Today marked the final trading session of 2025, with the Hang Seng Index edging down 0.87%. For the full year, performance was quite respectable, as the index climbed from approximately 19,600 points at the beginning of the year to 25,630 points, achieving a 27.77% annual gain and recording its best annual performance in five years. The IPO market also delivered strong results, with total Hong Kong IPO proceeds reaching HKD 286.3 billion for 2025, reclaiming the top global ranking. The Hong Kong market remains heavily influenced by U.S. market sentiment. Recent Fed meeting minutes released on the 30th local time indicated that while the Fed generally agreed to an interest rate cut at its December meeting, significant internal divisions have emerged among officials. Some forecasts suggest the Fed may only implement one more rate cut next year, and it is likely to maintain rates unchanged for some time until new data shows inflation declining again or unemployment rising beyond expectations. Foreign investor sentiment remained subdued, while domestically-driven sectors like banks and insurance, having surged yesterday, underwent a broad correction today, contributing to overall market weakness.

Media reports citing sources indicated that the U.S. Commerce Department's Bureau of Industry and Security has modified its policy to allow Samsung and SK Hynix to export chip manufacturing equipment to their Chinese factories, requiring only annual approval. This does not signify a shift in U.S. stance but is rather a response to pressing circumstances, particularly as ChangXin Memory is preparing for its IPO. On the evening of December 30, the Shanghai Stock Exchange website showed that ChangXin Technology Group Co., Ltd.'s STAR Market IPO application was formally accepted. Both Samsung and Hynix have factories in China; continued restrictions would risk ceding market share to domestic competitors and could exacerbate supply constraints, potentially fueling inflation in the U.S. A positive development emerged today with the joint release by the National Development and Reform Commission and the Ministry of Finance of the "Notice on Implementing Large-Scale Equipment Renewal and Consumer Goods Trade-in Policies in 2026," which clarifies the scope of support, subsidy standards, and work requirements for the 2026 "Two New" policies. However, this failed to generate significant market momentum, primarily because the measures fell short of expectations. For instance, the 2026 subsidy was cut by half: the subsidy ratio decreased from 20% to 15%, the single-item subsidy cap was reduced from 2,000 yuan to 1,500 yuan, the number of eligible categories was slashed from 12 to 6 (excluding kitchen appliances/dishwashers, etc.), and the initial funding pool of 62.5 billion yuan was 23% lower year-on-year. Furthermore, the 2025 subsidies had already absorbed substantial demand. Consequently, stocks like Midea Group (000333) and Hisense Home Appliances (000921) experienced brief rallies before retreating. A notable highlight of the new policy is the inclusion of smart glasses in the support scope for 2026, compared to the 2025 policy, representing a clear incremental segment. Related concept stocks such as Conant Optical (02276), one of the few global manufacturers capable of mass-producing 1.74 ultra-high refractive index lenses and the exclusive lens supplier for Alibaba's "Quark AI Glasses," are poised to rapidly enter the supply chains of leading global tech giants for smart glasses, potentially leveraging Goertek's customer channels. Its stock rose over 4% today. Other stocks like TCL Electronics (01070) and Sunny Optical Technology (02382) posted modest gains.

Overall, no standout sectors emerged today, with the better performers being predominantly small-cap stocks, many of which saw gains driven by window-dressing activities. The AI Agent concept, mentioned yesterday, demonstrated slightly better sustainability. On December 30, Meta's announcement of a multi-billion dollar acquisition of AI Agent product company Manus triggered a "butterfly effect." Maifushi (02556), a leading AI+SaaS marketing and sales enterprise in China, stands to further empower its core product scenarios like marketing and sales against the backdrop of accelerating AI Agent adoption. Moving forward, the company is expected to continuously enhance its product capabilities and expand into overseas markets through an "organic growth + acquisitions" strategy, creating a dual-drive engine targeting both SMEs and large clients, gradually benchmarking against overseas leaders like HubSpot and Salesforce. Its stock rose over 5% again today. The aerospace and aviation concept is particularly noteworthy. This theme has been exceptionally active in the A-share market, becoming a mainstream sector. However, in the Hong Kong market, which lacks many pure-play, state-level listed companies in this area, it has not sparked a major frenzy, with only a few supply chain stocks showing strength. Recent leading performers include CIMC Enric (03899), a core supplier for rocket propellant storage and transportation. Its main products include liquid oxygen/liquid hydrogen/liquid methane cryogenic storage tanks and refueling systems (essential for space launches). In July this year, it delivered nine large liquid oxygen storage tanks for a commercial space project, with its products deployed at launch sites like Jiuquan and Xichang. Its space business became profitable in 2025, with revenue and orders exceeding 100 million yuan, half from overseas, supplying top institutions like China Aerospace Science and Technology Corporation and Oriental Space. Its products comply with the U.S. ASME space standard. It possesses high technical barriers, with liquid hydrogen tanks capable of maintaining ultra-low temperatures of -252.87°C, making it one of the few domestic enterprises capable of batch-delivering aerospace-grade cryogenic equipment. Its stock consolidated at high levels today. Another stock, Junda Co., Ltd. (02865), is themed around space computing. The space-based photovoltaic market holds immense potential, with low-earth orbit satellites alone potentially generating trillions in output value, while the market space for space-based computing centers is even broader. The company has entered a strategic cooperation with Shangyi Optoelectronics, planning to make an equity investment as a strategic shareholder. The two parties will deeply integrate industrial and scenario resources to collaborate on the application of perovskite battery technology in space energy. Shangyi Optoelectronics has technical backing from the Shanghai Institute of Optics and Fine Mechanics, Chinese Academy of Sciences, and is a rare domestic satellite battery producer. Its core team has deep experience in perovskite aerospace applications for years. It is well-positioned to benefit from the space computing sector, with its stock rising nearly 5% today.

