Zhitong Hong Kong Stock Exchange Unravels | Concerned about giant Capex weakening technology and adjusting various sudden gold logic enhancements

[Anatomy Dashboard]

The wave of technology ignited by A-shares yesterday has quickly subsided today. The overall mood became cautious again. Hong Kong stocks are also facing some unexpected situations. Today, the Hang Seng Index fell 0.95%.

Unexpectedly, serious infighting broke out among senior Ukrainian officials. Zelensky successively replaced Defense Minister Fyodorov and Ukrainian Army Chief Commander Sersky within a week. Ukrainian Prime Minister Sveritenko was also “persuaded to retreat,” and the cabinet was disbanded. The reason behind this is that the conflict between reformers and conservatives is difficult to reconcile, mainly issues of interest and corruption. The direct consequences may shake the confidence of the US and the West in their aid; Russia sees an opportunity to take advantage of the chaos to attack. This has undoubtedly put pressure on the US. Iran is already a headache. If Ukraine cannot handle it, the consequences will be very serious.

To make matters worse, the Mander Strait is also in crisis: the Houthis in Yemen announced the imposition of a “maritime embargo” on Saudi Arabia on the 20th, which took effect immediately. The EU's military operation in the Red Sea EUNAVFOR ASPIDES recommended that merchant ships linked to Israel, the US, or Saudi interests avoid sailing through the Red Sea and the Gulf of Aden until the threat level drops. According to data from the US Energy Information Administration, the Mander Strait carries about 12% of the world's trade traffic and one-quarter of container traffic. Looking at it now, there are problems in both straits, and global energy is once again being held back. WTI crude oil futures surged 4.08%, and Brent crude oil futures rose 4.02% to 94.673 US dollars/barrel. Shandong Molong (00568) rose more than 7%. If tension continues in the near future, coal will continue to rise, with Yancoal Australia (03668) rising by more than 6%.

The analysis indicates that once the Mander Strait is blocked simultaneously, the alternative route (taking Yanbu Port in Saudi Arabia - Zhoushan Port in Ningbo as an example) will greatly increase the range of 129.8% after circumventing Cape of Good Hope, or spawn additional shipping demand for about 148 VLCCs (estimated at 5 million b/d). Pacific Shipping (02343) and COSCO Marine (01138) rose more than 4%.

Let's take another look at gold. Spot gold strongly broke through the key mark of 4,130 US dollars/ounce. COMEX New York gold futures rose at the same time and remained stable above 4130 US dollars. The short-term bullish trend is remarkable. The view on gold is no longer about looking at the Federal Reserve's face; the most critical factor is asset hedging. The current situation is too chaotic, and previous assets will anchor AI, but now this logic has also changed drastically: capital is being withdrawn from AI. As a result, gold has become the best vehicle for safe haven. Coupled with the fact that the central bank of China's monthly holdings has continued to rise from 30,000 ounces to 480,000 ounces since this year, the pace of gold purchases has returned to the level of 2022 to 2023. Yesterday, when it comes to gold catalysis, we also need to see how ETF moves. Gold ETF Huaan (518880), the largest gold ETF target in Asia, rose 1.18%, and the gold stock ETF Huaan (159321) rose 6.27%, leading the way for all ETFs in the market. Today's strongest gains were in Chifeng Gold (06693) and Lingbao Gold (03330), which surged more than 15%. China Gold International (02099) and Zijin Gold International (02259) mentioned yesterday also rose more than 9%.

