The Hong Kong stock market experienced significant declines recently, but managed to stabilize on the last trading day of February, with the Hang Seng Index rising 0.95% by the close. The market has been notably weak, partly due to strong performance in South Korea's stock market, which has been a major beneficiary of the AI boom. The Kospi index rose approximately 20% this month and has gained 49% year-to-date, making it the best-performing major global index so far in 2026, attracting capital away from Hong Kong. In contrast, Hong Kong's tech stocks have underperformed, with internet giants struggling and dragging down the index. The absence of leading companies like NVIDIA in the U.S. or Samsung in South Korea is a structural weakness. Additionally, continuous new listings have diluted market liquidity; a large listing such as ByteDance could potentially reverse the downtrend.

On the geopolitical front, U.S.-Iran negotiations yielded no results yesterday. Although Oman's Foreign Minister Badr stated on social media that "significant progress" had been made and technical discussions would resume next week in Vienna, Trump's envoy Wittkof and son-in-law Kushner expressed disappointment with Iran's position. Further talks appear to be mainly for saving face. The situation remains highly tense: on February 27, the U.S. aircraft carrier USS Ford arrived in Israeli waters and is expected to dock at Haifa Port, meaning the U.S. now has two carriers—Ford and Lincoln—deployed in the Middle East. About 20 U.S. refueling aircraft also arrived at Ben Gurion Airport. Multiple countries have issued evacuation advisories: the U.S. ambassador to Israel urged staff to leave "today," Canada reiterated calls for citizens to evacuate Iran immediately, and China's Foreign Ministry advised against travel to Iran and urged Chinese nationals there to enhance safety precautions and evacuate as soon as possible. The situation is critical, with a U.S. strike on Iran appearing imminent. Iran's military has vowed a "devastating" response to any American aggression.

On February 27, the Politburo of the Communist Party of China held a meeting, emphasizing the need to enhance the foresight and targeted nature of macroeconomic policies, continue proactive fiscal and prudent monetary policies, and focus on stabilizing employment, enterprises, markets, and expectations. In response, the securities sector saw a brief uptick in the afternoon, though most gains were short-lived. Only Nanhua Financial Holdings (02691) showed strong performance, benefiting from its rare licenses: it holds the most comprehensive overseas clearing qualifications among Chinese firms, with strong pricing power and gross margins exceeding 70%. It holds memberships in 17 exchanges and 14 clearing seats (e.g., CME, LME, SGX, ICE), covering commodities (gold, copper, oil, agriculture), stock indices, interest rates, foreign exchange, power, and crypto derivatives. Client margins (approx. HKD 10+ billion) are held in overseas banks, earning high interest (5%+) at minimal cost. Its asset management scale exceeds HKD 1.5 billion, growing over 30% annually. The stock surged over 10% today.

On a positive note, biotech stocks that were recently sold short rebounded strongly, with WuXi XDC (02268) and WuXi Biologics (02269) both rising over 6%. However, NVIDIA's earnings "failed to ease AI concerns," with its stock falling nearly 5.5% yesterday—the largest single-day drop since tariff impacts last April—weighing on tech shares. Fintech firm Block announced layoffs of about 4,000 employees, nearly half its workforce, citing AI-driven efficiency improvements in a major restructuring. While AI enhances productivity, its disruptive impact on the real economy cannot be ignored.

SpaceX is building 100 GW-level solar capacity in the U.S., expected to be completed in 3–4 years. Leaders like Blue Origin, Google, and firms from China, Japan, and Europe are also entering the space. With ground-based computing power becoming insufficient, "computing in space" is gaining consensus. Space-based solar power is poised to benefit significantly as a primary energy source. Reports suggest that Junda Energy (02865) visited Shangyi Optoelectronics to collaborate on CPI film and perovskite tandem R&D. Shangyi confirmed that silicon-perovskite tandem technology is the future direction; HJT+perovskite stacks avoid patent issues and offer high quality-to-mass ratios. Junda's domestic capacity is expected to be ready by June this year, with supply starting in the second half and mass production beginning next year. Starlink V3 satellites are projected to reach 20,000 units next year, each requiring 300 m² of CPI film, implying annual demand of 6 million m². The stock surged over 23% today.

Data from OpenRouter, the world's largest AI model API aggregation platform, showed that during the week of February 9–15, Chinese models were called 4.12 trillion tokens, surpassing U.S. models' 2.94 trillion tokens for the first time, with four Chinese models ranking in the global top five. DeepSeek is testing its V4lite model, codenamed "Sealion-lite," featuring a 1 million token context window and native multimodal reasoning support. This directly benefits computing power firms like Sunevision (01686), which reported interim net profit up 9.7% to HKD 531 million, rising over 7% today. Cloud service demand is also expected to surge, with Kingsoft Cloud (03896) up over 7%. Power, which accounts for 60–70% of AI costs, is a core factor. China's low electricity costs support a "power export" logic, reinforced by policy: the National Energy Bureau released the first batch of pilot lists for new power system capacity upgrades. Lower Chinese power prices allow indirect exports via token calls. Related stocks like Huaneng Power (00902) and Datang Power (00991) both rose over 5%. Thermal power relies on coal; Indonesian miners have halted spot coal exports due to production quota cuts, reducing supply and raising overseas prices, diminishing the advantage of imports and supporting domestic coal prices. With limited pre-holiday restocking by power plants, coal prices are expected to remain firm. Yancoal Australia (03668), China Coal Energy (01898), L&L Energy (01277), and Yankuang Energy (01171) all gained over 4%.

Industry sources indicate that U.S. aerospace and semiconductor suppliers are facing worsening rare earth shortages, with at least two suppliers starting to reject some orders. Shortages are concentrated in yttrium and scandium, niche metals within the 17 rare earth elements family that are critical for defense, aerospace, and semiconductors—and almost entirely produced by China. Praseodymium-neodymium metal prices rose CNY 40,000/ton to CNY 1.08 million/ton, while praseodymium-neodymium oxide increased CNY 5,000/ton to CNY 882,500/ton. JL Mag Rare-Earth (06680) rose over 7% today.

Changes to the MSCI China Index constituents took effect after today's close, with 37 additions including Hong Kong stocks like Changfei Optical (06869), up over 10%, and PONY-W (02026), up over 7%. SenseTime-W (00020) and Hesai-W (02525) gained over 3%, with passive funds expected to buy proportionally.