**Market Analysis**

Yesterday's market rebound showed promising momentum, but the latest US-China talks have turned discordant again. Hong Kong stocks consolidated today with the Hang Seng Index closing down 0.13%. According to sources, US and Chinese officials will hold staff-level technical talks on trade and economic issues at the US Treasury Department on Thursday, but discussions will not involve the latest agreement for China to transfer TikTok's US operations to American control. US Treasury Secretary Bessent indicated that aircraft engines and components, certain chemicals, and IPOs could become important bargaining chips for the US in negotiations with China. Even IPOs are now being brought to the negotiating table. No wonder the market quickly spread rumors about ByteDance planning a Hong Kong listing, which has been confirmed as false information and debunked.

In response, China's Ministry of Commerce announced it would add three US companies to its unreliable entity list and three US entities to its export control list. It's the same old pattern of back-and-forth tensions. This approach is naturally unfavorable for stock markets, but overall impact remains limited. Alibaba (09988) made significant AI investments across the board, providing important momentum for tech stocks. The continued rise of the Hang Seng Tech Index best illustrates this trend, with Hua Hong Semiconductor (01347) and ZTE Corporation (00763) both rising over 4% today.

Core holding CATL (300750.SZ) surged nearly 6% at one point, hitting a new all-time high with its total market cap breaking through 1.8 trillion yuan for the first time, temporarily ranking third in A-share market capitalization, surpassing Kweichow Moutai (600519.SZ). CATL's H-shares, mentioned yesterday, also rose over 5%. High-tech enterprises overtaking traditional industries represents an inevitable trend. The mentioned CALB (03931) also gained over 6%.

The world's second-largest copper mine, Grasberg, encountered another emergency situation. A massive mudflow at Indonesia's Grasberg mine resulted in two employee deaths and five missing persons. Arizona-based Freeport warned Wednesday that it may be unable to fulfill the mine's supply contracts while also lowering its copper and gold production forecasts for this quarter. The copper supply-demand gap is widening further.

China Nonferrous Metals Industry Association's Copper Branch stated firm opposition to "involutionary" competition in the copper smelting industry. Under this double positive catalyst, Luoyang Molybdenum (03993), China Nonferrous Mining (01258), MMG Limited (01208), and Jiangxi Copper Company Limited (00358) all rose over 8%. China Metallurgical Group Corporation (01618) announced that its Pakistani Saindak copper mine contains 3.78 million tons of copper resources, with Pakistani approvals basically completed in the first half of 2025 and domestic procedures accelerating. Afghanistan's Aynak copper mine represents one of the world's largest undeveloped copper deposits with 12.36 million tons of resources, and supporting hydropower stations have entered construction phase. The stock surged over 9% today.

Note that domestic tungsten ore inventory is severely insufficient. According to reports, domestic APT (ammonium paratungstate, an intermediate product after tungsten concentrate processing) social inventory has dropped below 200 tons (normal level is 600 tons), and cemented carbide enterprises have only 12 days of raw material inventory remaining (safety line is 30 days). Hong Kong-listed tungsten mining stock includes Jiaxin International Resources (03858).

The Trump administration officially announced Wednesday the implementation of a trade agreement with the EU, confirming that imported EU automobiles and auto parts will be subject to 15% tariffs retroactive to August 1st. European automakers already face weak competitiveness, and this adds insult to injury. Chinese automakers will open new opportunities in Europe.

BYD Company (01211) saw European sales surge 200% year-over-year in August, surpassing Tesla for two consecutive months. The company's European special advisor stated that future European expansion requires local battery production. Current scale remains modest, but volumes will increase once European production lines are established. With Buffett completing his divestment, subsequent rallies face reduced pressure. The stock rose over 2% today.

Leapmotor (09863) unveiled a new hatchback model B05 at the Munich Motor Show in September, adding another product to its European lineup. The company officially announced the rollout of its one millionth vehicle, marking its entry as China's second new energy vehicle manufacturer to join the "million club." The stock gained nearly 7% today.

XPeng Inc. (09868): Auto parts supplier Magna announced in September that XPeng has selected the company to assemble two models for the European market at its Graz, Austria facility starting from Q3 2025. The stock rose nearly 4% today.

Geely Automobile Holdings (00175) will launch the Geely brand in the UK, with the EX5 electric SUV as the first model to be sold, set to launch in early Q4.

Regarding today's newly listed Chery Automobile (09973), it opened at HK$34.2, up over 11% from the subscription price of HK$30.75, and closed at HK$31.92. The company also has European market presence, with three gasoline engine SUVs set to debut in Poland in November. Earlier this year, the group launched the Chery brand in the UK and promoted Omoda and Jaecoo brands in six to seven European markets including Spain, Italy, and Poland.

Chery's successful listing today provides significant stimulus to cornerstone investor Horizon Robotics (09660), which rose nearly 3% today.

Yesterday also mentioned Xiaomi Corporation (01810): Xiaomi plans to establish electric vehicle showrooms in Europe by 2027 while achieving local production. On the smartphone front, the Xiaomi 17 series will globally debut with Qualcomm's fifth-generation Snapdragon 8 Elite mobile platform. Lei Jun stated that the Xiaomi 17 standard version will offer "more value without price increases" despite significant upgrades. The stock gained over 4% today.

