The performance of the A-share market has been relatively independent lately, showing little influence from external factors. In contrast, the Hong Kong stock market is more sensitive to international developments. As U.S.-Iran negotiations enter a critical phase, capital has withdrawn to adopt a wait-and-see approach. The Hong Kong market opened higher but declined throughout the day, closing down 1.44%. The latest round of U.S.-Iran talks is ongoing. According to Oman's Ministry of Foreign Affairs, discussions covered proposals and suggestions from Iran, as well as responses and inquiries from the U.S. negotiation team regarding core issues of Iran's nuclear program. The talks also addressed necessary safeguards for reaching a nuclear agreement, including technical and regulatory requirements. Badr noted that all parties are advancing the negotiations constructively, demonstrating unprecedented openness to new and creative ideas while working to create favorable conditions for a fair and sustainable agreement. The final outcome awaits further updates. As this is the final round of talks, foreign capital is expected to remain cautious until a resolution is reached.
The hardest-hit sector was innovative pharmaceuticals, including companies like WuXi AppTec. This decline is unrelated to earnings and is likely due to institutional portfolio adjustments. Some analysts suggest it may also be linked to potential restrictions by the Trump administration on clinical data and licensing deals involving Chinese pharmaceutical companies, as well as stricter FDA approval processes. Regardless, there is evident selling pressure. Insurance stocks also faced declines, with China Life Insurance falling over 4%.
Lithium battery stocks, which had positive news yesterday, saw gains fade today. Several listed companies indicated that lithium exports from Zimbabwe are expected to resume within a month, and current raw material inventories are sufficient to minimize operational impact. Ganfeng Lithium and Tianqi Lithium managed to stay in positive territory, but Contemporary Amperex Technology fell more than 6%, reflecting selling pressure from foreign investors.
NVIDIA released its earnings report, achieving record results with revenue, operating profit, and free cash flow all hitting new highs. Fourth-quarter revenue reached $68.1 billion, up 73% year-over-year. Data center revenue was $62 billion, rising 75% year-over-year and 22% quarter-over-quarter, surpassing market expectations of $60.62 billion. This growth was driven by continued capacity expansion of Blackwell and Blackwell Ultra products. The company's guidance also exceeded expectations, with first-quarter revenue projected at $78 billion, plus or minus 2%, compared to analyst estimates of $72.6 billion. NVIDIA noted that its forecast does not include data center revenue from China. The strong guidance, even without contributions from China, indicates robust overseas demand for AI investments. Another key factor is that GPUs are increasingly being treated as financial assets, serving as hard currency. Recent trends show overseas tech companies using chips as collateral for loans to fund large-scale AI investments. Investors are attracted by yields ranging from 7% to 17%, which often exceed returns from corporate debt issued by tech firms. This dynamic ensures strong demand for chips, as they can be used as collateral.
Market sentiment was further boosted by NVIDIA CEO Jensen Huang's remarks during the earnings call, where he emphasized that AI development has reached a turning point, with computing power demand surging exponentially. In this new era, computing power translates directly into revenue, providing a significant boost to computing infrastructure players.
FIT HON TENG, traditionally a consumer electronics assembly and cable manufacturer, is transitioning toward higher-margin, high-barrier connectivity and core components. It is upgrading from precision parts to system-level interconnect solutions. In the AI segment, the company benefits from the rapid growth of the global optical module market, with products including 224G high-speed interconnects, 800G/1.6T optical modules, and CPO solutions already adopted by key North American clients. In the electric vehicle segment, rising adoption of 800V platforms and advancements in autonomous driving are increasing the value of connectors per vehicle. FIT HON TENG surged over 11%.
China International Marine Containers delivered the world’s first ultra-large modular data center in 2024—the Malaysia 2312 project. The company has cumulatively delivered over 1,000 megawatts and more than 17,000 modules globally, currently serving AI and cloud computing clients with over 300MW of capacity. It offers end-to-end integrated solutions from design and manufacturing to transportation and commissioning, reducing construction timelines by 40% to 70% compared to traditional methods. The stock rose nearly 8%.
