Economic Information Daily (29th) reported: U.S. bond yields continued to rise, with the 10-year Treasury yield climbing 7 basis points to 5.23%, reaching its highest level in over 19 years. The 30-year yield hit a new high since 2004. Overnight, all three major U.S. indices came under pressure. The Hang Seng Index opened slightly higher this morning, but the opening price was already the day's high. After opening, the index turned downward, falling as much as 178 points. It closed the morning session at 24,486, down 155 points or 0.6%, with main board turnover exceeding HK$90.9 billion. The Hang Seng China Enterprises Index stood at 8,166, down 49 points or 0.6%. The Hang Seng Tech Index was at 4,237, down 58 points or 1.4%.
*Mak Ka-ka: Market vulnerable to external risks during National Day holiday*
With U.S. bond yields remaining high, Hong Kong stocks erased yesterday's gains in the morning session. Mak Ka-ka, Head of Financial Products Trading and Head of Research at Grandwell Securities (Asia), told Economic Information Daily that Hong Kong's trading volume remains low. Coupled with the A-share market's closure during the National Day holiday, the lack of northbound funds leaves Hong Kong stocks more susceptible to external risks, increasing market volatility.
Mak further pointed out that the ongoing stalemate in the Middle East has kept oil prices elevated, pushing up inflation expectations. Additionally, the rising yields on U.S. 10-year and 30-year Treasury bonds—where the 10-year yield reflects higher long-term inflation and term premium, and the 30-year yield reflects the market's repricing of U.S. fiscal supply and inflation—have increased the discount rate for stock valuations. Rising oil and transportation costs are also eroding corporate profits and consumer spending power, creating dual pressure on both discount rates and earnings.
Given that the impact varies across individual stocks, Mak believes Hong Kong stocks will be dominated by stock-specific movements in the near term. The Hang Seng Index itself is unlikely to experience a one-sided decline but will likely fluctuate within a range. The index is expected to trade between 24,100 as near-term support and 25,100 as resistance, with a lower chance of a one-way breakout to the downside.
*Shein's weak outlook reflects industry-wide issues*
Semi-new stock Shein (00625) released its first interim results since listing. Its adjusted net profit for the second quarter plunged 67% year-on-year to $228 million, representing only 2.1% of net revenue, down from 6.2% a year earlier. Net revenue for the quarter rose slightly by 0.9% year-on-year to $11.082 billion, while net profit surged 2.47 times to approximately $2.4 billion.
Mak analyzed that although Shein's order volume increased this time, its revenue data—reflecting the company's growth prospects—was nearly stagnant. The surge in net profit was driven solely by one-off gains, while core profits plunged sharply, indicating weakening demand in Europe and the U.S. Under the impact of U.S.-China tariffs and rising air freight costs, the company's business outlook has weakened.
Mak noted that in the short term, market focus will shift from listing enthusiasm to the company's ability to restore profitability. Share price improvement will only come when revenue from Europe and the U.S. resumes growth and passenger transport costs decline. Currently, the operating outlook shows no sign of improvement, and the share price is expected to remain in a volatile downtrend with no clear support. Moreover, as a semi-new stock, Shein's bottom is difficult to estimate, making it inadvisable to rush into bottom-fishing.
Mak added that the pressures faced by Shein are industry-wide. Fast fashion and cross-border e-commerce sectors are all affected by intense competition among peers, high fuel and air transportation costs, and increasing supply chain resilience requirements, which will continue to erode corporate gross margins. However, companies with international brand premium have relatively more buffer, while companies like Shein, which lack brand valuation premium, will face more pronounced pressure. (am)
*Mak Ka-ka: Market vulnerable to external risks during National Day holiday*
With U.S. bond yields remaining high, Hong Kong stocks erased yesterday's gains in the morning session. Mak Ka-ka, Head of Financial Products Trading and Head of Research at Grandwell Securities (Asia), told Economic Information Daily that Hong Kong's trading volume remains low. Coupled with the A-share market's closure during the National Day holiday, the lack of northbound funds leaves Hong Kong stocks more susceptible to external risks, increasing market volatility.
Mak further pointed out that the ongoing stalemate in the Middle East has kept oil prices elevated, pushing up inflation expectations. Additionally, the rising yields on U.S. 10-year and 30-year Treasury bonds—where the 10-year yield reflects higher long-term inflation and term premium, and the 30-year yield reflects the market's repricing of U.S. fiscal supply and inflation—have increased the discount rate for stock valuations. Rising oil and transportation costs are also eroding corporate profits and consumer spending power, creating dual pressure on both discount rates and earnings.
Given that the impact varies across individual stocks, Mak believes Hong Kong stocks will be dominated by stock-specific movements in the near term. The Hang Seng Index itself is unlikely to experience a one-sided decline but will likely fluctuate within a range. The index is expected to trade between 24,100 as near-term support and 25,100 as resistance, with a lower chance of a one-way breakout to the downside.
*Shein's weak outlook reflects industry-wide issues*
Semi-new stock Shein (00625) released its first interim results since listing. Its adjusted net profit for the second quarter plunged 67% year-on-year to $228 million, representing only 2.1% of net revenue, down from 6.2% a year earlier. Net revenue for the quarter rose slightly by 0.9% year-on-year to $11.082 billion, while net profit surged 2.47 times to approximately $2.4 billion.
Mak analyzed that although Shein's order volume increased this time, its revenue data—reflecting the company's growth prospects—was nearly stagnant. The surge in net profit was driven solely by one-off gains, while core profits plunged sharply, indicating weakening demand in Europe and the U.S. Under the impact of U.S.-China tariffs and rising air freight costs, the company's business outlook has weakened.
Mak noted that in the short term, market focus will shift from listing enthusiasm to the company's ability to restore profitability. Share price improvement will only come when revenue from Europe and the U.S. resumes growth and passenger transport costs decline. Currently, the operating outlook shows no sign of improvement, and the share price is expected to remain in a volatile downtrend with no clear support. Moreover, as a semi-new stock, Shein's bottom is difficult to estimate, making it inadvisable to rush into bottom-fishing.
Mak added that the pressures faced by Shein are industry-wide. Fast fashion and cross-border e-commerce sectors are all affected by intense competition among peers, high fuel and air transportation costs, and increasing supply chain resilience requirements, which will continue to erode corporate gross margins. However, companies with international brand premium have relatively more buffer, while companies like Shein, which lack brand valuation premium, will face more pronounced pressure. (am)
