In the Hong Kong stock market in August, there was the Hang Seng Index consolidating above 25,600, alongside a tug-of-war between bulls and bears within the agricultural sector. On August 4th, pork concept stocks in Hong Kong fell collectively: Dekang Animal Husbandry dropped 3.6%, Muyuan Shares fell over 4% intraday, COFCO Joyan fell 1.8%, and WanZhou International followed suit. The factor crushing stock prices was the continuously falling pork price, which broke below cost lines—as of August 3rd, the national average price for slaughtered pigs was around 10.32 RMB/kg, and the main futures contract, 2609, closed at 10,690 RMB/ton, falling over a thousand points in two weeks since the high in July, a decline of over 15% from the early July high, and setting a new low since the contract's listing.
Supply-side strength and weak demand structure are difficult to change in the short term, and industry bottoming continues
Current pig prices have been running below the industry average farming cost line, leading farming enterprises to generally incur losses. The performance of the futures market is also weak; there is still a price gap of about 360 RMB/ton between spot and futures, putting pressure on the market for basis repair. Institutions predict that pig prices are likely to continue a slightly weak and volatile trend in early August, and the supply-side strength versus weak demand structure is difficult to reverse in the short term.
In fact, this is another scene of the deep bottoming in the pig industry. As early as mid-July, Muyuan Shares issued a performance warning, forecasting a significant shift from profit to loss in the first half of 2026, highlighting the severe downward trend of the industry; leading Hong Kong stocks like WanZhou International and COFCO Joyan are also under significant pressure. On the other side of the bottoming is the continuous accumulation of capacity reduction—the period of losses for the entire industry is getting longer, and the reduction of sow capacity is expected to accelerate. The industry generally predicts that pig supply in 2026 will show a trend of "slight weak recovery followed by further contraction," and pig prices are likely to remain at a low level throughout the year, with a potential cyclical reversal in 2027 driving the price median upwards. With the support of national capacity control policies, the industry clearance pace may accelerate further.
Institutional views: historical patterns point to a configuration window
Faced with the dual slump in stock prices and pig prices, institutions are instead becoming more positive. Research reports from CICC suggest that the current farming sector is in a "bottom accumulation" phase, and the expansion of feed companies overseas is also opening up growth space. From historical data, public funds often overweight pig farming stocks at the bottom of the cycle, and the high point of allocation precedes the peak of pig prices. Currently, pig prices are in a historical bottom range, and as the period of industry-wide losses continues to lengthen, the acceleration of sow capacity reduction may raise the pig price median in 2027; referencing the historical patterns of public fund allocation to pig farming stocks and the current holding of pig farming stocks being in a historical bottom range, the time to allocate to pig farming stocks is now.
Similar judgments have appeared in the pricing of agricultural leaders in Hong Kong. Sinvel Macro previously pointed out that agricultural product prices are expected to continue rising in the second half of the year, and the contradiction in the pig cycle is continuously accumulating, with loss pressure and capacity contraction still ongoing, and the certainty and elasticity of the turning point are continuously increasing. This means that the agricultural sector in Hong Kong is moving from a "dark moment" to a "speculative game of expectations."
Southbound funds increase positions against the trend, and agricultural leaders gain favor from "smart money"
What is interesting is that while pig prices and stock prices are both under pressure, Southbound funds are not pessimistic about leading agricultural stocks in Hong Kong. Data shows that on August 5th, Southbound funds increased their holdings of COFCO Joyan by 3.08 million shares; on August 3rd, they increased holdings of WanZhou International by 1.732 million shares; on July 31st, they increased holdings of Dekang Animal Husbandry for 4 out of the last 5 trading days; and on August 6th, Southbound funds increased holdings of Youran Animal Husbandry by 787,000 shares, with cumulative holdings accounting for 25.51% of its issued ordinary shares.
From the overall capital perspective, the trend of south-bound fund inflow is also evident. In June and July of this year, the net purchase amount of south-bound funds reached HKD 27.11 billion and HKD 62.869 billion, respectively, and the net inflow trend has continued since August. From June 26th to August 4th, the Hang Seng Index rose cumulatively by 12.03%, and market risk appetite has gradually recovered. On August 7th, the Hang Seng Index closed at 25668.03 points, with all three indices rising and trading volume around HKD 259.6 billion. The improvement in capital flows is becoming an important factor supporting the Hong Kong stock market trend. Why Invest in Hong Kong Stocks? The Three Logics of Agricultural Stock Investment With breeding stocks also available in A-shares, why are more and more funds choosing to invest in agriculture via Hong Kong stocks? There are at least three logics behind this that investors should consider: Firstly, leading companies and scarce targets. Hong Kong stocks concentrate global pork giants like Sinomon International, Muyuan Co., Ltd., which is dual-listed as A+H, high-growth DeKang Animal Husbandry, and Sinochem Jiakang, which has a central SOE background, as well as upstream dairy leaders like Yuran Animal Husbandry and Modern Animal Husbandry. Some targets do not have direct counterparts in the A-share market, making Hong Kong stocks an important channel to share in the growth of Chinese agricultural leaders. Secondly, valuation troughs and institutional dividends. Hong Kong stocks have long been in a valuation trough among major global markets, and H-shares of the same company often trade at a discount to A-shares. In recent years, the HKEX has continuously optimized listing and trading systems and reduced stamp duty, coupled with the smooth operation of Stock Connect, continuously lowering the cost and barrier for mainland investors to participate in Hong Kong stocks, providing a safety margin for valuation repair. Thirdly, the elasticity of cyclical reversal and global pricing. Livestock farming is a typical a strong cyclical industry, and the reversal elasticity is greater the deeper the bottoming of pig prices. The Hong Kong stock market has a high proportion of institutional investors and more internationalized pricing; once the expectation of a cyclical reversal is established, the stock price recovery of leading companies is often faster than the spot price. Looking at the sequential performance of the pharmaceutical, biomedicine, and agricultural sectors from mid-2026, capital is a microcosm of seeking high-elasticity targets in the "bottoming + reversal" narrative. Risk Warning and Future Outlook Of course, investing in agricultural stocks in Hong Kong is not without risks. In the short term, pig prices may continue to be weak and volatile under the supply-surplus and weak-demand structure, and the performance of breeding enterprises may still be under pressure in the third quarter. In Hong Kong stocks, after five consecutive weeks of gains in the Hang Seng Index, signs of consolidation have appeared. Institutions expect short-term fluctuations in the range of 25,000 to 26,000 points, and factors such as changes in overseas liquidity and geopolitical situations may still disturb market sentiment. For investors, rather than dwelling on daily gains or losses, it is better to pay attention to three key signals: the de-stocking speed of breeding sows, whether pig prices can stabilize above the cos t line, and whether south-bound funds continue to increase their holdings in the agricultural sector. During the cyclical bottoming phase, patience and discipline are often more important than forecasting. Both novice and experienced investors in Hong Kong stocks should make prudent decisions based on their own risk tolerance, while understanding the trading rules and risks of Hong Kong stocks.
