Broker: UOB Kay Hian
Date of Report: 02 July 2025

China’s Economic Pulse: PMI Recovery, Macau Gaming Surges, and Top Hong Kong Stock Picks for July 2025

Key Economic Highlights

• China’s PMI data signals a modest recovery, with construction leading the rebound.
• Macau’s gaming sector beats consensus, regaining pre-pandemic momentum.
• Actionable trading ideas for MINISO Group and Flat Glass Group highlighted.

China PMI: Recovery Led by Construction as Small Enterprises Lag

June 2025’s economic indicators from China present a nuanced recovery story. The official Manufacturing Purchasing Managers’ Index (PMI) improved to 49.7 (up 0.2pts month-on-month), slightly above expectations but still below the expansion threshold of 50. Notably, manufacturing output strengthened to 51 (+0.3pts), and new orders returned to expansionary territory at 50.2 (+0.4pts). However, new export orders, while improving to 47.7 (+0.2pts), remained deeply contractionary, reflecting ongoing external headwinds.

Purchases saw a significant uptick to 50.2 (+2.6pts), the highest since March 2025. However, business expectations dipped to their lowest for the year at 52 (-0.5pts). The non-manufacturing PMI rose to 50.5 (+0.2pts), beating market forecasts, with construction activity surging to 52.8 (+1.8pts) amid robust infrastructure investment. In contrast, services PMI edged down to 50.1 (-0.1pts), revealing a slowdown in domestic consumption recovery. Input and selling prices both moved closer to the expansion threshold, reflecting improving demand conditions.

A deeper look by enterprise size reveals a widening divide:

• Large Enterprises: Expanded further to 51.2 (+0.5pts), buoyed by government-led projects and favorable financing.
• Medium Enterprises: Rose to 48.6 (+1.1pts) but remained in contraction.
• Small Enterprises: Fell sharply to 47.3 (-2.0pts), hampered by weak external demand and financing challenges.

Overall, June’s PMI data points to a marginal improvement in both manufacturing and services, supported by modest domestic demand. However, the sharp decline in small enterprise activity and lingering trade tensions continue to weigh on business confidence. The construction sector’s rebound is a bright spot, but sustained, targeted fiscal stimulus will be critical to maintain momentum into the second half of 2025.

Macau Gaming: Gross Gaming Revenue Surges, Galaxy Remains Top Pick

Macau’s gaming sector continues its robust post-pandemic rebound. June 2025 gross gaming revenue (GGR) came in at MOP\$21.1 billion, up 19% year-on-year but down 1% month-on-month—slightly below May’s post-pandemic high. Importantly, GGR beat consensus estimates by 9% and recovered to 88% of 2019’s level (versus 82% in May). For the first half of 2025, total GGR reached MOP\$118.8 billion, a 4% increase year-on-year, achieving 79% of 2019’s level (up from 76% in H1 2024).

Visitor arrivals have almost fully recovered, with May 2025 seeing a 99% recovery versus 2019’s level. Total visitations rose 9% month-on-month and 25% year-on-year to 3.4 million, led by a strong May Day Golden Week holiday. Mainland Chinese visitors grew 15% month-on-month and 31% year-on-year to 2.4 million. Same-day visitors surged 13% month-on-month and 39% year-on-year to 2 million, while overnight visitors reached 1.4 million (up 3% month-on-month and 9% year-on-year), with the average length of stay stable at 1.6 days.

Hotel data also points to sector strength, with occupancy rising to 93% in May (from 92.6% in April) and the average room rate climbing to MOP\$1,371 (from MOP\$1,275 in April).

Macau Gaming Sector Recommendation

• Sector Rating: OVERWEIGHT maintained
• Top Pick: Galaxy Entertainment (27 HK)
• Galaxy is favored for its focus on the premium segment and diverse entertainment events. The stock trades at 9.3x 2025 EV/EBITDA and 8.5x 2026 EV/EBITDA, with a target price of HK\$43.00 based on a 12.0x 2025 EV/EBITDA multiple. The share price as of 30 June 2025 was HK\$34.85, offering a 23.4% upside to target.

