Daily Investment Strategy

Daily focus：Alibaba（9988）

The United States Postal Service (USPS) announced on February 4, 2025, that it would suspend the acceptance of international parcels from mainland China and Hong Kong until further notice. This action coincided with the U.S. imposing an additional 10% tariff on imports from China and eliminating the tax exemption for low-value parcels under $800. As a result, many low-priced goods from China would no longer enjoy de minimis trade exemption status. However, just hours later, the USPS announced that it would resume accepting all parcels from China and Hong Kong, with this change taking effect immediately.

We believe that the series of actions taken by the U.S. are aimed at cracking down on Chinese e-commerce platforms that rely on the transportation of small parcels. We think it will have certain impact on Alibaba's overseas sales. However, the Group's AIDC business (not limited to the U.S.) accounts for approximately 12% of revenue, so the impact is considered mild. No longer having a de minimis trade exemption, merchants may pass the costs directly to consumers. However, the price advantage of Chinese goods may not be significantly reduced compared to foreign platforms, given their low price even after the tax. Moreover, if other e-commerce platforms sourced low-priced goods from China, they will face the same treatment, and Chinese e-commerce companies will still have a relative competitive advantage. Investors should pay attention to whether the USPS will suspend the acceptance of Chinese parcels again, because this move will require consumers to use the service of private shipping & logistics companies, which will greatly increase consumer costs and reduce the willingness to shop, esp. for impulsive buying. Some consumers may also request refunds, and we will pay close attention to the developments. In terms of recent news, the positive factors of Alibaba actually have a greater stimulating effect. Alibaba recently released a new version of the Qwen 2.5-Max artificial intelligence model, claiming that the model's performance has surpassed the highly anticipated DeepSeek. In the latest authoritative SuperCLUE large model ranking, Alibaba's score is indeed good. The release of both model reflects the technological progress in China's AI field. Alibaba's stock price rose rapidly on the day of the Qwen2.5-Max release, showing that investors responded positively to the new technology. After DeepSeek's debut, it is expected to trigger a new round of reevaluation of Chinese AI assets in the market, and Alibaba is no longer being regarded as an e-commerce stock, and there is upside potential for its valuation. Target price is HK$113.

S&P 500 rises as Treasury yields fall

The S&P 500 ended higher on Wednesday as falling Treasury yields and a rebound in Nvidia helped stocks offset declines in Google parent Alphabet. Alphabet's shares (GOOGL) fell more than 7% after fourth-quarter revenue missed expectations and growth slowed in its cloud division, which is closely related to artificial intelligence. Meanwhile, the ISM Services PMI fell to 52.8 in January from 54.0 in December, failing to meet the expected reading of 54.0. Weaker services sector activity data sent Treasury yields lower, help boosting interest-rate-sensitive stocks such as technology stocks. Overall, the market has been supported by solid quarterly results from most companies, with more than three-quarters of S&P 500 stocks reporting better-than-expected results.

Hong Kong Stock Connect had a net outflow of HK$5.3bn on Wednesday of which ICBC (1398) had the largest net inflow, reaching HK$0.31bn; followed by China Mobile (941). Tracker Fund (2800) recorded the largest net outflow at $3.63bn, followed by Tencent (700).