Core Viewpoint - The Hang Seng Index fell by 1.28% to close at 25,760.73 points on December 3, with a net inflow of HKD 2.279 billion through the southbound trading channel [1][3]. Group 1: Market Activity - The total trading volume for the southbound trading on December 3 was HKD 66.132 billion, with a net buy of HKD 2.279 billion [1]. - The Shanghai Stock Exchange's southbound trading accounted for HKD 39.050 billion in trading volume, with a net buy of HKD 0.548 billion, while the Shenzhen Stock Exchange had a trading volume of HKD 27.082 billion and a net buy of HKD 1.732 billion [1]. Group 2: Active Stocks - In the Shanghai Stock Exchange's southbound trading, Alibaba-W had the highest trading volume at HKD 32.55 billion, followed by Tencent Holdings and SMIC with HKD 20.92 billion and HKD 13.12 billion respectively [1]. - In terms of net buy amounts, Alibaba-W led with a net buy of HKD 2.60 billion, despite its stock price dropping by 2.17% [1]. - Tencent Holdings experienced the highest net sell amount of HKD 7.26 billion, with a closing price decrease of 0.97% [1]. Group 3: Shenzhen Stock Exchange Activity - In the Shenzhen Stock Exchange's southbound trading, Alibaba-W also topped the trading volume with HKD 23.90 billion, followed by Xiaomi Group-W and Tencent Holdings with HKD 16.21 billion and HKD 14.74 billion respectively [2]. - Xiaomi Group-W had the highest net buy amount of HKD 9.46 billion, despite a closing price drop of 1.18% [2]. - SMIC recorded the highest net sell amount of HKD 1.88 billion, with a closing price decrease of 2.11% [2].

Core Viewpoint - The majority of popular Chinese concept stocks experienced a decline, with the Nasdaq Golden Dragon China Index falling by 0.77% on December 3rd [1] Company Performance - Alibaba and Bilibili both saw their stock prices drop by over 2% [1] - NIO, NetEase, Baidu, and JD.com all experienced declines of over 1% [1]

Market Overview - The Hong Kong stock market experienced a decline on December 3, with the Hang Seng Index closing at 25,760.73 points, down 1.28% [2] - The total market turnover for the day was 1,644 million HKD, with southbound funds net buying 22.79 million HKD [2] Southbound Capital Activity - Southbound funds have net bought Alibaba for 15 consecutive days, accumulating a total of 286.49 million HKD [6] - On December 3, net purchases included Xiaomi Group at 8.7 million HKD, Alibaba at 4.27 million HKD, and Meituan at 2.97 million HKD, while Tencent Holdings saw a net sell-off of 7.32 million HKD [6] Semiconductor Sector - Semiconductor stocks showed resilience, with notable gains including Huahong Semiconductor up 1.58% and Hard Egg Innovation up 1.02% [3] AI and GPU Market Insights - HSBC's investment management head for China and core Asia, Shen Yu, indicated that China's AI capital expenditure story is just beginning, with significant growth expected in domestic GPU and AI computing power over the next 12 to 18 months [5] - The domestic GPU replacement rate is projected to rise rapidly to over 50% in the coming years, potentially reaching 79%, which will drive the development of AI applications in China [5] Stock Index Changes - FTSE Russell announced the inclusion of companies such as CATL and China Hongqiao into the FTSE China 50 Index, effective December 22 [11] - The changes will also see the removal of companies like CITIC Securities and Great Wall Motors from the index [11] Regulatory Actions - The Hong Kong Securities and Futures Commission has instructed the Hong Kong Stock Exchange to suspend trading of Daxian Education shares starting December 3, 2025, amid ongoing investigations [12][15]

