**Market Overview**
Pre-holiday caution dominated market sentiment as investors increasingly attempted to anticipate others' moves, leading to premature positioning and subsequent market correction. Hong Kong stocks opened lower and remained volatile throughout the session, with a late-session selloff contributing to a 1.35% decline at close.
**Tariff Impact**
US tariffs resurfaced as a market concern. On September 25th local time, Trump announced via his social media platform "Truth Social" that starting October 1st, the US would implement new rounds of high tariffs on various imported products. The measures include: 25% tariffs on all imported heavy trucks; 50% tariffs on kitchen cabinets, bathroom vanities and related building materials; 30% tariffs on imported furniture; and 100% tariffs on patented and branded pharmaceuticals.
While Trump's aggressive approach aims to force industrial reshoring, relying solely on tariff coercion is unlikely to succeed, as much manufacturing has already relocated and lacks supporting infrastructure. The optimal timing has been missed, with consequences including consumers bearing costs and businesses facing closure when unable to pass on expenses. Physical sector impacts will eventually affect US equity markets.
The pharmaceutical sector saw limited direct impact as US domestic companies handle sales, though sentiment was affected. Asymchem Laboratories (06821) and Pharmaron-B (02617) both declined over 7%.
Some sectors benefited from the tariff announcements. Polestar Automotive (01333) surged over 20% as Trump's tariffs target "traditional fuel heavy trucks" while electric heavy trucks remain exempt. The company focuses on electric heavy trucks and mining vehicles, shipping 307 electric dump trucks in 2024 with the largest domestic market share. Their products are priced around RMB 2 million, approximately 30% lower than US counterparts like Tesla Semi.
**Geopolitical Developments**
On September 25th local time, President Trump signed an executive order advancing plans for US and global investors to acquire TikTok's US operations from Chinese parent company ByteDance, emphasizing compliance with US national security requirements under 2024 legislation.
Market uncertainty arose from reports that high-ranking military officials including generals stationed globally were summoned to a Virginia Marine base meeting, raising questions about potential military adjustments or global deployment restructuring. Defense stocks China Shipbuilding Industry (00317) and AVIC Aviation High-Technology (02357) showed movement.
**Technology Sector**
Recent high-flying technology stocks corrected, partly due to Shanwei New Materials (688585.SH) regulatory scrutiny, though reports of Moore Threads IPO delays proved unfounded as the company's IPO was approved after market close. Hua Hong Semiconductor (01347) continued gaining over 3%.
**Automotive Sector**
Following yesterday's discussion of automaker European expansion, XPeng Motors-W (09868) officially announced entry into five markets: Switzerland, Austria, Hungary, Slovenia, and Croatia. The company partnered with Hedin Group, planning to launch 2025 XPeng G6 and G9 models in Switzerland, with XPeng P7+ launching in H1 2026. XPeng will officially enter Austria in October 2025, simultaneously expanding into Hungary, Slovenia, and Croatia. Combined with equity incentive plans, shares rose over 5%.
Chery Automobile (09973), mentioned yesterday, maintains significant fuel vehicle operations but has developed strong overseas markets with "localized development + global coordination" systems. The company has established Brazilian facilities and European bases with Spain's EVMOTORS. In 2024, Chery ranked first among Chinese brands in Europe, South America, Middle East and North Africa, and second in North America and Asia (excluding China). The company announced a September 30, 2025 board meeting to review interim results for the six months ended June 30, 2025, with shares rebounding nearly 3%.
**Energy Sector**
The National Energy Administration emphasized non-electric utilization as a breakthrough for expanding renewable energy applications, strengthening integrated green hydrogen production, transmission, storage and utilization development, extending green hydrogen industry chains toward green metallurgy, synthetic ammonia, methanol, and aviation fuel. Related stocks including Rui Feng New Energy (00527), China Datang Renewable Power (01798), China Longyuan Power (00916), and Xinte Energy (00956) performed well.
Wood Mackenzie's latest "Global Wind Market Outlook Update: Q3 2025" projects global annual wind power installations exceeding 170 GW over the next five years, accelerating post-2028 to peak at 200 GW in 2034. Wind power leader Goldwind Science & Technology (02208) gained over 4%.
**Gaming and Entertainment**
Gaming sectors performed well ahead of National Day holidays, with Macau hotels fully booked, catalyzing gaming performance expectations. MGM China Holdings (00200), Galaxy Entertainment (00027), and SJM Holdings (00880) showed stability.
NetDragon Websoft (00777) surged over 16% as AI technology reduced gaming development costs by 26.7% year-over-year while improving overall efficiency by 15%. Multiple games will launch overseas in H2, including new language versions of "Eudemons Online" and Southeast Asian versions of "Conquer" series.
**Board Focus: Silicon Carbide Breakthrough**
September 26, 2025 marked a historic moment as the first 12-inch silicon carbide substrate processing trial line officially went online at Jingsheng Mechanical & Electrical's subsidiary Zhejiang Jingrui SuperSiC. This represents not just production line completion, but a breakthrough charge for China's third-generation semiconductor industry.
Zhejiang Jingrui SuperSiC has established complete supply chains from crystal growth to processing and testing, achieving 100% domestic equipment self-development, breaking foreign technical barriers and marking Jingsheng Mechanical & Electrical's leap from "running alongside" to "leading" in global SiC substrate fields.
Key Hong Kong-listed companies include SICC (02631), the global silicon carbide substrate leader and only Chinese company achieving 8-inch substrate mass production with 12-inch samples, and INNOSCIENCE (02577), the global gallium nitride (GaN) power device leader with 8-inch silicon-based GaN wafer production yields exceeding 95%, unit costs 40% below industry average, and 33.7% market share (2023).
**Individual Stock Spotlight: TIANNENG POWER (00819)**
**Gross Margins Significantly Improved; Lithium Battery Business Revenue Surged**
Interim 2025 revenue reached RMB 24.192 billion, down 51.53% year-over-year; shareholders' profit RMB 820 million, down 11.68% year-over-year; basic earnings per share 72.8 cents.
Commentary: As a lead-acid battery industry leader, performance declined primarily due to significant increases in lead prices directly raising production costs and eroding gross margins. Previously invested unprofitable lithium battery projects also faced asset impairments.
Looking forward, the company actively transformed by suspending loss-making lithium battery projects, refocusing on advantageous lead-acid battery business with substantial market foundation (reportedly over 45% market share). Overall, H1 2025 lead-acid battery shipments reached 53.5-54 GWh, down 4.5-5%, corresponding to RMB 18.29 billion revenue, down approximately 5%.
With new national standards implementation and trade-in policy stimulus, H1 2025 two-wheeler OEM market demand recovered, with company OEM shipments achieving strong year-over-year growth. TIANNENG POWER's lead-acid battery business is expected to achieve volume and profit recovery in 2025.
Profitability-wise, H1 2025 lead price volatility significantly narrowed compared to previous year, driving lead-acid battery gross margin improvements to an estimated 14.5-15%, up 1.5-2 percentage points year-over-year.
Lithium battery business achieved high revenue growth in H1 2025 with narrowed losses. H1 2025 lithium battery revenue reached RMB 501 million, up 174.6%, primarily benefiting from domestic and US export pre-installation demand and industry prosperity spillover effects driving energy storage battery shipment growth. Additionally, AI development has created new demand for energy storage disaster recovery power sources. The company actively explores new markets with overseas expansion including Vietnamese assembly plants entering production operations to create new growth drivers.