GMT EIGHT - OPPORTUNITIES IN CHINA

Citi: Maintains "Buy" rating on NEXTEER (01316), target price raised to HK$4.5.

HK Stock Market Move | HAICHANG HLDG (02255) up 7% in the afternoon, with a cumulative increase of over 75% this month. The company has introduced financing and is expected to achieve significant strategic cooperation.

Morgan Stanley is bullish on the growth potential of AT&T (T.US) and T-Mobile (TMUS.US), while Comcast Corporation Class A (CMCSA.US) has had its rating downgraded.

LI AUTO (02015): The sales volume in the 50th week reached 14,100 units.

According to the official WeChat account of Ideal Car (02015), in the 50th week of 2024 (December 9th-December 15th), Ideal Car's weekly sales reached 14,100 units, ranking first in sales among China's new energy vehicle brands for 34 consecutive weeks.

HK Stock Market Move | FANGZHOU Health (06086) rose more than 10% and reached a strategic cooperation with Bayer AG to jointly promote industry innovation and development.

FANGZHOU JIANKE (06086) rose more than 10%, and as of the time of writing, it has risen by 10.66% to 6.75 Hong Kong dollars with a trading volume of 4.5862 million Hong Kong dollars. On the news side, on December 16, FANGZHOU JIANKE and AstraZeneca China held a strategic cooperation signing ceremony in Shanghai, signing a strategic cooperation agreement to carry out in-depth cooperation on digital medical platform construction and Internet health management model upgrade. It is understood that this strategic cooperation will focus on deep cooperation in the treatment drugs of -thalassemia Liboloz and psoriasis treatment drug Sondido, exploring innovative digital marketing project management models. It is worth mentioning that Liboloz recently successfully renewed its listing on the national medical insurance catalog, and its new indications filed this year are expected to be approved in 2025; Sondido has also been officially included in the national medical insurance catalog this year.

A-share closing review | Funds intervened to protect the market! Several ETFs traded heavily.

