UOB Kay Hian Private Wealth Management
July 29, 2025

China Bi-Weekly Market Outlook: Key Stocks, Sector Trends, and Market Movers for Investors in 2025

Market Overview: China and Hong Kong Equities Surge Amid Trade Optimism and Tech Rally

The past two weeks have brought renewed optimism to China and Hong Kong markets, highlighted by the Hang Seng Index’s 5.6% gain and a strong performance from technology stocks. Investors are cheered by the U.S. easing export controls on AI chips to China and growing positive sentiment around U.S.-China trade negotiations. Despite minimal news from the ongoing trade talks in Stockholm, expectations remain high, with the possibility of extending the August 12 deadline by another 90 days.
Hong Kong’s technology sector is seeing a catch-up rally, with the Hang Seng Tech Index up 7.2% in two weeks. Meanwhile, China A-shares have lagged but are showing limited downside, suggesting an attractive risk-reward setup for the near term.

Key China Market Indices (as of July 28, 2025)

Key Upcoming Events for China Market Watchers

• FOMC Meeting: July 29-30
• USCBC Delegation to China: July 27-30
• US-China Trade Negotiation: July 27-30
• China Politburo Meeting: Estimated July 28-31
• China Top 100 Real Estate Developer Sales: July 31
• China Exports Data: August 7
• China CPI/PPI: August 9
• Hong Kong Earnings Season: Mid-August

Southbound Trading: Big Tech Reclaims the Spotlight

Southbound inflows have accelerated, with net buying of HKD 63 billion over the past two weeks, up from HKD 43 billion previously. China’s 10-year bond yields remain at historic lows (1.7%), fueling robust southbound flows into Hong Kong equities.

New Entrants in Southbound Top 10 Trading List

The latest additions reflect diversified investment themes:

• Infrastructure: Dongfang Elec, Huaxin Cement, Lonking, Ch Energy Eng
• Financials: China Life
• AI: Kingsoft Cloud
• EVs: Li Auto-W

Sector Performance: Health Care, Conglomerates, and Materials Shine

Best Performing Hang Seng Sectors (Past Two Weeks)

Lagging Sectors

• Energy: 3.1% two-week return, 4.0% YTD (key stocks: 1921.HK -8.4%, 0467.HK -1.7%, 0934.HK +1.6%)
• Utilities: 3.0% two-week return, 5.1% YTD (0991.HK -8.3%, 0135.HK -1.5%, 1071.HK -1.9%)
• Communication Services: 1.1% two-week return, 15.2% YTD

Company Deep Dives: Movers, Shakers, and Key Events

Anta Sports (2020.HK): Franchise Revamp and Growth Strategy

• 2Q2025 operational update: Anta brand/Fila/other brands (ex-Jack Wolfskin) saw retail sales growth in the low-single, mid-single, and 50-55% range, respectively for 2Q2025, and mid-single, high-single, and 60-65% for 1H25.
• Descente/Kolon/Maia Active/Jack Wolfskin all achieved >40%, >70%, >30%, and >30% retail sales growth in 2Q2025.
• Anta brand’s 2Q2025 performance was below management’s expectations, attributed to online channel restructuring and offline franchise store upgrades.
• New store formats are delivering strong results: 70 Super Anta stores (20 opened in 1H2025) and 100 Champion stores (17 opened in 1H2025) both had high double-digit same-store sales growth.
• Lighthouse Plan launched to optimize franchise stores, with acceleration expected in 2H2025 through 2027.
• Recommendation: Maintain BUY with a DCF-based target price of HK\$108.60, implying 20.9x 2025F PE and 19.3x 2026F PE.

BYD (1211.HK): Inventory Buildup and Reputation Challenges

• Dealer inventory days increased from 73 (June 30) to 90-100, following May–June sales promotions and intensified competition with Geely.
• Potential impact from public backlash over BYD’s 5-year sponsorship of the China National Men’s Football Team, though not yet reflected in sales volume or pricing.
• BYD is shifting focus to tech-driven growth (e.g., L4 parking technology); overseas sales up 128% year-on-year, targeting 2 million units by 2027.
• Recommendation: Near-term negative sentiment, but strategic international expansion and technology focus remain long-term positives.

China Real Estate: CR Land (1109.HK), COLI (0688.HK), Longfor (0960.HK)

• CR Land: Expected ~20% YoY growth in 1H2025 revenue, ~10% recurring business growth, GPM improvement to 23.7%. Core net profit may decline ~5% YoY due to lower gains from asset disposals.
• COLI: Mild revenue growth in 1H2025, blended GPM to drop to 17–18% (from 22.1% in 1H2024), core net profit expected to fall ~20% YoY.
• Longfor: Over 25% YoY revenue growth in 1H2025, but GPM may drop to 12.2% (from 20.6%), and core net profit expected to decline 60–70% YoY. However, most land costs are paid and capital expenditures are declining, reducing financial pressure.
• Sector View: MARKET WEIGHT. Despite weakening real estate markets and price declines, CR Land stands out for its healthy balance sheet, resilient earnings, and attractive dividend yield (4.7%/4.8% for 2025/2026). CR Land is a Trading Buy.

Information Technology and AI Supply Chain: Huawei, NAURA, SMIC, Innolight, Envicool, FII, WUS

• Huawei launched its AI server rack system “Cloudmatrix 384” at the World AI Conference in Shanghai, featuring engineering innovations and performance comparable to NVIDIA’s GB200 NVL72 racks.
• Innolight (optical transceiver maker) is a significant beneficiary as Cloudmatrix uses full optical networking instead of copper interconnects.
• Envicool is set to benefit from increased demand for liquid cooling solutions due to higher compute density.
• Server OEMs/ODMs like FII and AI chip/switch board PCB suppliers like WUS are also positioned for growth as AI infrastructure demand rises.
• SMIC has reportedly resolved some capacity expansion bottlenecks through import substitution, leveraging domestic equipment from Chinese vendors like NAURA. This supports scale-up for domestic AI data centres and ongoing import substitution in advanced semiconductor nodes.

Conclusion: Market Trends and Opportunities to Watch

With strong Southbound flows, tech sector momentum, and a dynamic mix of sector winners and laggards, China and Hong Kong markets present a landscape rich with opportunity and risk. Upcoming macro events, earnings releases, and policy meetings will set the tone for the next phase of market activity. Investors should keep an eye on leading names in technology, real estate, and infrastructure, as well as the evolving dynamics in trade and monetary policy.
UOB Kay Hian’s market outlook underscores the importance of diversified exposure and close monitoring of both macro and company-specific developments for well-informed investment decisions.