Is Hang Seng Index gradually approaching the turning point of a bear market?

Both A-shares and Hong Kong stocks can be described as light, with both markets experiencing stagnant funds. The trading volume of A-shares for the whole day was less than CNY 650 billion. In fact, this also fully demonstrates another point: the market is approaching the 2,900-point level of the Shanghai Composite Index, and the selling pressure is gradually diminishing, with the momentum of short selling decreasing.

Normally, below the 3,000-point level of A-shares, it is often an opportunity to bottom fish, especially for some hidden funds that like to make long-term layouts in blue-chip companies. Therefore, the sector with the greatest volatility should be the Chinese brokerage sector (every time the index rises, the brokerage sector is definitely at the forefront).

Recently, GUOLIAN SEC Minsheng Securities announced its integration, and the mergers and acquisitions of brokerage firms are heating up. There are also rumors in the market that Ping An Securities may merge with Founder Securities. According to the requirements of the China Securities Regulatory Commission, Ping An Insurance needs to submit a plan to resolve the issue of controlling both Founder Securities and Ping An Securities by December 19th of this year. Industry insiders predict that under the guidance of regulatory policies and the increasing differentiation of industry profits, the process of mergers and acquisitions in the brokerage industry is expected to enter an accelerated period. However, investors should be reminded that even if the brokerage sector is undergoing restructuring and consolidation, it seems to be far less attractive to off-market speculative funds than before. After all, what does it matter if the brokerage firms merge? The overall market still lacks incremental funds, not to mention that the large financial sector generally lacks technological content and belongs to the category of "speculation and then retreat". In addition, many brokerage firms have both A-shares and H-shares with significant price differences. Often, A-share funds enter enthusiastically while H-share funds retreat faster than anyone else. The synergy of the sector is not as strong as before.

On the contrary, structural market trends are gradually emerging in A-shares. Due to the obvious profit-making effect of the Beijing Stock Exchange in A-shares recently, many funds have started to join the game, as can be seen from the increase in new account openings. It is very similar to the ChiNext board in its early days, with daily trading volume reaching 1 billion and the Beijing Stock Exchange surpassing HKD 20 billion in recent transactions. According to the current IPO speed of the Beijing Stock Exchange, it is also possible to expect a daily transaction volume of over HKD 80 billion next year. After the release of the "19 Measures for Deepening Reform of the Beijing Stock Exchange", the acceptance of IPOs on the Beijing Stock Exchange has gradually increased, with 34 companies accepted since September, including 6 companies in early December. Industry insiders believe that with the implementation of the direct IPO rules of the Beijing Stock Exchange, the expansion of the Beijing Stock Exchange is expected to accelerate next year.

A-shares are experiencing structural market trends, while Hong Kong stocks are experiencing individual stock trends, which is different. In fact, in the context of the "bottoming out of the mobile phone industry chain cycle", the stock prices of consumer electronics companies in Hong Kong have generally risen, but the trend is slow. Don't believe it? Just take a look at Sunny Optical (02382), whose stock price has risen by 30% since October; AAC Technologies (02018) has seen a stock price increase of over 60%; Q Technology (01478) has nearly doubled its stock price; and GoerTek (01415) has been a bull for four years (with a minimum stock price of HKD 0.83, it has increased 20 times in four years)......Gao Wei Electronics has always been highly valued in the Apple supply chain. With the recent high attention on the Apple VR market, the newly updated iOS 17.2 system officially launched the "Spatial Video" shooting function, which has accelerated the launch of Apple's Vision Pro and increased industry attention to high-end MR headsets. Longbridge Securities previously stated that A customer's new headset product will be officially released in early 2024, equipped with 12 cameras, and Gao Wei Electronics is expected to gain an important supply share.

Guo Mingchi, an analyst at TF International Securities, recently stated in a new article that generative AI will become popular in 2023, and the iPhone 16 will introduce related innovative features. In other words, the iPhone 16 will be the first AI iPhone. It is reported that Apple reorganized the Siri team in the third quarter of this year, with the goal of integrating AIGC functions and LLM. On mobile phones, voice input will be the key interface for AI, AIGC, and LLM, so strengthening Siri's software functionality is the key to promoting AI features. According to previous leaks from Mark Gurman, the iPhone 16 will be the first to be equipped with the iOS 18 operating system. With iOS 18, Apple will bring a smarter Siri assistant. It will truly understand the user's language and accurately grasp the meaning behind the user's words.

As the microphone supplier for the iPhone 16, it is expected that Goertek (002241.SZ) and AAC Technologies (02018.HK) will have similar supply proportions. At the same time, benefiting from the specification upgrade, the unit price of the microphone for each iPhone 16 will be at least 100-150% higher than that of the iPhone 15. In addition, as AI devices are expected to be a key trend in consumer electronics in 2024, it is expected that Apple's other products and high-end Android phones may also upgrade their microphones. This will be a potential source of growth for AAC Technologies and Goertek, and both companies will become leading beneficiaries of the AI iPhone.

In the Hong Kong stock market, trends are favored. Often, when retail investors realize the medium- to long-term trends, the stock price is already close to its peak. Large-cap Hong Kong stocks prefer to explore the driving force for stock price increases from within the company rather than relying on concepts to support stock prices. For example, recent unexpected events such as the suspension of navigation in the Red Sea have been hyped by the media, but the HK market is not particularly interested. In the Hong Kong market, short-term fluctuations in commodities have little significance for long-term performance improvement of companies. Only breakthroughs in the innovative technology of the industrial chain can establish more stable investor confidence.

Therefore, even international investment banks that have always been pessimistic about Chinese technology companies have changed their stock price forecasts for Lenovo Group. According to data from Qunzhi Consulting, it is estimated that the global shipment volume of AI PCs in 2024 will reach approximately 13 million units, marking the year of scale shipments. From 2025 to 2026, the shipment volume of AI PCs will continue to maintain a double-digit annual growth rate and become a mainstream PC product type in 2027. This means that the global PC industry will steadily enter the AI era in the next five years, and opportunities will come again for leading manufacturers like Lenovo Group.On December 12th, Goldman Sachs, a top international investment bank, released a research report stating that global PC shipments are expected to have a sustained recovery path, with inventory bottoming out and demand stabilizing. The estimates for 2025-2030 remain largely unchanged, with a similar year-on-year growth of 7% in PC shipments in 2024, reaching 270 million units. The "buy" rating for Lenovo Group (00992.HK) is maintained, with the expectation that the PC business will recover next year, and the average selling price and profit margin of AI-related devices will also increase.

Disclaimer: This article is for discussion purposes only and should not be considered as investment advice. The author does not hold any of the mentioned Hong Kong stocks. The stock market carries risks, and investment should be approached with caution!