【HK Stock Weekly Review】Fertilizer Sector Rises Against the Trend, Gold Prices Under Pressure and Adjusting

(Source: Baushui Capital)

Last Week Review

Last week, the Hang Seng Index closed at 25,465.60 points, down 1.13% for the week; the Hang Seng Tech Index closed at 4,978.08 points, up 0.62%; and the China Enterprises Index closed at 8,671.48 points, up 0.50%.

Hang Seng Weekly Chart

Data Source: FUTU

Capital Flow

Data Source: FUTU

Baushui Perspective

The Hong Kong stock market performed weakly overall this week, but the fertilizer and agricultural chemicals sector stood out by defying the trend. Notably, China National Offshore Oil Chemical (03983) rose 7.49% this week. China Xuyang Group (01907) surged 21.89%, mainly driven by rising international oil and chemical prices due to escalating Middle East geopolitical tensions. A Citi report pointed out that the impact of the Strait of Hormuz conflict on global food security has been severely underestimated: the Middle East controls 36% of global urea and 29% of ammonia exports, and a blockade would directly cut off the fertilizer supply chain. Fertilizer costs account for 50%-60% of variable crop production costs. With planting seasons in Brazil and India starting next month, supply gaps could threaten crop yields. Based on this, Citi raised target prices for three major grains: corn at 475 cents/bushel, wheat at 600 cents/bushel, and soybeans at 1250 cents/bushel. It also emphasized that rising fertilizer prices will increase farm operating costs, which will feed through to CBOT futures prices. If prices reach the high levels seen during the Russia-Ukraine conflict, the impact on the global food market could be even more profound.

Additionally, Xunce Technology (03317) surged nearly 49% this week, attracting market attention. The rally was mainly due to its launch of the FeedClaw platform for the entire market and positive industry catalysts. National Supercomputing Internet announced limited-time free distribution of a total of 10 million Tokens to OpenClaw users and revealed renewal prices significantly below market average.

In contrast, gold and non-ferrous metals sectors generally faced pressure this week, with most shipping and port stocks declining. Zijin Gold International (02259) fell 11.88%, Zhaojin Mining (01818) dropped 6.84%, and Shandong Gold (01787) declined 5.69%. Analysts believe that the core reason for this gold price correction is a shift in market logic from purely “safe-haven” to “inflation expectations and monetary policy re-pricing”: a strong dollar, cooling expectations of rate cuts, rising US Treasury yields, and declining gold ETF holdings all contributed to the pressure. Despite increased short-term volatility, many investment banks remain optimistic about gold’s long-term prospects. JPMorgan expects gold to reach $6,300 per ounce by the end of 2026, while Deutsche Bank maintains its year-end target of $6,000. In the bond market, concerns about escalating Middle East tensions potentially increasing fiscal pressures led to widespread bond sell-offs this week, with the 30-year US Treasury yield approaching 4.9%, reflecting a systemic reassessment of government credit risk premiums. As global fiscal space tightens, maintaining high long-term interest rates may become the new normal.

Looking ahead to next week, macro focus will be on the Federal Reserve and the Bank of Japan and European Central Bank rate decisions. Market expectations are that the Fed will hold rates steady; industry events such as NVIDIA GTC and OFC will showcase advances in AI computing power and optical interconnect technology. Meanwhile, tech giants Tencent and Alibaba in Hong Kong, as well as Micron in the US, will release earnings reports, with ongoing developments worth watching closely.