Other movements centered around holiday consumption. For instance, the aviation industry rallied collectively, buoyed by strong bookings for the New Year and upcoming Spring Festival holidays (details in the sector focus). In the film sector, data from Lighthouse Professional showed that as of December 28, the total box office for the 2025 New Year holiday film season had surpassed 5 billion yuan. Notably, this achievement set a new eight-year high for the same period. For the full year, according to the China Film Administration, as of 14:30 on December 13, 2025, the domestic total box office had exceeded 50 billion yuan, with total admissions reaching 1.194 billion. Damai ENT (01060) and Maoyan ENT (01896) both rose over 4%. Chow Sang Sang (06168) announced in November that it would launch a new joint venture store cooperation model, partnering with franchisees to jointly invest in, establish, and operate "Three-Good" stores (prime location, quality products, excellent operation). This model is expected to分散 investment risks, stimulate store opening enthusiasm, and potentially lead to store count growth and higher revenue per store, positively impacting group performance. Additionally, the company intends to seek shareholder approval for a mandate authorizing the board to repurchase H-shares, up to 10% of the total H-shares in issue. Stocks that have fallen significantly are prone to rebounds; its stock rose over 7% today.

Travel data for the 2026 New Year holiday indicates a significant increase in residents' willingness to "travel for the New Year," bringing substantial business growth to the aviation industry. Data from TravelSky on 12.29: Domestic flight bookings for New Year exceeded 3.54 million, up 28% year-on-year; combined inbound and outbound flight bookings exceeded 720,000. The average economy class airfare (excluding tax) for the 2026 New Year holiday is approximately 597 yuan to 669 yuan, an increase of 6.7% to 8.2% compared to 2025. Besides robust demand, pressure on the cost side for airlines has eased noticeably. For instance, falling oil prices: The retreat of Brent crude from previous highs has effectively reduced airlines' fuel cost pressure. A stronger Renminbi: The recent appreciation of the RMB against the USD signifies significant exchange gains for domestic airlines that hold substantial USD-denominated debt for aircraft purchases, helping to improve financial performance. Following the New Year holiday, the extended Spring Festival holiday will continue to act as a catalyst for airline stocks. Key Hong Kong-listed stocks: CHINA EAST AIR (00670), CHINA SOUTH AIR (01055), AIR CHINA (00753).

CHINA EAST AIR (00670): Holiday travel boom set to drive volume and price increases for airlines. Domestic route bookings for the New Year holiday exceeded 1.76 million, up approximately 46% year-on-year; international route bookings exceeded 620,000, up about 18% year-on-year. The company achieved a net profit attributable to shareholders of 2.103 billion yuan, successfully turning a profit compared to a loss of 138 million yuan in the same period last year. Analysis: Robust holiday travel demand points to promising ticket prices during the Spring Festival travel peak. Lower oil prices and a favorable exchange rate help reduce costs for airlines. The three major airlines maintained relatively strong load factors even during the off-season. After years of losses, all three major state-owned airlines returned to profitability in the first three quarters of this year. CHINA EAST AIR, after five consecutive years of losses, turned a profit in the first three quarters of 2025, crucially earning 3.5 billion yuan in Q3 alone, a 34% increase year-on-year. In the first three quarters, the growth in passenger traffic, measured in revenue passenger kilometers (RPK), on international routes significantly outpaced that on domestic routes for the company. The year-on-year increases for CHINA EAST AIR in this metric were 24.16% and 6.08% respectively. Key operational metrics like capacity input (ASK), passenger traffic (RPK), and load factors for the three major airlines all showed year-on-year increases. In September, CHINA EAST AIR's ASK rose 3.63% year-on-year; RPK increased 8.67% year-on-year; the load factor was 87.57%, up 4.06 percentage points year-on-year. This year, CHINA EAST AIR continued to push into international markets, launching new routes and increasing frequency on existing international and regional routes, becoming the domestic airline with the most international destinations. Recently, CHINA EAST AIR also announced plans to launch a Shanghai Pudong-Auckland-Buenos Aires route, opening a major southern corridor, which is set to break the record for the world's longest single flight. The company is optimizing and expanding its international network, continuously promoting connecting flight services, and enhancing its core competitiveness. Coupled with cost reductions from falling oil prices, airline profits could see further growth. With the continuous expansion of visa-free travel, international travel and exchange demand is being steadily activated. High industry-wide load factors, strong travel demand on both domestic and international routes, and recently sustained positive ticket price trends suggest airline unit revenue may see significant recovery. China's aviation ticket prices are expected to stabilize and rise in 2026. Furthermore, lower oil prices and a stronger RMB are favorable for airlines to release their earnings potential.