Safe-haven assets have also radiated from gold to non-ferrous metals, and copper is highly correlated with gold. There is another catalyst: the news of US copper tariffs is “the most important point worth watching in the near future.” Last year, the US Department of Commerce proposed a phased implementation of import tariffs on refined copper, and a 15% import tariff from January 2027, but the plan was originally scheduled to be re-evaluated before the end of June this year. If Trump eventually follows this plan, the US is likely to usher in a new wave of copper imports. There are also other stimuli. According to reports on July 21, domestic copper stocks are being removed faster than expected, from a high of 577,200 tons in early March to 165,000 tons on July 10, a drop of 71%. The tight supply and demand logic is gradually being implemented. On the supply side, the winter storm swept through central Chile, causing some large-scale copper operations to be affected. Globally, insufficient long-term capital expenditure combined with copper ore grades continued to decline. Mature mines faced natural decline, while large-scale mines generally delayed the resumption of production, resulting in extremely low flexibility in the supply of copper concentrate in the short term; It blocked the transportation of sulfur and sulfuric acid to the Middle East, right There is a potential impact on global wet copper production capacity. Related varieties Minmetals Resources (01208) rose more than 9%, and China's nonferrous mining (01258) and Zijin mining (02899) rose more than 6%.

Other metals, such as Jiaxin International Resources (03858), which was repurchased yesterday: UBS expects that the Chinese tungsten market will continue to be in short supply. The price of tungsten concentrate will rise to 500,000 yuan and 550,000 yuan per ton respectively in 2026 and 2027, which is 24% and 36% higher than the spot price. It is believed that the current tungsten price of about 400,000 yuan per ton is close to the bottom of the new cycle, and there is limited room for decline. Today's increase is over 8%.

The weakening of technology is due to concerns about giant Capex. Alphabet (GOOG.US) will be the first hyperscale cloud service provider to release financial reports. In April of this year, Alphabet raised the 2026 Al Guidelines and hinted that AI capital expenditure will increase dramatically in 2027. However, Alphabet may have been forced to lower its capital expenditure guidelines due to multiple restrictions, the most important of which is the financing constraint, and Alphabet's free cash flow has been declining, and may even be 60% lower than the reported value. As a result, the direction of science and technology has weakened for the most part. The two leading companies, Jiantao Laminate Board (01888) and Changfei Optical Fiber (06869), fell by more than 15% and 10% respectively.

Unexpectedly, Tencent (00700) didn't hold up either. Its cloud executives said that in order to reduce inference costs to the extreme, the company would deploy localized computing power on a large scale. The market is worried that its higher spending will drag down performance. In addition, it is rumored that Bernstein Research is tracking the decline in domestic game flow in Q2.

On July 21, US President Trump announced the new tariff arrangement for generic drugs via social media: from August 1, 2026, generic drugs imported to the US will continue to enjoy a two-year zero-tariff transition period; after the transition period is over, 100% tariffs will be levied and implemented for one year; the subsequent tax rate will be further raised to 200%. The core goal of the policy is to promote the return of generic drug production capacity to the US, and companies that fail to build production lines in the US as scheduled will bear high tariff penalties. Next, generic drugs were a bit difficult, and the value of innovative drugs was once again highlighted. Kingsley Technology (01548) and Kangfang Biology (09926) increased by more than 6%.

Since June, the paper industry has continued the “shutdown+price increase” combo. Nine Dragons Paper's top ten bases have increased by 50-100 yuan/ton, and 21 companies have followed suit by 50-200 yuan/ton. The scope and extent of price increases have been rare in the off-season in the past three years. The waste paper system (box board corrugated paper) took the lead in recovering, and paper giants clearly benefited. Lee & Man Paper (02314): It is expected that the six months ending June 30, 2026 will obtain the company's profit for the period of approximately HK$1.33 billion to HK$1.39 billion, an increase of 64% to 71% over HK$811 million in the same period last year. Today, it has risen by more than 4%, and Nine Dragons Paper (02689) has risen steadily.

