**Market Overview**

Today marked a significant military parade, with markets initially showing enthusiasm as the Hang Seng Index surged higher at the opening. However, momentum weakened throughout the session, closing down 0.60%. The parade showcased impressive military capabilities, including the "Thunderbolt-1" air-launched long-range missile, "Julang-3" submarine-launched intercontinental ballistic missile, "Dongfeng-61" land-based intercontinental missile, and "Dongfeng-5C" liquid intercontinental strategic nuclear missile. These systems form crucial components of the strategic defense framework with global strike capabilities.

This marked the first concentrated display of the military's land, sea, and air-based "trinity" strategic nuclear forces. These advanced systems create complementary advantages and establish "second-strike" nuclear capabilities, providing strong deterrent effects. The parade also featured cutting-edge conventional weapons including the world's first unmanned tank turret with phased array radar, the first combat-deployed laser cannon, the first supersonic intelligent drone, unlimited-range nuclear torpedoes, advanced anti-satellite defense missiles, comprehensive multi-layered anti-drone defense systems, and high-energy laser weapons.

Global attention on the military parade was evident, with pizza delivery orders near the Pentagon surging 4x and 3x respectively at Domino's and Papa John's during the parade hours. When asked about whether the parade represented a challenge to America, President Trump provided a measured response, reflecting the changing dynamics of military capabilities.

While the military parade boosted confidence, stock market performance was disappointing, attributed to excessive prior gains and insufficient correction, leading some investors to take profits. Military-industrial stocks declined significantly, with China Shipbuilding Industry Company Limited (00317) falling nearly 9%. Securities firms, initially expected to provide support, instead became major contributors to the sell-off. External factors also played a role, with U.S. 30-year Treasury yields breaking above 5% for the first time since July, while U.S. markets declined overnight.

**Safe Haven Asset Rotation**

With market weakness, capital rotated toward safe haven assets, particularly gold. The World Gold Council announced plans to develop a digital form of gold on September 3rd, potentially revolutionizing the $900 billion London physical gold market by creating new trading, settlement, and collateral mechanisms. This development could significantly enhance gold liquidity and accelerate central bank gold accumulation.

London spot gold rose 1.64% to $3,532.405 per ounce on September 2nd, while COMEX gold futures gained 1.51% to $3,599.5 per ounce, both reaching record highs. Zhaojin Mining Industry Company Limited (01818) surged over 4% again, while Luk Fook Holdings (International) Limited (00590) and Chow Tai Fook Jewellery Group Limited (01929) both gained over 3%.

**Healthcare Sector Momentum**

Healthcare emerged as another safe haven sector, with Hengrui Medicine (01276) and Shijiazhuang Yiling Pharmaceutical Co., Ltd. (00460) both rising over 8%. Medical services showed even stronger gains. ByteDance's recent establishment of Shanghai Xiaohe Intelligent Medical Technology Company, focusing on AI-powered healthcare solutions, highlighted industry optimism. Spring Healthcare Group Limited (01858) and Ping An Healthcare and Technology Company Limited (01833) both surged over 10%, while Alibaba Health Information Technology Limited (00241) continued its upward trend.

**Robotics Sector Divergence**

The robotics sector showed mixed performance following previous discussions. Unitree Robotics announced plans to submit IPO application documents between October-December 2025. MicroPort CardioFlow Medtech Corporation (02252) gained momentum, benefiting from both robotics and medical concepts. The company reported H1 2025 revenue of RMB 176 million, up 77% year-over-year, with net losses narrowing 59% to RMB 115 million. Growth was driven by rapid overseas expansion, with international sales surging 189% and accounting for 58% of total revenue. Management maintains guidance for 85% annual revenue growth, expecting overseas sales to contribute 55% of total revenue. The stock rose over 13% today.