Investment Rating - The report maintains a "Recommended" rating for the communication industry, considering the sustained high prosperity of the sector driven by AI, 5.5G, and satellite communication developments [4][1]. Core Insights - The overall market performance for the week (November 24-30, 2025) saw the Shanghai Composite Index rise by 1.40%, the Shenzhen Component Index by 3.56%, and the ChiNext Index by 4.54%. The communication sector, represented by the Shenwan Communication Index, increased by 8.70% [1][9]. - Within the communication sector, the highest increase was observed in the communication network equipment and devices, which rose by 12.14%, while the lowest increase was in communication application value-added services, which rose by 3.56% [12][1]. - Notable individual stock performances included Guangku Technology with a 39.19% increase, Tongyu Communication at 39.06%, and TeFa Information at 34.07% [14][1]. Summary by Sections Weekly Market Overview - The communication industry index increased by 8.70% during the week [9]. - The communication network equipment and devices sub-sector had the highest increase at 12.14% [12]. - The majority of stocks in the communication sector experienced gains, with 89.52% of stocks rising [14]. News Highlights - Google has adjusted its 2027 TPU shipment expectations upward, indicating a positive outlook for the non-NV inference chip supply, which is expected to boost the overseas computing hardware chain [2]. - Alibaba's cloud revenue for Q2 FY2026 reached 398.24 billion yuan (approximately 55.94 billion USD), marking a 34% year-on-year growth, with AI-related product revenue achieving triple-digit growth for nine consecutive quarters [2][21]. - The establishment of the Commercial Space Administration in China is expected to enhance coordination and integration within the satellite industry, promoting high-quality development [2][20]. Key Company Announcements - Notable announcements from the communication sector include ongoing equity acquisitions and transfers by companies such as Unisplendour and Tianfu Communication [24][26].

Core Viewpoint - Aojie Technology announced a share reduction by Alibaba, decreasing its stake from 13.99% to 12.69% through a sale of 5,439,008 shares between November 24 and December 1, 2025 [1][7]. Group 1: Company Overview - Aojie Technology, established in 2015 in Zhangjiang, Shanghai, specializes in chip product sales, custom chip services, and semiconductor IP licensing, with key products including cellular baseband chips and non-cellular IoT chips [3][9]. - Alibaba has been a significant shareholder since 2017, participating in multiple funding rounds [4][10]. Group 2: Financial Performance - For the first three quarters of 2025, Aojie Technology reported total revenue of 2.88 billion yuan, a year-on-year increase of 13.42% [3][9]. - The company recorded a net loss attributable to shareholders of 327 million yuan, an improvement from a loss of 412 million yuan in the same period last year [3][9]. - The total gross profit improved by 68 million yuan year-on-year, attributed to increased chip sales and improved gross margins [3][9]. Group 3: Shareholder Actions - The reduction in Alibaba's stake is primarily due to its own business arrangements, and Alibaba remains a key shareholder with a positive outlook on Aojie Technology and its industry [4][10]. - Aojie Technology has not been informed of any further reduction plans by Alibaba [4][10].

Group 1 - OpenAI is developing a new large language model named "Garlic" [1][3] - Tesla has released a video showcasing its humanoid robot "Optimus" running [1][3] - Amazon has launched a custom AI chip called Trainium3 [1][3] Group 2 - The image creation model Seedream 4.5 has been released [1] - The AI glasses Livis have been officially launched with a starting price of 1999 yuan [1] - The Qianwen APP has integrated Alibaba's learning model [1] - Hangzhou Tongxing Technology has released its first AI assistive glasses for the visually impaired [1] - The French AI startup Mistral AI has officially launched the Mistral 3 model [1]

Core Insights - Traditional e-commerce is facing a "mid-life crisis" characterized by traffic saturation, ineffective promotions, and challenges in international expansion [1][3] Group 1: Traffic and User Behavior - The initial "traffic anxiety" in traditional e-commerce has escalated, with users now favoring platforms like Meituan for food delivery and Douyin for shopping, leading to a significant decline in attention towards traditional e-commerce sites [3][5] - Alibaba's e-commerce segment, which historically contributed around 60% of the group's revenue, is now under pressure as competitors like Douyin see rapid growth, with Douyin's GMV projected to reach 3.5 trillion yuan in 2024, growing over 30% [3][6] Group 2: Promotion Challenges - The traditional promotional model, exemplified by the "Double 11" shopping festival, has lost its appeal, with the event's duration extended to 28 days in 2024, resulting in a 27% GMV increase to 1.442 trillion yuan, but largely due to extended promotional periods rather than genuine consumer interest [10][12] - Consumers are increasingly fatigued by frequent promotions, leading to a decline in the effectiveness of traditional discount strategies, as evidenced by the 15.2% GMV growth during the 618 festival, which also relied on extended promotional periods [12][10] Group 3: International Expansion - Traditional e-commerce is looking to international markets for growth, with plans to host "Double 11" in 20 countries, reflecting a collective effort to seek survival through global expansion [14] - However, international expansion is fraught with challenges, including stricter regulations in the U.S. and EU, competition from local giants like Amazon and Mercado Libre, and difficulties in adapting to consumer habits in developed markets [16][18] Group 4: Strategic Misalignment - The core issue for traditional e-commerce lies in "strategic confusion and identity misalignment," as companies attempt to defend their market share while blindly following trends, leading to a diversion of resources from their core business [21][23] - Companies like Alibaba are investing heavily in new ventures like food delivery and instant retail, but this has resulted in a significant drop in profits, with an 85% year-on-year decline reported in their latest financial results [10][21] Group 5: Future Outlook - The current landscape of global e-commerce is undergoing a transformation, with companies needing to refine their core competencies rather than relying on subsidies and extended promotions to attract users [24][26] - The mid-life crisis of traditional e-commerce is viewed as a turning point, where adapting to changes and leveraging accumulated advantages could lead to overcoming current challenges [26]

