Zhitong Hong Kong Stock Exchange Unravels | Democratic Party Sweeps Both Houses to Dispel Various Doubts and Beneficial Varieties Rebound Across the Board
[Anatomy Dashboard]
Yesterday, the market was watching the US midterm elections. Although some results were anticipated, Trump's statement directly induced a sharp rebound in the market. Today, the A-share GEM surged by more than 4%, the Shanghai Composite Index rose more than 2%, and Hong Kong stocks also rose 1.67%.
At 1 a.m. EST on November 4, on-site voting for the US midterm elections basically ended, and all states will continue to count and announce the results of the vote count. According to media predictions, the Democratic Party will win 52 of the 100 seats in the Senate, take back control of the Senate, and it is expected that it will take back control of the House of Representatives and take back control of the National Assembly. Of course, the final results will not be announced until later, but the victory or defeat has been decided, and the Republican Party is unable to recover.
This result is not surprising, because according to various polls, the topics that voters are most concerned about, such as the cost of living, government corruption, inflation, and the war in Iran, are all unfavorable to the current government. In particular, the attack on Iran has led to high oil prices, rising inflation, and growing public dissatisfaction. Coupled with Trump's cronyism, as long as he is loyal, candidates in some states are incompetent. None of this can be done with money. Musk spent more than 400 million US dollars to no avail; the Democratic Party simply picked up the omission. As the saying goes: Forts often fall apart from within.
According to the general script of the market, the result of the Democratic Party sweeping both houses is bad for the stock market, because the market is worried that Trump will do something wrong, and the bad effects of the last time Trump's loss in the election instigated the shock on Capitol Hill are still visible. Also, I'm worried about the impact on the direction of AI. These are all points that the market is worried about, so the general market trend this morning is very complicated. But I didn't expect Trump's speech to be widely reported at noon: “I congratulate the Democrats and look forward to cooperating with you to work for the benefit of our country.” But at the same time, Trump also said that if the Democratic Party makes progress in this election and gains control of Congress, he may force the Democratic Party to reach a cross-party agreement with it by exercising the presidential veto power. Additionally, White House officials insisted that Trump would not interfere with the election by declaring martial law or encouraging officials not to certify the election results. It directly dispelled two concerns: they won't do anything, but the Democratic Party's proposal will be rejected. Although the National Assembly can also overturn the veto, it is extremely difficult and requires two-thirds of the National Assembly to pass it.
Let's look at another topic. After losing Congress, the market will worry that Trump will adopt a more extreme foreign policy to restore his prestige. This possibility exists, such as increasing the attack on Iran on a larger scale. However, this is a prerequisite; that is, even if the Republican Party loses both houses, the gap must not be too wide. It is estimated that Trump has already seen that this loss will be too miserable. If he does not do well, he will trigger internal backlash, such as impeaching him. The new Speaker of the House Jeffries stated: “America is back. The American people have made it clear that they have had enough of extremism and enough of corruption.” He announced the two main lines of the House's 100-day agenda: reducing the cost of living, and at the same time initiating supervision and investigation of the Trump administration to investigate related responsibilities. Although impeachment has not yet been involved, it is very likely. Once Trump has gone too far, it may be initiated. The consequences are very serious. If he is impeached and stepped down during his term, he will not simply step down, but will be liquidated later. Take a look at its latest statement to Israel: stop the 4 billion military aid to Israel. This signal indicates that there is a certain cooling meaning.
In summary, there will be great changes in many aspects of the US in this midterm election. In particular, there will be many restrictions on Trump, and I'm afraid it will be very difficult to carry out all kinds of aggressive measures. This is a huge benefit for the market. However, at the same time, it is important to clearly see that there are many areas of agreement between the two parties that will not change. The risk of a power game will not be reduced as a result; there will only be some minor adjustments to the form and methods. The Russian-Ukrainian conflict is even more unlikely to end, because the conflict was initiated by Democratic Party Biden, and the relationship between the US and Europe will become closer, and aid to Ukraine will increase. There are also variables in Iran's direction, because Israel faces huge obstacles in forming a cabinet and needs to stir up war so that it can continue to be the caretaker prime minister. If it gets bigger, will the US care? There are quite a few pro-Israel parties from both parties.