On September 24, China Fusion Energy Co., Ltd., with registered capital of 15 billion yuan, made its first public appearance at the Shanghai Industry Fair, announcing the launch of construction of the China Circulation Tokamak-4 (HL-4) experimental device. The device employs full high-temperature superconducting magnet technology, reducing volume by 40% compared to traditional tokamaks while tripling fusion power density. Technical verification is expected before 2030, directly targeting commercial deployment by 2050.

Nuclear fusion prospects are very promising, but true commercialization still requires time. Equipment-side superconducting magnet manufacturer Shanghai Electric (02727) rose over 10%, while materials-side radiation-resistant steel producer TIANGONG INT'L (00826) gained over 5%.

China Everbright (00165) welcomed value reestimation: Early investment in US stablecoin leader Circle saw stock price gains exceeding 300% this year, Hong Kong-listed Dekang Agriculture surged over 200%, NetEase Cloud Music rose approximately 150%, plus unlisted projects. The company indirectly holds approximately 12.6% of SMEE through Guangwei Qinghe Investment Center. Based on a 2025 valuation of 600 billion yuan, the holding value reaches 64.7-71.9 billion Hong Kong dollars, approaching its own market cap (approximately 13 billion Hong Kong dollars). AIoT unicorn TERMINUS, in which Everbright Holdings owns 26.14%, has completed overseas listing filing and is expected to list in Q3 2025. The stock surged nearly 26% today.

Skyworth Group (00751), featured as a September golden stock pick, again rose over 7%.

**Sector Focus**

According to Nikkei Asia on September 25th, as the US tightens rare earth resources amid ongoing trade tensions, rare earth metal price increases are extending beyond minerals covered by Chinese export restrictions, with light rare earth prices not restricted by China also soaring recently.

Data shows that as of September 18th, dysprosium traded at $840 per kilogram in European markets, approximately triple April levels. Another rare earth metal terbium under Chinese export controls reached $3,600 per kilogram in Europe, repeatedly hitting record highs.

However, light rare earth prices not targeted by Chinese export restrictions have also risen rapidly recently. Taking neodymium and praseodymium as examples, Chinese praseodymium-neodymium prices reached $90,850 per ton in late August, hitting the highest level since March 2023. Currently, prices remain near two-and-a-half-year highs. Neodymium prices are also climbing, with metallic neodymium rising nearly 50% since early June.

As a national strategic resource, long-term rare earth controls are inevitable, making rare earth prices prone to rises but resistant to falls. Major Hong Kong-listed varieties include JLMAG (06680) and CHINA RAREEARTH (00769).

**Individual Stock Analysis**

**KINGSOFT CLOUD (03896): Fundraising Through Placement to Support AI Business Expansion with Outstanding Public Cloud Performance**

KINGSOFT CLOUD recently announced a placement of 338 million new shares at HK$8.29 per share, with expected net proceeds of approximately HK$2.76 billion. 80% will be used for AI business expansion, including infrastructure and cloud service capability upgrades, with remaining funds supplementing corporate operational needs. After this placement, Kingsoft Software holds 32.94% and Xiaomi holds 10.29%.

Q2 revenue reached 2.35 billion yuan, up 24.2% year-over-year and 19.3% quarter-over-quarter.

**Commentary**: This placement will play a crucial role in the company's future development. The company benefits from sustained high AI revenue growth driving strong overall performance, with outstanding public cloud business performance. By business segment, AI represents the core driver. Q2 public cloud service revenue reached 1.63 billion yuan, up 32% year-over-year (versus 14% in Q1). AI revenue hit 730 million yuan, up over 120% year-over-year, achieving triple-digit growth for eight consecutive quarters and representing 45% of public cloud service revenue. Growing intelligent computing cloud demand also boosted basic cloud product revenue.

By customer segment, Kingsoft + Xiaomi contributions increased. Q2 revenue from Kingsoft + Xiaomi reached 630 million yuan, up 69.5% year-over-year, with revenue share rising to 27%. H1 2025 completed 40% of the annual related transaction limit.

Looking ahead, continued AI resource investment combined with ecosystem synergies with Xiaomi and Kingsoft are expected to maintain strong public cloud AI business growth.

Industry cloud accelerated growth in Q2 2025, with multi-sector AI project delivery. Q2 2025 industry cloud revenue reached 724 million yuan, up 10.1% year-over-year and 17.4% quarter-over-quarter, mainly benefiting from sustained client demand for software IT services and accelerated Q2 project delivery completion. In public services, the company comprehensively promotes government cloud and state-owned enterprise cloud business, jointly launching Kingsoft Government AI integrated machines with WPS Office.

The company completed new funding rounds in Q2, with cash, cash equivalents, and restricted cash reserves reaching 5.52 billion yuan as of end-June. With Xiaomi's clear AI investment commitment, KINGSOFT CLOUD will directly benefit from foundation model and autonomous driving training and inference demand growth.