Core Insights - The analysis maintains a bullish outlook on Alibaba Group Holding Limited (BABA), despite not rating the stock as a "Strong Buy" anymore [1]. Group 1: Company Analysis - The focus is on high-quality companies that can outperform the market over the long run due to competitive advantages and high levels of defensibility [1]. - The analysis encompasses a wide range of companies, from large-cap to small-cap, primarily in European and North American markets [1]. Group 2: Analyst Background - The analyst has a Master's Degree in Sociology with an emphasis on organizational and economic sociology, along with a Bachelor's Degree in Sociology and History [1].

Core Viewpoint - The Hong Kong Consumption ETF (159735) has experienced significant growth in both share volume and fund size in 2023, despite a recent decline in market performance [1][2]. Group 1: Fund Performance - As of December 2, 2023, the Hong Kong Consumption ETF (159735) has a total share volume of 926 million and a total fund size of 779 million yuan, reflecting a year-to-date increase of 140.06% in share volume and 198.09% in fund size compared to the end of 2022 [1]. - The fund's management fee is set at 0.50% annually, while the custody fee is 0.10% annually [1]. - The fund manager, Li Yixuan, has managed the ETF since its inception on May 25, 2021, with a performance return of -15.87% during the management period [1]. Group 2: Trading Activity - The Hong Kong Consumption ETF (159735) recorded a total trading volume of 1.143 billion yuan over the last 20 trading days, averaging 57.17 million yuan per day [1]. - Year-to-date, the ETF has accumulated a total trading volume of 22.285 billion yuan over 223 trading days, with an average daily trading volume of 99.93 million yuan [1]. Group 3: Top Holdings - The ETF's top holdings include Alibaba-W (19.54%), Tencent Holdings (16.59%), and Pop Mart (7.99%), among others, with their respective market values and share counts detailed [2]. - The fund's significant positions reflect a diversified exposure to major players in the Hong Kong consumer market, indicating a strategic focus on high-growth companies [2].

Investment Rating - The industry investment rating is "Overweight (Maintain)" [1] Core Viewpoints - The computer industry is experiencing a significant demand for computing power driven by ongoing AI transformations, with major companies like Alibaba showing strong growth in AI-related revenues [3][4] - The report highlights the performance of the computer sector, which outperformed the Shanghai Composite Index by 1.68 percentage points and the CSI 300 Index by 1.44 percentage points during the past week [2] Summary by Sections Market Review - The Shanghai Composite Index rose by 1.40%, the ChiNext Index increased by 4.54%, and the CSI 300 Index gained 1.64% during the week from November 24 to November 28, while the computer sector index rose by 3.08% [2] Weekly Insights - Alibaba's Q3 report indicated a revenue of 247.8 billion yuan, a year-on-year increase of 4.8%, with AI and cloud services showing robust growth [3] - The cloud intelligence group's revenue reached 39.82 billion yuan, up 34% year-on-year, and AI-related product revenue has seen triple-digit growth for nine consecutive quarters [3] - Alibaba's market share in China's AI cloud market reached 35.8%, surpassing the combined share of its next three competitors [3] Investment Recommendations - Suggested companies to focus on include: - Computing Power: Cambrian, Haiguang Information, Zhongke Shuguang, Huafeng Technology, Shenling Environment, Yingweike, Oulutong, and Zhongheng Electric [5] - AIDC: Kehua Data, Yunsai Zhili, Hongxin Electronics, Runjian Shares, Runze Technology, and Dataport [5] - AI Applications: Kingsoft Office, iFlytek, Foxit Software, Wankong Technology, Dingjie Zhizhi, Hand Information, Nengke Technology, and Zhuoyi Information [5]