year-on-year. In terms of profits, the combined Non-GAAP net profit of major domestic internet companies in Q4 2025 decreased by 35.6% year-on-year (compared to an 18.3% decrease in Q3 2025). Looking ahead to 2026, CITIC Securities believes internet company revenues are expected to maintain steady growth. According to Visible Alpha, the combined revenue of major internet companies is expected to increase by 5.8% year-on-year in Q1 2026 and 9.2% for the full year 2026. On the profit side, as of March 27, the 2026 earnings growth expectations for the Hang Seng Tech Index have been revised down by 2.6 percentage points (compared to March 21), mainly because most internet companies have re-entered an investment phase: 1) AI Deployment: Tencent Holdings (00700), Alibaba (09988), KUAISHOU-WR (01024), Bilibili (09626), etc. 2) New Market Entry: Didi, Full Truck Alliance (YMM.US), Meituan (03690), etc. From a market performance perspective, the narrative has shifted from AI-driven valuation expansion to EPS-driven performance, with valuations falling to historical lows. In Q1 2026, the Hang Seng Tech Index and the China Internet Index fell by 15.7% and 16.5% respectively (compared to a 7.1% drop in the Nasdaq Index during the same period). This was mainly due to changes in the AI narrative, concerns over short-term profit trends as internet companies re-entered an investment phase, and decreased risk appetite and liquidity tightening caused by geopolitical events, shifting the market narrative from AI-driven valuation expansion to EPS-driven stock prices. As of March 31, the Hang Seng Tech Index's NTM PE was 17.6x, at the 34th percentile since 2020, indicating valuations have fallen to historical lows. Looking ahead to 2026, considering the uncertainty of liquidity disturbances, CITIC Securities recommends focusing on companies with low valuations, high earnings certainty, robust cash flows, and good shareholder returns. Meanwhile, the AI industry trend continues to accelerate, with iterations in model capabilities, innovations in the Agent paradigm, and earnings realization expected to be key catalysts under the AI narrative. From a defensive perspective, focus on companies with low valuations, high earnings certainty, and robust cash flows. Considering external uncertainties, it is advisable to monitor companies in relatively stable industry structures with high earnings certainty. From a shareholder return perspective, the shareholder return ratios for 2025 for Vipshop/JOYY/JD.com/Weibo/KE Holdings/Didi/Full Truck Alliance were approximately 13.0%/12.0%/9.7%/7.1%/7.0%/4.1%/3.5% respectively. Additionally, companies like Full Truck Alliance, Boss Zhipin, and JOYY have announced mid-to-long-term shareholder return plans. Regarding cash reserves, as of the end of 2025, most internet companies held cash accounting for over 40% of their market capitalization, providing a strong safety margin.

Data from Hong Kong Exchanges and Clearing shows that the total open interest for Hang Seng Futures (April) is 98,277 contracts, with a net open interest of 35,224 contracts. The settlement date for the April Hang Seng Futures is April 29, 2026. With the Hang Seng Index at 25,894 points, the bear warrant concentration zone is near the central axis above, while the bull warrant zone is deviated below the central axis, suggesting underlying momentum for long positions in Hong Kong stocks. Instability in the Middle East may lead to some Middle Eastern family funds participating in Hong Kong stock investments. The outlook for the Hang Seng Index this week is positive.

The earnings expectations for the Hang Seng Index this year have already been revised down by approximately 12%, with minor adjustments continuing since mid-March. However, the positive aspect is that much of the bad news has already been priced in, and there are signs of a bottoming out and recovery in fundamentals. Recently, the views of major international investment banks have converged: while acknowledging that external disturbances and geopolitical risks will continue to suppress risk appetite, they generally believe Chinese assets offer better value relative to global peers. Within the Hong Kong market, leading technology, pharmaceutical, and consumer stocks, along with high-dividend assets, are more likely to see capital inflows. For the coming week, the view leans towards "resilience amid fluctuations." The index may not surge upwards in one go, but if the Renminbi remains stable and oil prices do not spike further, internet platforms, semiconductors, airlines, and low-valuation, high-dividend sectors are likely to show more resilience than the broader market. The key is not to chase highs, but to observe whether capital continues to flow back in.