Today the market continued to adjust, with the Growth Enterprise Market Index showing some resistance to the decline. The Shanghai Composite Index saw three consecutive declines, and the number of stocks hitting the limit down increased significantly. Active funds flowed out of micro-cap stocks, shifting focus back to traditional blue-chip stocks. Earlier strong themes such as retail, AI applications, etc. all receded, with high positions stocks like Zhejiang Yiming Food, Shandong Huifa Foodstuff hitting the limit down; leading stocks like Maotai Index, Ning Combination showed strength with stocks like BYD Company Limited, Kweichow Moutai, Contemporary Amperex Technology leading the gains. Several Shanghai and Shenzhen 300 ETFs saw significant volume increase in the afternoon, with Huatai Bairui Shanghai and Shenzhen 300 ETF turnover exceeding 5 billion yuan. The total market turnover for the day was 1.5 trillion yuan, with a decrease of over 180 billion compared to the previous trading day, and over 4700 stocks fell in both markets. Three major changes occurred in A shares today, sparking discussion on whether the market style will switch. Firstly, there were over 170 stocks hitting the limit down today, and most of the stocks hitting the limit down were recently strong stocks, such as Jianshe Industry Group, Xiamen Sunrise Group, Zhejiang XCC Group, Guangxi Oriental Intelligent Manufacturing Technology, etc. Secondly, the recently active consumer stocks suddenly pulled back, with sectors like film and television, tourism hotels, community group buying, retail, etc. experiencing a sharp decline. Thirdly, micro-cap stocks and low-price stock indices that were recently strong saw a large decline, with the micro-cap stock index falling by nearly 6%, while the Shanghai and Shenzhen 300 and Shanghai 50 indices rose. Regarding the style switch between large and small caps, Huajin Securities stated that the occurrence of a style switch between large and small caps is not common at the end of the year. Since 2010, there have been 5 times when small caps switched to large, and 5 times when large caps switched to small. Only 3 times did the style switch occur in November or December. The main factors affecting the style switch between large and small caps are policies, external events, liquidity, and profitability. Looking at individual stocks, there were 553 gainers in both markets, 4794 decliners, and 30 stocks remained flat. There were a total of 31 limit-up stocks and 171 limit-down stocks in both markets. At the close, the Shanghai Composite Index fell by 0.73% to 3361.49 points, with a turnover of 584.8 billion yuan; the Shenzhen Component Index fell by 0.35% to 10537.43 points, with a turnover of 925.6 billion yuan. The Growth Enterprise Market Index fell by 0.02% to 2201.18 points. Market trend Today, main funds focused on grabbing communication equipment, liquor, passenger cars, and other sectors for investment. Leading stocks with the highest net inflows from main funds included ZTE Corporation, Kweichow Moutai, Tianyu Digital Technology, etc. News recap 1. ByteDance denies cooperating with ZTE Corporation to establish a new brand Regarding the online rumors of cooperation between Douyu and ZTE Corporation, a relevant person from Douyu stated that the news was not true. Douyu has had deep cooperation with many mobile phone brands, but has not explored the possibility of establishing a new brand with ZTE Corporation, nor has there been any cooperation on chips. 2. Ministry of Industry and Information Technology's Raw Materials Division: is organizing the revision of the method for replacing steel production capacity and will conduct research on the development plan for the steel industry in the "15th Five-Year Plan" period At the "Standards Upgrade Leads to Optimization and Upgrading of Raw Materials Industry and Promotion of New Industrialization" press conference held by the Ministry of Industry and Information Technology, Chang Guowu, the director of the Raw Materials Industry Division, said that the Ministry of Industry and Information Technology is currently working with relevant parties to revise the method for replacing steel production capacity, promote the optimization and restructuring of industry organization layout, and promote reduced-volume high-quality development. At the same time, research will be conducted on the development plan of the steel industry in the "15th Five-Year Plan" period to comprehensively analyze the new situation facing the development of the steel industry. 3. China's transit visa-free policy is comprehensively liberalized and optimized, with the stay time for transit visa-free foreigners in China extended to 10 days from today The National Immigration Administration announced on December 17 that it will comprehensively liberalize and optimize the transit visa-free policy, extending the stay time for transit visa-free foreigners in China from the original 72 hours and 144 hours to 240 hours (10 days), and adding 21 new ports as entry and exit ports for transit visa-free personnel, further expanding the area of activities. Personnel from 54 countries including Russia, Brazil, the UK, the US, Canada, etc., who meet the conditions and transit through China to a third country (region), can enter China visa-free through any of the 60 opening ports in 24 provinces (regions, cities), and stay in the designated area for up to 240 hours. Market outlook 1. Guotai Junan: The cross-year rebound trend will continue, but the focus will be on individual stocks and themes Guotai Junan believes that a long-term variable is unfolding, with the decline in risk-free interest rates driving incremental funds into the market; the bond interest rate breaking 2% will gradually reduce investors' interest in bonds and increase their interest in stocks and equities. Unusual statements from high-level meetings support market sentiment and liquidity, with the stock index expected to be mainly volatile in the next stage, and the cross-year rebound trend will continue, but the focus will be on individual stocks and themes. Focus on the decline in risk-free interest rates and bullish on technology and consumption. 2. EB SECURITIES: Market style may switch from thematic speculation to high-dividend blue chips EB SECURITIES believes that the market is undergoing an adjustment to digest previous profit-taking; after the end of two heavyweight meetings, various departments will take action one after another, releasing specific favorable policies that are expected to stabilize the market and see a rebound; meanwhile, the market style may switch from thematic speculation to high-dividend blue chips.

Citi: Maintains "Buy" rating on NEXTEER (01316), target price raised to HK$4.5.

DBS released a research report, raising the target price of NEXTEER (01316) by 12.5%, from 4 HK dollars to 4.5 HK dollars, and maintaining a "buy" rating. The bank pointed out that although NEXTEER's main market is in North America, it is rapidly expanding its market share in the automotive market in Shanxi Guoxin Energy Corporation in China; it is also expected that the company will achieve its target numbers for new business this year. With the accelerated application of self-driving technology in mainland China and the US reiterating support for the gasoline vehicle industry, all factors support NEXTEER's strong growth momentum. Based on the improved business outlook, the bank has raised the forecasted price-to-earnings ratio for 2025 from 10 times to 11 times, and raised the company's target price. It is expected that the stock price may further rise, and the investment rating is maintained due to factors such as rapid expansion in mainland China.

HK Stock Market Move | HAICHANG HLDG (02255) up 7% in the afternoon, with a cumulative increase of over 75% this month. The company has introduced financing and is expected to achieve significant strategic cooperation.

HAICHANG HLDG (02255) rose another 7% in the afternoon, with a cumulative increase of over 75% this month. As of the time of writing, it rose by 5.8% to HK$0.72, with a trading volume of HK$140 million. On the news front, HAICHANG HLDG previously announced that it has entered into a non-legally binding indicative terms list with an industrial fund, which plans to subscribe to US$100 million worth of convertible bonds issued by HAICHANG HLDG. This potential financing transaction will not only bring funds to the company for general corporate capital expenditures and working capital, but may also result in the fund becoming a major shareholder of the company, introducing new directors and senior management, establishing significant strategic cooperation relationships, and involving the company's current and future businesses. The announcement stated that the fund is currently an independent third party of the company, focusing on investment opportunities in the growth period of the modern service industry in China. Its main contributors are well-known enterprises with long-term and rich offline and online operation service experience, abundant traffic resources, and active layout in the cultural tourism sector.

