Market Overview - On August 18, despite a lack of direction in the Hong Kong stock market, individual stocks showed good performance, with the Hang Seng Index down 93 points or 0.4% to close at 25,176 points, while the Hang Seng Tech Index rose 0.7% to 5,579 points [1] - The market saw a trading volume exceeding 311.9 billion HKD, indicating active trading. Net inflow from the Stock Connect decreased to 870 million HKD [1] - The overall market performance was stable, with 959 stocks rising, highlighting increased investor interest in high-performing stocks and industry leaders [1] Economic Analysis - Since July, the momentum of economic recovery in China has weakened, and the Hang Seng Index's valuation has significantly recovered, with a forecasted PE of approximately 11 times, returning to levels seen in 2018-2019 [2] - The risk premium is at a historical low, and the AH premium has reached a near six-year low. A technical correction in the index is considered a normal phenomenon within a high-level fluctuation [2] - The ample liquidity in the market supports Hong Kong stocks, while the 10-year Chinese government bond yield has risen to 1.78%, indicating a shift towards asset rebalancing from bonds to stocks [2] Real Estate Sector - The new housing transaction volume continued to decline year-on-year, with a reported 1.23 million square meters sold in 30 major cities, down 15.5% year-on-year [3] - The decline in transaction volume was worse than the previous week's 12.3% drop, with a month-on-month decrease of 4.9% [3] Industry Dynamics Consumer Sector - 361 Degrees (1361 HK) announced a strategic partnership with Stand Robot, focusing on wearable robots and high-performance materials, which positively impacted its stock price, rising 2.3% [4] Automotive Sector - The automotive sector saw a rally, with Great Wall Motors (2333 HK) rising 10.2%, driven by favorable sales and performance news [4] - Other automotive stocks like Geely (175 HK) and BYD (1211 HK) also saw increases of 2.6% and 0.8%, respectively [4] Innovative Pharmaceuticals - The innovative drug sector saw most major companies rise, with a focus on expanding medical insurance coverage and supporting pharmaceutical innovation [5] - China Biopharmaceutical (1177 HK) reported steady growth in the first half of the year, while Haijia Medical (6078 HK) forecasted a decline in revenue and net profit but improved cash flow due to reduced receivables [5] New Energy and Utilities - The new energy and utilities sector experienced narrow fluctuations, with some stocks like Harbin Electric (1133 HK) and Weisheng Holdings (3393 HK) rising by 1.3% and 4.5%, respectively [6] - Hong Kong and China Gas (1083 HK) reported expected mid-term results but saw a decline of 7.2% in stock price, possibly due to profit-taking [6] Company-Specific Updates China Water Affairs (855 HK) - The company announced an increase in water prices for a new supply project in Hubei, with price hikes of 9.6% to 64.4% effective from September 1 [7] - Two additional water supply projects are entering the hearing stage, with a total daily supply capacity of 104,000 tons [8] - The likelihood of a full acquisition offer for Kangda Environmental (6136 HK) is low, and it is not expected to impact the company's financial status [9] - The target price for China Water Affairs has been raised to 6.90 HKD, reflecting a potential upside of 11.1% [10] 361 Degrees (1361 HK) - The company reported a revenue increase of 11.0% to 5.71 billion RMB in the first half of the year, with a net profit of 860 million RMB, also up 8.6% [12] - The children's clothing segment showed strong performance, with a 25.8% increase in sales [13] - E-commerce revenue grew by 45% to 1.82 billion RMB, driven by promotional events and new product launches [14] - The target price for 361 Degrees has been adjusted to 7.74 HKD, corresponding to a 10 times FY26E PE ratio [15]