[Section Focus]

On July 22, Longji Green Energy (601012.SH) officially signed an important cooperation agreement with global energy company RWE to deploy a large-scale centralized photovoltaic and battery energy storage system (BESS) project in Sicily, Italy. The project is equipped with an energy storage capacity of about 300 MWh, and will be connected to the local power grid after completion. The project will use LongiBank 2.0 6.25 MWH, LongiBank 2.0, the flagship centralized energy storage solution. The product is designed with a high-safety, liquid-cooled integrated lithium iron phosphate (LFP) system, with an energy density of up to 146 Wh/L, and a single cabin capacity of 6251 kWh in an optimized 20-foot standard container.

This news has undoubtedly boosted confidence in the photovoltaic industry. Currently, photovoltaics has fallen to the bottom, and any advantage could stimulate the rise. The main types of Hong Kong stocks are: Xinyi Solar (00968), Follett Glass (06865), and GCL Technology (03800).

[Individual Stock Mining]

TCL Electronics (01070): Acquisition progress exceeded expectations and miniLED shipments doubled

Recently, the company plans to acquire 51% of TCL Air Conditioning (Zhongshan) Co., Ltd.'s shares for HK$5.61 billion. The settlement will take place in the fourth quarter of 2026. The company expects revenue of HK$60.3 billion to HK$65.7 billion for the first half of the year, up 10% to 20% year on year; adjusted net profit for the first half of the year was HK$1.48 billion to HK$1.65 billion, up 40% to 56% year on year.

Comment: This acquisition will drive the company's complete transformation to a full range of smart home platforms. The acquisition will enable the company to enter the air conditioning business with annual production and sales of more than 22 million units and the fourth largest global shipment volume. The increase in profitability of TCL Electronics' small to medium size display business has driven a steady increase in overall profit.

The company expanded production in Huizhou to become the world's largest TV production base. At the same time, the registered capital of TCL Ace Electric increased by about 80% to HK$3.1 billion, increasing the annual production capacity of 10 million smart TVs. After delivery, the annual production capacity of the Zhongkai base will exceed 50 million units. The company's LCD panels account for nearly 70% of the global market. MiniLED backlighting and quantum dot materials are self-developed and self-produced, and the upstream panel self-supply rate exceeds 70%. The company's large scale shows domestic revenue of HK$4.60 billion in 26Q1, up 3.9% year on year, and overseas revenue of HK$12.11 billion, up 23.2% year on year, including revenue from North America +32.2%, Europe +29.9%, and Asia Pacific/Latin America/Middle East Africa +16.4%. Multiple regions around the world joined forces to accelerate development.

Looking at the product structure, the company's 26Q1 miniLED shipments doubled, with domestic shipments increasing by 1.8 pcts to 19.4%, and overseas by 10 pcts to 15.7%. Driven by product structure upgrades and larger size, 26Q1's large-scale domestic gross profit margin was 20.1%, +1.9pct; overseas gross profit margin was 16.6%, +3.7pct. The revenue from the innovative business was 8.96 billion yuan, +8.1% year-on-year, of which PV revenue was +13%, and the new installed capacity exceeded 1.3 GW. Benefiting from the expansion of business scale, improvement in operating quality and the gradual results of overseas market expansion, the gross margin of the PV business increased to 9.4% over the same period last year. Internet business revenue increased 13.2% to HK$740 million in 26Q1, and overall gross margin increased 10.6pct to 65.0%. The share of overseas high-end orders increased. The share of high-end model shipments rose from 10% in 2022 to 132.6% in 2026Q, and the scale of high-end shipments doubled from 2 years ago.

TCL Electronics is a leading enterprise in the global color TV industry. It continues to cultivate high-end and global operating capabilities to drive steady expansion of TV business share, while consolidating growth momentum in photovoltaics, all-category marketing, and Internet businesses outside the main channel. The strategic cooperation between the company and Sony is a major highlight of future development. TCL and Sony established a joint venture in March, and it is expected that the combined market share may surpass the top in the world after operation in 2027. The company's performance side is expected to continue to grow rapidly in the second half of 2026, fueled by product structure upgrades, and future profit margins may be further opened up with the establishment of a joint venture with Sony.