[ET Net News Agency, 25 November 2024] The governor of Texas has ordered state
government agencies to cut investments in China. Although the actual impact is limited, it
has raised concerns among US funds about avoiding investments in China. Many Chinese
internet stocks led the decline, dragging down the Hang Seng Index by 98 points or 0.5% to
19,131, hitting a new low since late September's rally, with a turnover of nearly HKD 78.2
billion. The Hang Seng China Enterprises Index reported 6,850, down by 36 points or 0.5%.
The Hang Seng Tech Index reported 4,213, down by 32 points or 0.8%.

"Wong Wai Ho: Hang Seng may struggle to stay above 19,000 in the short term"

The momentum in the Hong Kong stock market has weakened. Last Friday (22nd), the Hang
Seng Index plummeted nearly 400 points and fell below the important 19,300 mark. This
morning, the Hang Seng Index initially showed a rebound but turned downwards before the
midday break, falling by less than 100 points in the first half of the day. Wong Wai Ho,
the First Vice President of the Yan Yun Family Office (HK) Limited, told ET Net News
Agency that the policy outlook for Hong Kong stocks has significantly weakened. Positive
effects from recent policy announcements are not as strong as they were at the end of
September. Furthermore, with the incoming U.S. President Trump targeting China directly in
personnel appointments, global markets have a negative view on Chinese stocks,
intensifying selling pressure on Hong Kong stocks. He mentioned that funds are currently
flowing towards strong U.S. stocks and the currency market, reducing trading volume in
Hong Kong stocks and increasing the likelihood of the Hang Seng Index falling below
19,000. In the short term, he expects the Hang Seng Index to fluctuate between 19,000 and
20,000.
The upcoming Central Economic Work Conference in Mainland China next month is
anticipated, but Wong Wai Ho admits that market expectations for the conference are low.
In previous years, the conference focused on setting the tone for the economy in the
coming year rather than announcing key policies. Currently, the market does not expect any
significant stimulus policies to be announced, so the overall positive impact on Hong Kong
stocks is expected to be minimal.

"EU is likely to ease tariffs and this benefits car stocks; BYD, Xiaomi and Geely are
preferred choices"

Over the past weekend, German media reported that the Chair of the European Parliament's
Trade Committee, Lange, mentioned that the EU has been negotiating with China on electric
vehicles, with an agreement expected soon. China is to commit to providing electric
vehicles to the EU at a minimum price to eliminate competition distortion caused by unfair
subsidies. Subsequent reports indicate that the final tariffs imposed by the EU on China
may fall between 10% to 15%. The EU will offer Chinese car manufacturers the opportunity
and subsidies to build factories in the EU in exchange for technology transfer.
Car stocks showed signs of a rebound this morning. Wong Wai Ho noted that the
fundamental outlook for new energy car stocks is improving. The impact of the price wars
that started earlier this year is gradually diminishing, and with the potential easing of
EU tariffs, car stocks are expected to benefit in the short term. Although the European
market share is currently not high, sales of Chinese car companies in the region are
expected to increase.
He mentioned that China will continue to strongly support the automotive industry to
maintain the economy, as the automotive industry is an important part of domestic demand.
Policy support is expected to remain favourable for car stocks. However, he believes that
even with reduced industry risks, not all car stocks will benefit, so stock selection
should not be generalized. Competition in Mainland China's new energy car sector remains
fierce, making it difficult for individual car stocks to stabilize profits. For example,
new energy car companies such as NIO (09866), XPeng (09868), and Li Auto (02015) still
face uncertainties in terms of profitability. Wong Wai Ho prefers companies like BYD
(01211), Xiaomi (01810), and Geely (00175), believing that these three companies have more
stable profitability. In the high research and development cost environment of the new
energy car industry, they are better positioned. Even if Xiaomi's new energy car business
is not enough to turn a profit, it has support from its mobile phone, electronics, or
traditional car businesses to maintain profitability, making it more competitive in the
new energy car market.