Market sentiment turned cautious over the weekend, fearing unexpected developments. While positive progress was mentioned just a day prior, hostilities erupted between the US and Iran on Thursday. Iranian forces attacked a US Navy destroyer transiting the Strait of Hormuz, casting a shadow over diplomatic prospects. The Hong Kong market opened lower today, declining 0.87%. This development has complicated the Middle East situation further. Saudi Arabia and Kuwait, which had previously prohibited the US from using their bases and airspace, have now reversed that decision. This has escalated tensions in the Strait of Hormuz, with the US military reportedly considering restarting the "Freedom Plan."
On May 7th, the Baltic Dry Index reached 3034 points, marking its highest level since December 5, 2023. The index rose 1.44% from the previous session, extending its gains for a fifth consecutive day. Shares of PACIFIC BASIN (02343) and COSCO SHIP ENGY (01138) both rose approximately 4%.
Regarding the planned meeting between the US and Chinese heads of state, a spokesperson stated that communication is ongoing, but no further details are available. This indicates a lack of final confirmation, as uncertainties remain regarding preconditions or potential further US actions. Consequently, today's market caution is understandable.
Gold prices continued their ascent. Shares of WANGUO GOLD GP (03939), LINGBAO GOLD (03330), and CHIFENG GOLD (06693) all surged over 7%.
The AI sector showed divergence. Chip-related stocks moved towards high-demand specialized areas. For instance, MONTAGE TECH (06809) and another stock continued to gain over 5%. The PCB sector remains tight, with delivery lead times for mid-to-high-end CCL extending from the usual 2 weeks to up to 6 weeks. Some overseas suppliers have raised core material prices by about 30%. Related stocks, including a Smartkarma May pick, all rose around 5%.
Large language models are attracting significant capital. DeepSeek's valuation has reportedly doubled several times in recent weeks. Other domestic models are also securing substantial funding rounds and accelerating IPO plans, potentially listing in Hong Kong. The market is reassessing the commercial viability of the AI application layer. A similar trend is observed overseas, with several US-listed AI software stocks posting strong gains on May 7th.
A company mentioned previously rose over 5% again. Another firm reported strong Q1 data, with paid subscribers reaching a record high and related revenue growing significantly, leading to a stock surge of over 11% today. Other related stocks also gained over 3%.
Notably, a short-video platform's stock surged over 9%. Its recently launched AI video model targets professional content creation. Revenue projections are optimistic, and the potential market size for video production is vast.
Space exploration efforts are accelerating in both China and the US. A Chinese cargo spacecraft is being prepared for launch. SpaceX is reportedly accelerating its IPO process, targeting a valuation exceeding $2 trillion. This could become the largest IPO in history and significantly impact the aerospace industry. A Smartkarma May pick, which is a core channel supplier for SpaceX in Southeast Asia, saw its stock rise over 7%. Its Starlink-related business is growing rapidly, and it stands to benefit from the broader AI trend. The company has strong earnings growth and stable, rising dividends.
Another Smartkarma May pick, previously rumored to have supply ties to a space project, saw its stock surge over 16% today. This move is seen as a correction, as its valuation had not fully reflected its satellite business value. Some institutions have optimistic valuation targets for its A+H shares.
The robotics sector, mentioned yesterday, remains hot. Highlighted stocks rose over 6% and 3%, respectively. China holds a dominant position in the global humanoid robotics supply chain, with a 63% share overall and 45% in the hardware segment. Its strong manufacturing base is a core competitive advantage. Over 140 domestic companies are involved in humanoid robot assembly, with 31 being cross-industry entrants. Major appliance and smartphone manufacturers can leverage their existing supply chains and technologies, such as high-density batteries and motor control, for robotics. The intense supply chain competition in key regions has driven costs down significantly. Concerns have been expressed that most top players in humanoid robotics, besides the leader, could be Chinese companies. Hong Kong-listed companies involved in cross-industry robotics performed strongly.
The property sector, a recurring theme, showed positive data. Transaction volumes for pre-owned homes in major cities saw significant year-on-year growth in April and during the holiday period. Market expectations for property stocks are shifting as inventory clears faster, warranting valuation revisions. A Smartkarma May property pick rose 3.55% today, hitting a record high. Other major developers also gained over 4%.
**Sector Focus** The Middle East is a crucial global fertilizer production hub, and a significant portion of fertilizer trade passes through the Strait of Hormuz. Due to transport disruptions, a major urea production facility has halted supplies. Since the recent escalation, international fertilizer prices have surged. Analysis suggests that while global grain prices are low, high fertilizer costs are straining farmers' budgets. Urea and other nitrogen fertilizers are essential for crop yield and quality. Reduced usage increases the risk of lower harvests. Agricultural agencies have begun revising down production forecasts for the next season. Key Hong Kong-listed fertilizer stocks to watch include several major Chinese producers.
**Stock Analysis** **Sunny Optical Technology (02382): Strong Order Book; Core Products Achieve Mass Production** The company reported strong 2025 results with significant growth in revenue, gross profit, and net profit. As a global optical leader, it holds leading market shares in multiple categories, including being the top global supplier of smartphone lenses and camera modules for many years. Penetration in high-end models continues to increase. For a key North American client, lens supply is stable, and module production resumed in H2 2025. A core breakthrough is the mass production of its in-house periscope motor-module integrated solution with industry-leading yield.
By segment: Mobile optics revenue grew, with pressure on volume offset by a higher mix of premium products, leading to increased ASP and stable-to-rising profit contribution. Automotive optics revenue grew over 20%, with shipments surging, becoming the primary growth driver. XR and other optics revenue also grew over 20%.
Core products have achieved mass production. The company holds about a 32.3% global market share in automotive lenses, ranking first for 13 consecutive years. High-resolution lenses are in mass production. In XR/AR optics, key components like Pancake lenses and optical waveguides are being supplied to leading clients. For high-pixel automotive modules, it launched the world's first 8MP COB module and has secured orders for 17MP modules. It is pursuing AI-optics integration with deep partnerships in the autonomous driving ecosystem.
The order book is robust. For XR, it has substantial orders for components from major clients. For robotics vision, it has a significant pipeline of projects involving navigation, 3D vision, and robotic systems, collaborating with industry leaders. The company's outlook for 2026-2028 anticipates steady growth in mobile, a doubling in automotive, a breakout in XR, and scaling in robotics, indicating vast long-term growth potential.