Anyway, much of the uncertainty has been lifted. The market sees opportunities, and big capital is also actively entering the market. The sudden rise in the afternoon is a sign. Meanwhile, IPOs on the Hong Kong stock side are also slowing down. According to statistics, as of November 3, at least 78 companies had postponed, withdrawn, or abandoned their listing plans this year, accounting for about a quarter of the companies planning to go public without completing transactions. This cancellation rate set a record high since the 2008 financial crisis. At that time, the cancellation rate was as high as 40%, yet on average for the past ten years, only about three companies withdrew their listings every year.
The strongest rebound was in the technology sector. The focus was on domestic demand, such as Junzheng Co., Ltd. (03223), Huahong Hongli (01347), Bijiao Technology (06082), Tianshu Zhixin (09903), and Jiantao Laminate (01888) all rose by more than 11%. Other orders, which depend on the North American chain, are also rising, but mainly driven by sentiment. After all, the US is very uncertain about AI data center construction.
There are new expectations in the direction of medicine. The Republican Party wants to expand the scope of restrictions from “federally funded R&D projects” to pure commercial pharmaceutical companies' own capital orders, and completely ban cooperation between US pharmaceutical companies and domestic CXO. Many moderates within the Democratic Party oppose this aggressive expansion. They only agree to restrict federal financial support programs. They do not want the commercial new drug research and development supply chain to be directly interrupted to avoid driving up the cost of new drug development and drug prices in the US. Zhaoyan New Pharmaceutical (06127), Pharmaceutical Syndication (02258), Zhitong Jinyu Kanglong Chemical (03759), and Pharmaceutical Kangde (02359) all rose more than 12% in November.
The gold category also rebounded sharply. The previous decline was too severe, compounded by the decline in US Treasury yields and the third-quarter “Global Gold Demand Trends” report released by the World Gold Council on November 3, showing that global central banks and other official institutions had net purchases of 321 tons, up 42% year on year, the highest quarterly level since the fourth quarter of 2024; cumulative gold purchases in the first three quarters of this year were 675 tons, up 6% year on year. As of September, the Central Bank of China had increased its gold holdings for 23 consecutive months. Chifeng Gold (06693) and Lingbao Gold (03330) rose more than 17%.
The Democratic Party won control of the National Assembly, which is expected to dispel market concerns about early cut/termination of new energy tax credits and drive demand for new energy sources. Previously, the market feared that the Republican Party would cut or even abolish the IRA clean energy tax credit. After the Democratic Party's victory, tax incentives for industries such as photovoltaics, energy storage, wind power, and SOFC are expected to remain complete under the IRA framework, medium- to long-term capital expenditure expectations for green power operators have been consolidated, and the US new energy installed capacity is expected to be upgraded. Specifically, for example, photovoltaics: subsidy expectations are stable, and there is room for improvement in demand. Increased policy stability such as ITC investment credits and 48C local manufacturing subsidies is conducive to large-scale ground-based power plants and distributed industrial and commercial projects to promote long-term financing and PPA implementation. Relevant stocks include Follett Glass (06865), Xinyi Solar (00968), and GCL Technology (03800); other stocks include US large storage needs and compliance supply chain opportunities. Individual stocks include Ningde Era (03750) and upstream Ganfeng Lithium (01772); the Democratic Party's victory may improve medium- and long-term North American wind power construction expectations and promote overall overseas wind power construction expectations The margins between supply and demand are getting tighter, and the competitive pattern Improvements to create more space for domestic companies to go overseas, such as Goldwind Technology (02208).
[Section Focus]
The Hong Kong Stock Exchange announced that it will launch 12 new stock futures contracts on January 18, 2027. The first 6 months of the new stock futures contracts will be exempted from the Securities Regulatory Commission levy.
The Hong Kong Stock Exchange said that the new stock futures contract will complement some of the most actively traded individual stock options on the Hong Kong Stock Exchange and enrich the variety of derivative products using these stocks as related assets.
