Divergences in US-Iran talks lead to a 140-point drop in the Hang Seng Index, with significant pullback in tech stocks. The semiconductor supply chain continues to see strong demand; investors may consider the E Fund Asia Semiconductor ETF.

Although there has been a two-week ceasefire between the US and Iran, disagreements persist in the ceasefire negotiations. Trump insists that Iran must not possess nuclear weapons and that the Strait of Hormuz must remain open, while Iran accuses the US of violating the ceasefire agreement. Both sides hold different positions, compounded by Israel's surprise attack on Lebanon after the ceasefire. Therefore, the market remains cautious ahead of formal negotiations. The broader Asian-Pacific stock markets have retreated, with Hong Kong shares opening 136 points lower and falling as much as 239 points to 25,653, before narrowing losses slightly. In the afternoon, it rebounded to a high of 25,854 and closed at 25,752, down 140 points or 0.54%, with a turnover of HKD 244.9 billion. The Hang Seng Tech Index closed at 4,821, down 101 points or 2.06%; the H-share Index closed at 8,611, down 65 points or 0.75%. Among blue-chip stocks, 36 rose, 53 fell, and 1 remained unchanged. Southbound capital took advantage of the market decline, recording net inflows exceeding RMB 12.5 billion throughout the day.

Aluminum stocks outperformed today, becoming one of the few bright spots in the market. Major US aluminum suppliers recently raised premiums for semi-finished aluminum products by approximately 12%, primarily due to supply disruptions caused by Middle Eastern conflicts. Domestic aluminum prices have also risen, leading to widespread profit growth among listed aluminum companies in the first quarter. China Hongqiao $CHINAHONGQIAO (01378.HK)$ (1378.HK) surged HKD 1.94 or 5.19%, closing at HKD 39.3, making it the best-performing blue chip of the day. Aluminum Corporation of China $CHALCO (02600.HK)$ (2600.HK) issued a positive earnings forecast, expecting a year-on-year increase of 50% to 58% in net profit attributable to shareholders in the first quarter. Its share price rose HKD 0.42 or 3.39%, closing at HKD 12.82.

The optical communication sector regained momentum as the Google Cloud Next conference approaches. Market expectations are rising for increased demand for OCS optical path switches, along with global fiber optic price hikes. It is estimated that the supply-demand gap could widen to 15% between 2026 and 2027. Yangtze Optical Fiber $YOFC (06869.HK)$ (6869) rose by $15.6 or 6.94%, closing at $240.4; Huiju Technology $TIME INTERCON (01729.HK)$ (1729) rose by $1.2 or 6.7%, closing at $19.1.

The AI large model concept performed well against the market trend as the mysterious AI video generation model 'Happy Horse' emerged, ranking first on the Artificial Analysis evaluation list and surpassing ByteDance's Seedance 2.0. Speculation suggests it was developed by a Chinese team, driving related concept stocks to surge. Xunce $XUNCE (03317.HK)$ (3317) rose by $55.6 or 23.92%, closing at $288, hitting a new high since its listing with a trading volume of $2.811 billion; Zhipu $KNOWLEDGE ATLAS (02513.HK)$ (2513) officially launched its new generation open-source model GLM-5.1 and raised prices by another 10%. The stock price rose by $61 or 7.02%, closing at $929.5; Deshibio $DIAGENS-B (02526.HK)$ (2526) rose by $26 or 9.52%, closing at $299; Biren Technology $BIREN TECH (06082.HK)$ (6082) rose by $1.7 or 5.2%, closing at $34.36; TianShu Zhipin $ILUVATAR COREX (09903.HK)$ (9903) rose by $2.2 or 0.7%, closing at $296.

However, traditional tech stocks generally faced pressure today. Alibaba $BABA-W (09988.HK)$ (9988), despite news of establishing a new Group Technology Committee and upgrading the Tongyi large model, saw several major banks lower its target price. It fell by $3.6 or 2.85% for the day, closing at $122.9; Kuaishou $KUAISHOU-W (01024.HK)$ Alibaba (1024) was warned by S&P that its free cash flow may drop by more than half this year, with capital expenditure expected to rise by 70%. In addition, the new 'Happy Horse' model poses a threat to its subsidiary, Lingma. The stock fell 1.68 yuan or 3.6%, closing at 45.02 yuan; Xiaomi $XIAOMI-W (01810.HK)$ (1810) fell 1.4 yuan or 4.27%, closing at 31.36 yuan; Baidu $BIDU-SW (09888.HK)$ (9888) fell 2 yuan or 1.79%, closing at 109.6 yuan; Meituan $MEITUAN-W (03690.HK)$ (3690) fell 0.5 yuan or 0.57%, closing at 88 yuan; Tencent $TENCENT (00700.HK)$ (0700) announced that its cloud AI computing power product will increase prices starting next month. Its share price slightly increased by 0.5 yuan or less than 0.1%, closing at 508.5 yuan.