Top Trading Ideas: MINISO Group and Flat Glass Group

MINISO Group Holding Limited (9896 HK)

• Trading Buy Range: HK\$36.50–36.90
• Last Price: HK\$35.60
• Target Price: HK\$39.55 / HK\$41.50
• Protective Stop: Breaks below HK\$33.65
• Q1 2025 Revenue: RMB 4.43 billion (+18.9% yoy)
• Net Profit: RMB 420 million
• Technical Highlights: The stock recently found support near HK\$33.50 and rebounded above its 20-day and 50-day moving averages. The 14-day RSI is above 50, indicating strengthening momentum, while MACD signals are turning positive. Investors may consider entry near the 250-day moving average, targeting a gradual fill of previous downward gaps. Average holding period: around two weeks.

Flat Glass Group Co., Ltd. (6865 HK)

• Trading Buy Range: HK\$8.76–8.85
• Last Price: HK\$8.81
• Target Price: HK\$9.59 / HK\$9.89
• Protective Stop: Breaks below HK\$8.05
• Q1 2025 Revenue: RMB 4.08 billion
• Net Profit Attributable to Shareholders: RMB 110 million
• Technical Highlights: The stock has lagged behind the broader market but stabilized around HK\$7.60 before gaining 7.6% on strong turnover, moving above its 10-, 20-, and 50-day moving averages. The 14-day RSI is above 50, and MACD signals are bullish. If the stock can hold above these averages, investors may consider buying for a potential catch-up rally. Average holding period: around two weeks.

Key Indices and Market Movers

Top Trading Turnover (HK Market)

• XIAOMI CORP-W: HK\$59.95 (+1.7%), 5-day ADT: HK\$12,870.3m
• BABA-W: HK\$109.80 (-2.1%), 5-day ADT: HK\$8,496.6m
• TENCENT: HK\$503.00 (-1.9%), 5-day ADT: HK\$8,116.2m
• MEITUAN-W: HK\$125.30 (-3.2%), 5-day ADT: HK\$6,734.0m
• SMIC: HK\$44.70 (-0.3%), 5-day ADT: HK\$4,974.9m

Top Gainers

• TENCENT MUS-CL A: HK\$75.85 (+4.3%), 5-day ADT: HK\$40.5m
• WUAPPTEC CO LT-H: HK\$78.65 (+3.4%), 5-day ADT: HK\$391.2m
• NIO INC-CLASS A: HK\$27.40 (+2.8%), 5-day ADT: HK\$150.0m
• HANSOH PHARMACEU: HK\$29.75 (+2.2%), 5-day ADT: HK\$279.4m
• SENSETIME-W: HK\$1.49 (+2.1%), 5-day ADT: HK\$503.0m

Top Losers

• BOC HONG KONG: HK\$34.10 (-5.7%), 5-day ADT: HK\$732.47m
• LI AUTO INC-A: HK\$107.00 (-3.3%), 5-day ADT: HK\$1,461.77m
• MEITUAN-W: HK\$125.30 (-3.2%), 5-day ADT: HK\$6,734.00m
• LONGFOR GROUP HO: HK\$9.26 (-2.8%), 5-day ADT: HK\$149.27m
• CITIC: HK\$10.78 (-2.5%), 5-day ADT: HK\$395.11m

Key Macro and Corporate Calendar Events for July 2025

• 02 Jul: Hong Kong May Retail Sales
• 03 Jul: China Jun Caixin PMI Composite, Services
• 04 Jul: Hong Kong Jun S&P Global PMI
• 07 Jul: Hong Kong and China Foreign Reserves
• 09 Jul: China Jun Inflation (PPI, CPI)
• 09-15 Jul: China Money Supply (M0, M1, M2)
• 14 Jul: China Jun Trade Balance, Exports, Imports
• 15 Jul: China 2Q GDP, Industrial Production, Retail Sales, Fixed Assets, Jobless Rate
• 17 Jul: Hong Kong Jun Unemployment Rate
• 21 Jul: Hong Kong Jun CPI Composite
• 27 Jul: China Jun Industrial Profits
• 28 Jul: Hong Kong Trade Balance, Exports, Imports
• 31 Jul: China Jul NBS PMI; Hong Kong Jun Money Supply, GDP, Retail Sales

Conclusion: China’s Growth Remains Uneven, Macau Gaming Shines, and Tactical Stock Picks Present Opportunities

The latest economic data from China underscores an uneven recovery, with large enterprises and the construction sector leading growth while small businesses continue to face challenges. Macau’s gaming industry stands out as a bright spot, nearly regaining its pre-pandemic scale. For investors, trading strategies around MINISO Group and Flat Glass Group may offer timely opportunities, supported by improving technicals and strong Q1 results. As always, close attention to macro data releases and sectoral shifts will be essential for navigating the months ahead.