The assets associated with the 12 new contracts include MINIMAX (00100), Lenovo Group (00992), Huahong Hongli (01347), China Hongqiao (01378), Cinda Biotech (01801), Zijin Gold International (02259), Yao Ming Kangde (02359), Zhiguo (02513), Zhongji Xuchuang (03308), Ningde Era (03750), Changfei Optical Fiber Cable (06869), and Bubble Mart (09992). Although the promotion of individual stock futures contracts itself does not necessarily lead to an increase, the varieties that can be selected are all highly representative and have good liquidity. Institutional attention will be stronger, so investors might as well focus on it.
[Individual Stock Mining]
Ganfeng Lithium (01772): Full production of energy storage cells, full sales, release of overseas lithium mine production capacity
Ganfeng Lithium's revenue for the first three quarters of 2026 was 36.159 billion yuan, +147.24% year on year; net profit to mother was 5,012 billion yuan, +19540.5% year over year; after deducting non-net profit of 4.636 billion yuan, +592.14% year over year. BlackRock recently increased the company's H share position from 6.67% to 8.62%.
Comment: Ganfeng Lithium performed well in the first three quarters, with net operating cash flow of 2,295 billion yuan, a significant improvement over the previous year. Prices of lithium salt rebounded, and shipments of energy storage cells increased dramatically. The company's global multi-resource layout distributes cyclical risks: Argentina's salt lake, Mali spodumene, Australia, and domestic lepidomite multi-site layout, diverse resource types, gradually increasing the self-sufficiency rate to over 45 million tons of LCE, leading the world. 2026 annual LCE production: 23-250,000 tons (+30% +).
Release of overseas lithium production capacity, 1) Argentina's Cauchari‑Olaroz (CO Salt Lake, 51% shareholding), 24.58 million tons of LCE, the second largest salt lake in the world. The first phase has a production capacity of 40,000 tons/year of lithium carbonate; the second phase passed the 2026 EIA, and construction will commence in 2027. 2) Mariana Salt Lake, Argentina (100% holding), 8.12 million tons of LCE, with a production capacity of 20,000 tons/year of lithium chloride in the first phase. It will be put into operation in February 2025 and climbed in 2026, contributing 10,000 tons+. 3) Goulamina spodumene mine in Mali (wholly-owned), 7.14 million tons of LCE, lithium oxide grade 1.37%, production capacity 506,000 tons of lithium concentrate/year in the first phase. Rapid growth in production capacity and shipments. Lithium salt production capacity: 200,000 tons+ of lithium carbonate/lithium hydroxide; 250,000 tons+ planned for 2026; Phase II will be launched at the end of 2026 and put into operation in 2027. 4) PPGS Salt Lake: Construction started in the second half of 2026 and put into operation in 2028. Lithium metal: The largest in the world, production capacity continues to expand. Customers include leading global companies such as Ningde Times, BYD, LG, and Tesla.
Diversified resource layout, the company's layout of lithium batteries for electric ships, the one-time construction of 2 million tons of potassium chloride production capacity in the Congo's Buguma potash fertilizer project (expected to be put into operation in 2027), the total recovery rate of lithium absorption and extraction technology has reached more than 90%, and the lithium sulfide production line is gradually releasing production capacity. The energy storage business volume is a core increase, with full production and sales of energy storage cells. The company's energy storage capacity increased by 35-40 GWh production capacity (588Ah production line Q3 climbs), and shipped 50 GWh+ throughout the year, becoming the largest source of profit, increasing its global share, contributing 3 to 4 billion dollars in net profit. Energy storage orders were scheduled to reach mid-2027. The production capacity was fully signed in 2026, and the volume was released by the end of the year, and 648 Ah continued to advance. Large-scale mass production of solid-state batteries (10 GWh level), with an energy density of 450 to 500 Wh/kg, entering high-end cars+consumer electronics, opening up 100 billion dollars of space. Order schedule: The full year of 2026 plus the first half of 2027 has been completed, and the new production capacity has been locked in advance. In addition, the company's high-safety, low-temperature solid-state lithium batteries have been sent in batches to internationally renowned mobile phone companies for verification.
The agency expects lithium prices to continue to strengthen in the second half of 2026, maintaining the target price forecast of 250,000 yuan/ton. There is room for a 50% increase compared to the current price of lithium carbonate. The company's performance increased in the first half of the year, and institutions are optimistic that lithium prices will pick up during the peak season. The company's energy storage orders are full, and demand for overseas energy storage and domestic storage drives cell shipments to continue to rise.