Morgan Stanley is bullish on the growth potential of AT&T (T.US) and T-Mobile (TMUS.US), while Comcast Corporation Class A (CMCSA.US) has had its rating downgraded.

Morgan Stanley began a significant adjustment to the US telecommunications industry on Monday, upgrading AT&T (T.US) and T-Mobile US (TMUS.US) to a "hold" rating, while downgrading Comcast Corporation Class A (CMCSA.US) to a "hold" rating. This rating adjustment is primarily based on the growth potential and market performance of each company. AT&T is expected to deliver excellent performance due to its leading advantage in fiber products, while T-Mobile US is seen as having significant advantages in wireless products. Analysts at Morgan Stanley further pointed out in a research report on December 16th that AT&T has the most attractive risk/reward profile, with significant upside potential in its stock price compared to the target price of $28. There is an 18% upside potential, and even more in a bull market forecast with a 40% upside potential, and only a 10% downside risk in a bear market forecast. Additionally, they noted that while T-Mobile US has performed well for many years, its strengths in branding, customer service, network leadership, and stable traditional income streams are seen as key factors supporting its future industry-leading growth. However, Morgan Stanley analysts are cautious about the prospects of the cable television industry, predicting a dual challenge of broadband trends and EBITDA growth by 2025. Therefore, they downgraded the rating of media and cable television giant Comcast Corporation Class A from "hold" to "hold" and predict that its residential broadband customer losses will continue until 2027. Furthermore, Comcast Corporation Class A's expansion in wireless business is slower compared to its competitor Charter Communications (CHTR.US), with Charter being more proactive in promoting, marketing, and bundling its Spectrum mobile business. As a result, Morgan Stanley maintains a "hold" rating for Charter Communications.

How to select US stock ETFs in 2025? Oppenheimer recommends buying the S&P Capital Markets ETF (KCE.US) on dips.

