HK Stock Market Move | Steel stocks lead the gains; institutions say that market-based clearing of the supply side has begun to appear, and if policies are implemented, supply contraction will accelerate.

Steel stocks lead the gains, as of the time of writing, CHINA ORIENTAL (00581) is up 6.67% at HK$1.44; MAANSHAN IRON (00323) is up 6.92% at HK$2.78; Angang Steel (00347) is up 5.96% at HK$2.31; CHONGQING IRON (01053) is up 2.88% at HK$1.43. Guotai Haitong released a research report stating that the negative impact of real estate on steel demand has significantly weakened, and demand is expected to gradually bottom out. Even without considering supply policies, the industry has experienced a long period of losses, and market-driven supply clearing has begun to emerge. It is expected that the fundamentals of the steel industry will gradually improve. If supply policies are implemented, the industry's supply contraction will be faster, and industry progress will accelerate. Cinda also stated that, against the backdrop of anti-"involution", steel industry capacity management is expected to be further strengthened through safety production inspections and control of disorderly competition and excess capacity release. In the current environment of overseas tariffs, general steel companies with low export proportions are less affected. Coupled with the national "steady growth" policy, the demand for steel in industries such as real estate and infrastructure is expected to marginally improve. Currently, the profits per ton of steel in the general steel sector are considerable and, under the backdrop of industry "anti-involution", general steel companies have a large room for performance improvement and are expected to undergo value restoration. The steel sector is also expected to see a good opportunity for allocation.