Auto stocks showed mixed performance today. Geely Auto $GEELY AUTO (00175.HK)$ (0175) rose 0.56 yuan or 2.35%, closing at 23.82 yuan; Nio $NIO-SW (09866.HK)$ (9866) rose 1.1 yuan or 2.17%, closing at 51.85 yuan. XPeng Motors $XPENG-W (09868.HK)$ (9868) fell 3.8 yuan or 5.37%, closing at 67.75 yuan; BYD $BYD COMPANY (01211.HK)$ (1211) launched the new Denza brand car in Paris and plans to install fast-charging equipment in France. However, its share price fell 5 yuan or 4.68%, closing at 101.8 yuan; Li Auto $LI AUTO-W (02015.HK)$ (2015) fell by HKD 1.4 or 1.91%, closing at HKD 71.8.

In other stock performances, Link REIT $LINK REIT (00823.HK)$ (0823) announced the sale of its Singapore retail property for SGD 250 million, at a premium to book value. Its share price increased by HKD 0.18 or 0.48%, closing at HKD 37.88, hitting a one-month high during trading. Some local real estate stocks performed well against the market trend; Henderson Land $HENDERSON LAND (00012.HK)$ (0012) rose by HKD 0.54 or 1.8%, closing at HKD 30.52; Cheung Kong $CK ASSET (01113.HK)$ (1113) climbed by HKD 0.44 or 0.9%, closing at HKD 47.34; Ali Health $ALI HEALTH (00241.HK)$ (0241) dropped by HKD 0.25 or 5.1%, closing at HKD 4.65; Wuxi AppTec $WUXI APPTEC (02359.HK)$ (2359) surged by HKD 4.3 or 3.45%, closing at HKD 128.9; Li Ning $LI NING (02331.HK)$ (2331) gained HKD 0.8 or 3.66%, closing at HKD 22.66; China Resources Mixc Lifestyle $CHINA RES MIXC (01209.HK)$ (1209) increased by HKD 1.66 or 3.55%, closing at HKD 48.42; Longfor Group $LONGFOR GROUP (00960.HK)$ (0960) was downgraded by major banks on target price, falling by HKD 0.44 or 5.59%, closing at HKD 7.43, making it the worst-performing blue chip of the day.

Aviation stocks are under pressure from high oil prices, with major banks lowering target prices for the three major mainland aviation stocks, expecting each to face net losses of over several billion RMB. China Southern Airlines $CHINA SOUTH AIR (01055.HK)$ (1055) fell 0.12 yuan or 2.8%, closing at 4.16 yuan; Air China $AIR CHINA (00753.HK)$ (0753) fell 0.14 yuan or 2.77%, closing at 4.92 yuan; Cathay Pacific $CATHAY PAC AIR (00293.HK)$ (0293) fell 0.32 yuan or 2.67%, closing at 11.65 yuan; China Eastern Airlines $CHINA EAST AIR (00670.HK)$ (0670) fell 0.1 yuan or 2.49%, closing at 3.92 yuan.

The global semiconductor industry continues to grow rapidly driven by AI demand, with global chip sales expected to reach nearly $1 trillion by 2026, and AI-related chips contributing nearly half of that. In terms of capital expenditures, global semiconductor capex is projected to hit $200 billion by 2026, a year-on-year increase of about 20%. Taiwan Semiconductor alone is expected to spend between $52-56 billion, an annual growth of 27% to 37%, reflecting the full acceleration of AI infrastructure investment. Nvidia has already booked most of Taiwan Semiconductor's advanced packaging capacity, and the bottleneck in the AI chip supply chain is shifting from wafer manufacturing to advanced packaging, driving strong demand across the entire Asian semiconductor supply chain. Investors looking to capture a basket of investment opportunities across Asia’s semiconductor全产业链 can look at the E Fund Asia Semiconductor ETF $EFund A SEMICON ETF (03486.HK)$ (3486), which closed today at 14.95 yuan, down 0.07 yuan or 0.47%. This ETF tracks the Solactive Asia Semiconductor Select Index, which has returned 426% cumulatively since its base date in March 2020. Returns over the past year and two years were 72% and 185%, respectively, selecting 30 leading semiconductor companies from Hong Kong, Japan, South Korea, and Taiwan, including Taiwan Semiconductor, SK Hynix, SMIC $SMIC (00981.HK)$ (0981), Huahong Semiconductor $HUA HONG SEMI (01347.HK)$ (1347), and ASMPT $CHINACOMSERVICE (00552.HK)$ (0522), covering key segments such as wafer foundries, memory, equipment, and testing. Investors should note that this ETF is concentrated in the semiconductor sector and is subject to industry and geographic concentration risks, with higher NAV volatility, making it suitable for investors optimistic about the long-term development of Asia’s semiconductor industry and continued growth in AI computing power.

@孫子的末代傳人 @中戶變大戶小牛變大牛 @股海GSO

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