Analysts from the top investment firm Oppenheimer Asset Management on Wall Street recently released a research report, stating that investors should take advantage of periods of relative consolidation or brief declines in the "SPDR S&P Capital Markets ETF" (KCE.US) before it resumes its long-term leadership in the financial market by buying on dips. Last Friday, the SPDR Capital Markets ETF briefly fell below $144, but quickly rebounded above $144, and on Monday, driven by buying on dips, the ETF closed at $144.950. Its increase so far this year is as high as 45%, significantly outperforming the S&P 500 index. Ali Wald, Oppenheimer's technical analysis director, stated in a report, "The SPDR S&P Capital Markets ETF still ranks first in our ETF momentum ranking, second only to the two popular banking ETFs - KBE and KBWB." "The broad industry advantage of the S&P Capital Markets ETF enhances our confidence in investing in this ETF." Looking ahead to the stock market in 2025, Oppenheimer Asset Management stated in the research report that due to strong economic growth in the United States, the S&P 500 Index will reach a record high of 7100 points by the end of next year. The forecast for the S&P 500 Index in 2025 is the "wildest target" among Wall Street peers, exceeding the 7000 points previously given by Deutsche Bank Aktiengesellschaft and Yardeni Research, as well as the 7007 points given by Wells Fargo & Company's market strategy team. John Stoltzfus, Chief Stock Market Investment Strategist at Oppenheimer, stated in the latest report that the fundamentals "suggest that the current resilience of the US economy and stock market could continue into next year." Looking ahead to the stock market in 2025, almost all Wall Street strategists expect the US stock market to continue to rise, with this unprecedented bullish sentiment among recognizable institutions. Compared to forecasts of over 7000 points, predictions from major Wall Street financial giants like Morgan Stanley, Goldman Sachs Group, Inc., and J.P. Morgan appear more conservative, with all three predicting the S&P 500 Index will be at 6500 points by 2025. In contrast, Oppenheimer and a few other Wall Street institutions, including Wells Fargo & Company, Deutsche Bank Aktiengesellschaft, and Yardeni Research, predict that the S&P 500 Index will break through the significant milestone of 7000 points by the end of next year for the first time in US stock market history. Oppenheimer's Chief Market Strategist John Stoltzfus is currently the most optimistic star strategist on Wall Street for 2025 forecast of the US benchmark index. He raised the target point of the S&P 500 Index to 6200 points in November for 2024. However, these Wall Street institutions mentioned in the research report that although the overall trend is expected to continue rising next year, the S&P 500 Index may still experience a period of around 10% correction and relatively short-term consolidation. This phase often presents opportunities for the "buy on dips" strategy to be effective, which is the core logic behind Oppenheimer's bullish view on the SPDR Capital Markets ETF and its recommendation for investors to actively "buy on dips." The SPDR Capital Markets ETF aims to track the market performance of the "Standard Pool Corporation Capital Markets Select Industry Index." The index represents the "capital markets portion" of the S&P Total Market Index (TMI), focusing on financial stocks, covering asset management firms and custodial banks, diversified capital markets, financial market exchanges, as well as investment banks and brokerage firms. The SPDR Capital Markets ETF provides US stock investors with broad exposure to the US capital markets sector, including large, mid, and small financial stocks. Its core holdings include Coinbase (COIN.US), RobinHood (HOOD.US), LPL Financial (LPLA.US), Interactive Brokers Group, Inc. Class A (IBKR.US), and Blue Owl Capital (OWL.US) among others. Regarding industry investment outlook for 2025, Wall Street is generally positive on financial stocks, with not only Oppenheimer, but also Bank of America Corp, Bank of Montreal, J.P. Morgan, and Wells Fargo & Company, among other well-known Wall Street institutions expressing optimism for financial stocks. These institutions state that the catalysts driving bank stock growth are clear: strong economy, expectations of loosened regulations under President Trump, attractive valuations, and low interest rates. Jake Manoukian, Private Bank's US Investment Strategy Director at J.P. Morgan, said that his investment team is looking for opportunities in the financial and asset management industries for the 2025 portfolio. "It is clear that this administration will be more friendly to Wall Street and trading activities. This enthusiasm is not without precedent. Financial stocks have long been seen as Republican government favorites."During the term of office, the preferred industry is mainly due to the relaxation of regulations and expectations of creating a more favorable environment for major financial giants and large-scale merger transactions." stated the Morgan J.P. team led by Manoukian.In addition, the following are the stocks in the S&P Capital Markets ETF constituents that the Oppenheimer analysis team has given a "buy" recommendation for and have the potential for excess returns: Coinbase Global (COIN) - The stock is consolidating after a breakout. Moody's Corporation (MCO) - Its bullish consolidation is moving upward. Blue Owl Capital (OWL) - The stock is "continuing to move up" after a breakout. StepStone Group, Inc. (STEP) - The stock has seen a tactical pullback, providing a buying opportunity on dips.

Palantir (PLTR.US) is reportedly working with Cohere to deploy its AI model.

Cohere is one of the most well-known artificial intelligence startups, with a valuation of 5.5 billion dollars as of July, apart from OpenAI and Anthropic. It was co-founded by the authors of the paper "Attention Is All You Need," which helped initiate the Large Language Models (LLM) revolution. The company is reportedly quietly collaborating with Palantir (PLTR.US) to deploy its artificial intelligence models. Based in Toronto and San Francisco, Cohere sells artificial intelligence services to corporate clients. While Palantir and AWS reached an agreement with Anthropic last month for selling artificial intelligence to defense clients, Palantir is also a partner of Cohere. According to information discussed in a video released by Palantir, Cohere's models have been used by many unnamed Palantir clients. The video was a presentation at DevCon1 in November 2024, which was Palantir's first developer conference. Cohere engineer and former Palantir employee Billy Trend said, "This indicates that Cohere has already been providing services to Palantir's clients." Trend mentioned in his speech, "This is why I am very excited to collaborate with Palantir, and we will introduce to you the details of how we provide services to their clients." In the video, Trend focused mainly on technical details. Although he did not mention any specific Palantir clients, Trend did mention a deployment of artificial intelligence by Cohere for a Palantir customer that had "very strict restrictions on data storage location" and wanted to do reasoning in Arabic, "which is a great opportunity for Cohere because that's what we're good at." Trend explained that Palantir's clients can access Cohere's latest artificial intelligence models through the "computational modules" within Foundry. It is worth noting that one of Palantir's flagship platforms, Foundry, is more geared towards commercial clients, while Palantir's other older main platform, Gotham, is designed for defense and intelligence agencies. Therefore, although we do not know which organizations are using Cohere through Palantir, it implies that it may be for enterprises. Palantir collaborates with a variety of large companies, such as Airbus. But it is also openly acknowledging its close cooperation with U.S. defense and intelligence agencies, recently releasing a declaration on how to rebuild the defense technology sector. Based on a review of its website and announcements, Cohere has been touting its partnerships with large tech companies like Fujitsu, but remains silent on any deals with Palantir. Media inquiries to Cohere regarding whether its artificial intelligence is used for military or intelligence-related use cases, and what the overall policy of Cohere is for such deployments, were declined by Cohere. Palantir did not immediately comment. As for OpenAI, it is also being used in defense technology, as earlier this month it was reported that OpenAI had signed an agreement with Anduril.