Shougang Holding (00697) announced positive developments, with its Beijing Robotics Industry Development Investment Fund completing additional RMB tens of millions investment in humanoid robotics company "Songyan Power," following initial investment in March 2024. Songyan Power focuses on humanoid robot development and bionic facial technology, with applications in museums and retail environments. The company's robot "Little Naughty" won multiple awards at the 2025 World Humanoid Robot Games, including gold medals in gymnastics and long jump, and silver in dance. Combined with previous announcements about establishing a robotics advanced materials company, Shougang Holding is building a comprehensive robotics industry chain. The company's first "Robot 4S" store will open permanently at Beijing Rongshi Plaza during National Day holiday, with plans for 3-10 chain stores by year-end. The stock gained nearly 7% today.

**Semiconductor Developments**

The U.S. government officially notified Taiwan Semiconductor Manufacturing Company (TSM.US) on September 2nd that its Nanjing facility's "Verified End User" (VEU) status will be revoked, with the exemption for exporting specific U.S. technology to China terminating on December 31, 2025. Samsung Electronics and SK Hynix have faced similar restrictions previously. This strengthens the domestic substitution narrative, with optical fiber showing the strongest logic as hollow-core fiber replacement becomes the trend. Yangtze Optical Fibre and Cable Joint Stock Limited Company (06869), the sole beneficiary leader, rose over 12% today.

Despite today's market decline, the positive sentiment from the military parade will not disappear quickly, and markets will likely recover in due course.

**Sector Focus**

According to GGII and China Business Research Institute data, China's solid-state battery shipments reached approximately 7GWh in 2024. Considering technology optimization and adoption timeframes, projections indicate shipments will reach 18GWh by 2027 and 30GWh by 2028. Semi-solid-state batteries have already been deployed in vehicles priced in the RMB 100,000 range, bringing the technology into mainstream price segments. Industry analysts believe first-generation all-solid-state battery material systems are now standardized, with material performance and equipment approaching mass production requirements. The second half of this year is expected to be crucial for solid-state battery equipment and material companies to secure partnerships.

Key Hong Kong-listed companies in this space include: HK ROBOTICS (00370), CALB (03931), REPT BATTERO (00666), LOPAL TECH (02465), and TIANNENG POWER (00819).

**Individual Stock Analysis**

**XINYI SOLAR (00968): Glass Prices Continue Rising, Power Station Operations Remain Stable**

Reports indicate some photovoltaic glass companies have begun pricing September orders, with 2.0mm single-layer coated (panel) benchmark prices rising to RMB 13 per square meter, up RMB 2 from July pricing.

H1 2025 Performance: The company achieved revenue of RMB 10.932 billion, down 6.5% year-over-year; net profit attributable to shareholders of RMB 746 million, down 58.8% year-over-year; gross margin of 18.3%, down 8.6 percentage points year-over-year; net profit margin of 6.8%, down 8.7 percentage points year-over-year.

**Analysis**: Photovoltaic glass prices continue rising. In H1 2025, the company's photovoltaic glass business sales volume (by tonnage) increased 17.5% year-over-year, generating revenue of RMB 9.474 billion, down 7.3% year-over-year, with gross margin of 11.4%. While sales volume grew, profitability remained under pressure due to significant year-over-year selling price declines and fixed costs from idle capacity.

Geographically, H1 2025 overseas photovoltaic glass business revenue proportion increased to 31.6%, with North America and Europe high-premium regions accounting for 8.1% of revenue, up 5.8 percentage points from 2024.

Facing industry oversupply conditions, the photovoltaic glass sector has begun self-adjusting with new production reduction measures. Power station operations remain stable, with H1 2025 solar power station business achieving revenue of RMB 1.438 billion, up 0.7% year-over-year, with gross margin of 63.5%. Gross margin declined slightly due to power curtailment in some regions and increased depreciation expenses.

With continued supply-side reduction and rising raw material costs, component manufacturers' inventory accumulation has become more active, leading to declining photovoltaic glass inventory recently and driving August order price increases. As anti-competition measures continue, photovoltaic glass prices are expected to bottom out and recover in the second half, supporting sector profitability restoration.