[ET Net News Agency, 29 August 2024] Nvidia is regarded by Wall Street as "the most
important stock on earth". Its performance lacked surprises, and investors had begun to
sell the stock before the results were released. The after-hours decline expanded to more
than 6%, dragging down the performance of technology stocks, and US stocks fell across the
board. Last night, Chinese concept stocks surged across the board, with the Nasdaq China
Golden Dragon Index plunging 3.57% or 199 points to 5,399. The closing day of the Hong
Kong stock market was dragged down by the decline in Chinese concept stocks. Although the
performance of the blockbuster Meituan (03690) beat expectations and drove the stock price
to surge by nearly 10% in the morning session, the weakening atmosphere and
pre-performance selling pressure on Chinese banking stocks dragged down the Hang Seng
Index. It was difficult for Meituan to help. The Hang Seng Index fell 115 points in the
morning session. The Hang Seng Index fell 115 points or 0.7% to 17,576. The main board
turnover was nearly HKD 57.7 billion.
The Hang Seng China Enterprises Index was 6,167, down 58 points or 0.9%. The Hang Seng
Technology Index was 3,421, down 24 points or 0.7%.

"Wong Wai Ho: Chinese concept stocks are trapped by outlook expectations. The Hang Seng
Index does not cross the bull-bear line, which is not pessimistic"

Li Auto (02015) announced its second-quarter results. Although revenue increased by
10.6% year-on-year to RMB 31.7 billion, its adjusted net profit dropped significantly by
nearly 45% to only RMB 1.5 billion. After the announcement, Li Auto's ADR plummeted by
more than 16%.
Wong Wai Ho, an executive director of the Research Department of China Vered Securities
Limited, told ET Net News Agency that the main reason for the sharp decline of Li Auto is
the narrowing of profit margins. Recently, Chinese concept stock companies have generally
encountered the same difficulties. Even if the performance is satisfactory, the stock
price is difficult to resume its upward trend. The main reason is that the forecasts for
the future are still pessimistic, so the market has lowered valuations one after another,
resulting in the weakness of Chinese concept stocks.

"The dividend distribution of Mainland China banks is beneficial to the deployment of
retail investors, but the overall profit effect is slight"

Mainland China banking stocks have announced their results one after another. Bank of
Communications (03328) and CITIC Bank (00998) were the first to announce their results.
Although both Mainland China banks announced interim dividends for the first time, both of
them recorded a narrowing of net interest margins in the interim, and their stock prices
fell by more than 6% and more than 5% in the morning session, respectively. Wong Wai Ho
analysed that Mainland China banking stocks that have not announced results have a greater
chance of announcing mid-term dividends. Since many China characteristics stocks this year
have already announced that they will increase their dividends, and it has become one of
the KPIs of Mainland China banking stocks, the market has already been prepared for the
mid-term dividends.
He emphasized that the payment of the first interim dividend by the Chinese banks does
not mean that the full-year dividend will be increased, because Chinese banks tend to
maintain a certain dividend payout ratio, which means that future final dividends will
also be reduced accordingly. However, he pointed out that dividing the annual final
dividend into two dividends is also positive news for retail investors, because early
payment and early enjoyment will help retail investors to make further arrangements. It
will always have a certain positive effect, but the overall benefit is not too big.

"Speculating on new forces is to capture the moment when their performance turns losses
into profits. Li Auto drags down future forecasts"

The performance of Li Auto is unsatisfactory, with revenue rising but profits shrinking.
Wong Wai Ho pointed out that the electric vehicle market is known to be fiercely
competitive. Facing hundreds of electric vehicle brands in the Mainland China, the
performance of Li Auto reflects the impact of the price reduction war. Sales volume
increased but profits fell. New forces generally fail to make profits. Speculating on new
forces is to capture the moment when their performance turns losses into profits. However,
this time's poor performance of Li Auto will make people feel that new forces are one step
further away from turning losses around. As a result, today's Xpeng (09868), NIO (09866)
and Leapmotor (09863) both followed the fall.
He mentioned that unless the price reduction war ends, it will be difficult for new
forces to gain momentum in the short to medium term. Even if the company continues to
introduce funds, it will be difficult to immediately increase its market valuation.