Jefferies Financial Group Inc. Forecast 2025: Microsoft Corporation (MSFT.US), Alphabet Inc. Class C (GOOG.US), and Amazon.com, Inc. (AMZN.US) will emerge as winners in AI software.

Investment company Jefferies Financial Group Inc. stated that Microsoft Corporation (MSFT.US), Alphabet Inc. Class C (GOOG.US, GOOGL.US), and Amazon.com, Inc. (AMZN.US) could be the winners in the artificial intelligence (AI) software field next year. Analysts at Jefferies Financial Group Inc. said, "Microsoft Corporation is a major beneficiary of generative AI and will benefit from infrastructure (Azure AI) and application opportunities (various Copilots), but since the release of ChatGPT, the stock has underperformed iShares Expanded Tech-Software Industry ETF (IGV.US) by 19%. With Azure's re-acceleration and Copilot's momentum, we believe Microsoft Corporation will rise again." Jefferies Financial Group Inc. has a "buy" rating on Microsoft Corporation with a target price of $550. Meta Platforms (META.US) is also expected to benefit from generative AI as it can launch AI tools to about 4 billion users and over 200 million businesses through various applications. Analysts at Jefferies Financial Group Inc. said, "Meta can further leverage generative AI to explore new revenue streams beyond advertising through Llama and WhatsApp." Jefferies Financial Group Inc. analysts stated that Amazon.com, Inc. holds over 50% market share in the cloud services provider market, which over time should bring "strong AI revenue potential." Jefferies Financial Group Inc. maintains a "buy" rating on Amazon.com, Inc. and has raised the target price from $235 to $275. Another beneficiary in the AI software field is Snowflake (SNOW.US), and its CEO Sridhar Ramaswamy (appointed in February this year) might change the company's trajectory. Analysts at Jefferies Financial Group Inc. said, "We believe that after hitting bottom in 2024, Snowflake's business will reach an inflection point in the 2025 fiscal year, with strong order volume driving revenue growth, and significantly improving profit margins in the next 2-3 years." Jefferies Financial Group Inc. has raised Snowflake's target price from $180 to $200 and maintains a "buy" rating. Moreover, Alphabet Inc. Class C is considered a pioneer in the AI field and plans to launch more new products. These products will be promoted through its 7 applications with user numbers exceeding 2 billion each. Analysts at Jefferies Financial Group Inc. said, "Alphabet Inc. Class C's impressive performance in models allows them to make significant strides in cloud computing, although currently, Alphabet Inc. Class C lags behind peers in cloud computing."

HK Stock Market Move | NEW HIGHER EDU (02001) rose more than 7% with a stock price increase of over 38% in the month. Recently, Chairman Li Xiaoxuan has increased his holdings multiple times.

NEW HIGHER EDU (02001) rose by more than 7%, with the stock plummeting 50% on November 29th and gradually recovering afterwards. The increase this month has exceeded 38%. As of the press time, it rose by 7.69%, reaching HK$1.26, with a trading volume of HK$31.4022 million. In terms of news, NEW HIGHER EDU previously announced its annual performance, with total revenue of approximately 2.835 billion yuan, a year-on-year increase of 12.2%; adjusted net profit of 772 million yuan, a year-on-year increase of 6.1%. The final dividend is 0.233 yuan per share, and the company announced the distribution of the dividend in the form of shares, maintaining a dividend rate of 50%. Zhongjin believes that the company plans to distribute dividends in the form of shares abnormally in order to retain cash for the development and operational needs of the group's business, especially for the capital expenditure for the planned development of undergraduate and postgraduate schools in the group in the coming years, to improve the liquidity of stock trading. In addition, the chairman and executive director of NEW HIGHER EDU, Li Xiaoxuan, has recently increased his holdings in the company several times. According to the latest information from the Hong Kong Stock Exchange, on December 11th, Li Xiaoxuan increased his holdings of NEW HIGHER EDU by 1.559 million shares at a price of HK$1.0493 per share, with a total amount of HK$1.6359 million. After the increase, the latest number of shares held is 762 million shares, with the latest shareholding ratio of 49.4%.

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