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NetEase (9999): In the fourth quarter of 2025, total revenue reached Rmb27.5bn, representing a 3% year-on-year increase. While online game revenue growth was a modest 3.5% at Rmb21.3bn due to a high comparison base from the previous year, deferred revenue surged by 32%, signaling strong operational momentum. The company maintained healthy profitability with an overall gross margin of 64.2%, while the gaming segment's margin reached 70.5%. For the first quarter of 2026, revenue is projected to grow by 8% to Rmb31.2bn, largely driven by Where Winds Meet, which has already surpassed 80mn players globally. Furthermore, the deep integration of generative AI—evidenced by the deployment of over 10,000 intelligent NPCs—enhances development efficiency and player engagement. Combined with the anticipated third-quarter 2026 launch of Sea of Remnants, these technological advantages and a robust product pipeline are expected to reinforce long-term market positioning.
Central bank's reaffirmation of its loose monetary policy stance
A series of favorable policies, including the State Council's strong promotion of the AI strategy and new-type productivity, coupled with the central bank's reaffirmation of its loose monetary policy stance, have provided a bottom support for market sentiment. Although the slight increase in January's CPI and the narrowing decline in PPI indicate a slight easing of deflationary pressures, the strength of the domestic demand recovery remains to be seen. Affected by the overnight pullback in Chinese concept stocks and the rebound in US Treasury yields, the market's upward momentum may be temporarily limited. Funds are expected to rotate between AI technology themes and defensive sectors. Investors are advised to focus on the details of policy implementation and subsequent liquidity release signals.
Hong Kong Stock Connect recorded a net inflow of HK$4.81bn on Wednesday, with Tencent Holdings (700) recording the largest net inflow at HK$730mn, followed by Zijin Gold International (2259); Alibaba (9988) recorded the largest net outflow at HK$520mn, followed by SMIC (981).
The Hang Seng Index opened 55 points lower and then widened its losses, briefly falling below the 27,000 mark in the afternoon. It closed down 233 points, or 0.9%, at 27,032. The H-share Index fell 1% to 9,175, while the Hang Seng Tech Index underperformed the market, falling 1.7% to 5,408. Total market turnover reached HK$238.7 billion. Lenovo Group (0992) reported a 21% drop in third-quarter profit, raising concerns about its earnings prospects, causing its share price to fall 4.5%. NetEase (9999) reported weaker-than-expected quarterly results, falling over 4% throughout the day. Meituan (3690) was summoned by regulators for its involvement in train ticket sales, causing its share price to fall 4.5%. Conversely, the AI sector bucked the trend, with Zhipu (2513) and MiniMax (0100) surging 28% and 14% respectively, benefiting from the release of new models.
Source: KGI Investment Products and Solutions Department
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U.S. employment data came in weaker than expected, with initial jobless claims rising by 22{,}000 to 231{,}000, above market expectations. The cooling labor market has also prompted speculation that the Federal Reserve may deliver a larger scale of rate cuts this year…