Other hardware gains included Cambridge Technology, which advanced nearly 8% on optical module strength, and Tianyue Advanced, which rose over 6% on SiC momentum. The packaging sector also benefited. According to a Morgan Stanley report, ASMPT is expected to report first-quarter revenue of HKD 40 billion, exceeding seasonal norms. Full-year revenue growth is projected to accelerate from 7% last year to 22%, driven by emerging businesses such as CoWoS-L and high-bandwidth memory. The stock gained over 3%.
Amid growing AI demand, North America is facing severe power shortages. Former President Trump plans to convene tech giants including Amazon, Meta, Microsoft, and Google next week to sign commitments requiring them to cover electricity costs for high-consumption data centers. This move underscores the sustained demand for data centers and the ongoing power shortage theme. Institutional estimates suggest that U.S. electricity capacity demand driven by AI will grow at a CAGR of approximately 55% from 2025 to 2028, with cumulative demand exceeding 150GW over the next three years. This surge creates opportunities for supporting equipment, with self-built power generation becoming a major trend. Gas turbines, known for their rapid response, high power adaptability, low generation costs, and reliability, are emerging as a preferred power solution for AI data centers. Harbin Electric rose over 7%, while Shanghai Electric gained more than 3%.
Following the unsuccessful sale of a Panama port, Li Ka-shing has accelerated the disposal of U.K. assets. CK Hutchison Holdings announced on February 26 that its subsidiaries CK Infrastructure Holdings, Power Assets Holdings, and CK Asset Holdings are selling 40%, 40%, and 20% stakes, respectively, in UK Power Networks to French utility Engie for HKD 44.3 billion, HKD 44.3 billion, and HKD 22.15 billion, totaling over HKD 110 billion in proceeds. These stocks rose around 4%.
According to China’s Ministry of Commerce, 20 Japanese entities have been added to an export control list, while another 20 were placed on a watchlist. In response, Japanese Prime Minister Takaichi Sanae expressed strong opposition, calling the move unacceptable and regrettable. The escalating trade friction between China and Japan is expected to accelerate domestic substitution, particularly in the semiconductor sector. While Hong Kong-listed stocks lack direct beneficiaries, potential beneficiaries include China Shipbuilding Industry Group Power, Aluminum Corporation of China, CRRC Times Electric, and China Railway Signal & Communication.
Man Wah Holdings previously acquired a U.S. home furnishings brand to enhance competitiveness, with its second growth curve warranting attention. In December, the company announced the acquisition of GRIC Group for approximately $58.7 million. GRIC primarily manufactures and sells soft furniture in the U.S. The acquisition includes $32 million for a 100% equity stake, with the remaining $26.99 million used to assume the target’s bank debt. The acquisition is expected to boost Man Wah’s North American operations through GRIC’s brand and distribution channels. The purchase price represents a 27% premium to GRIC’s net assets of $25.2 million. GRIC owns two core brands, Southern Motion and Fusion Furniture, with nearly 30 years of presence in the U.S. mid-to-high-end market. Channel integration is a key focus.
As the global leader in functional sofas, Man Wah has held the top sales position for seven consecutive years, with a 50.1% market share in China—45 percentage points ahead of the nearest competitor. The company benefits from strong supply chain bargaining power, with foam procurement costs 14% below the industry average and steel cost differentials of 9%. It has also reduced energy consumption per unit by 19%. Exports to the U.S. are primarily handled through Vietnam, benefiting from lower tariffs and faster delivery, driving growth in overseas revenue. These advantages are reflected in Man Wah’s Vietnam operations, where local sourcing accounts for 62% of the supply chain, and export business gross margin has reached 41.3%. The company is also developing a second growth curve through a joint venture with Leader Harmonious, focusing on humanoid robot joint modules for the North American market. It is also entering the AI server liquid cooling plate and chassis segment, targeting revenue of CNY 200 million by 2026, aligned with computing infrastructure demand.