HK Stock Market Move | Pork concept stocks have seen substantial gains as supply pressure eases and prices overall recover. Institutions are optimistic about the further acceleration of capacity reduction.

Pork concept stocks are seeing significant gains. As of the time of this report, Muyuan Foods Group (02714) is up 7.71%, priced at HKD 38.58; COFCO JOYCOME (01610) is up 7.04%, priced at HKD 1.14; and DEKON AGR (02419) is up 3.63%, priced at HKD 61.4. On the news front, as of September 4, the national average price of live pigs is reported at RMB 11.06 per kilogram, which is a nearly 17% rebound from the low of RMB 9.47 per kilogram in late June. Huayuan Securities points out that the overall outflow pressure has recently improved, and with supply pressure easing, prices are rebounding overall; demand is also showing improvement, providing some support for pork prices. It is expected that prices will likely operate on a stronger basis in the near term. Guosen further states that considering the current prices of live pigs and piglets are still at the cycle bottom, high-cost production capacity will continue to face cash flow pressures. We expect that in the coming months, breeding capacity will be further reduced, and by 2027, pork prices are expected to begin a cyclical reversal. Leading pork companies are likely to see cash flow improve first and transition into high-quality dividend stocks.