[ET Net News Agency, 17 May 2024] The Hang Seng Index stood at 19,433 in the morning
session, up 56 points or 0.3%, with a total turnover of over HKD 91.0 billion. The Hang
Seng China Enterprises Index reported 6,894, up 23 points or 0.3%. The Hang Seng Tech
Index reported 4,099, up 27 points or 0.7%.
The top three traded stocks on the Hang Seng Index were Tencent (00700), Alibaba
(09988), and Meituan (03690). Tencent traded at HKD 396, up HKD 2.4 or 0.6%, with a
turnover of HKD 6.331 billion. Alibaba traded at HKD 85.15, up HKD 5.45 or 6.8%, with a
turnover of HKD 5.271 billion. Meituan traded at HKD 125.4, down HKD 0.2 or 0.2%, with a
turnover of HKD 2.202 billion. The top three traded stocks on the Hang Seng China
Enterprises Index were Tencent, Alibaba, and Meituan. The top three traded stocks on the
Hang Seng Tech Index were Tencent, Alibaba, and Meituan.

"Wong Wai Hong: Hong Kong stock market is expected to maintain strength in the second
quarter, potential pressure in the third quarter"

The Hong Kong stock market continued to rise this morning, breaking through the
important futures level of 19,500 during the session, but later retraced after reaching a
high of 19,597. Senior financial analyst Wong Wai Hong told ET Net News Agency that
although the Hang Seng Index is currently at a high level, the trading volume is strong,
reaching HKD 200 billion yesterday, indicating a strong market foundation and limited
short-term adjustment pressure. He mentioned that although market expectations are for a
market pullback to the 20-day moving average before re-entering, it is difficult to
achieve in the current market conditions. He expects that the short-term support level
will be around the 10-day moving average or 19,000.
As for the peak of the Hong Kong stock market, Wong Wai Hong analysed that after two
attempts to break through the 20,300 level in the second half of last year, the Hang Seng
Index formed a double-top pattern and is expected to break through 20,000 again but face
resistance at 20,300. He expects that similar to last year, the market will challenge the
high level within a similar timeframe, and the Hong Kong stock market will maintain
strength at least until the second quarter, with a change in strategy likely to occur
after the end of the quarter.
He mentioned that the biggest downside factor in the third quarter could be the mid-term
earnings season for Hong Kong stocks. As the recently announced first-quarter earnings of
listed companies have performed better than expected, it has increased market expectations
for second-quarter earnings. This may lead to a sell-off if the earnings fall short of
expectations, causing volatility in the Hong Kong stock market.

"State-owned enterprises' acquisition of inventory properties is expected to take two to
three years to digest"

Following yesterday's news that the central government plans to provide loan funds
through state-owned banks to support local state-owned enterprises in purchasing inventory
properties from distressed developers at a significant discount, there are further reports
today that the central government will hold a meeting to implement the measures. Property
stocks in Hong Kong surged again this morning but retraced significantly from their highs.
Wong Wai Hong analysed that if state-owned enterprises take over inventory properties from
property developers as planned, it could trigger another upward movement in property
stocks.
However, he emphasized that while state-owned enterprises can immediately alleviate the
liquidity pressure on property developers, especially private developers, they will need
to gradually clear their inventory. Given the large inventory of properties, including
unsold units, in the property market, it may take at least two to three years to fully
digest the inventory. During this period, private developers may successfully clear their
inventory, but they may face challenges in launching and selling new projects. Therefore,
he expects that the transaction volume in the Mainland China property market may rebound,
but prices will remain stable.
Furthermore, Wong Wai Hong mentioned that the stocks of state-owned enterprises involved
in the acquisition of inventory properties may be viewed unfavourably. Although the credit
risk for these state-owned banks providing loans to property developers is reduced, it
will be difficult to collect high interest rates after lending to state-owned enterprises,
which may indirectly affect interest income and pose a major obstacle to the companies'
prospects.

"Sunac and Sino-Ocean can be considered, but they are highly risky"

If you want to speculate in the property stocks at the moment, Wong Wai Hong admits that
the property stocks has been soaring for some time, and it may be too late to buy now.
However, he believes that the implementation of the aforementioned measures could indeed
benefit individual property stocks for another round of speculation. He suggests that it
is advisable to enter with small bets and a quick trading strategy. Among them, he
believes that Sunac (01918) has not reached its full potential yet, considering its
previous speculative momentum. In September last year, it soared to around HKD 3.5 on
news. He expects that it could still test higher levels based on the current news.
Additionally, among the recent surges in property stocks, Sino-Ocean (03377) has been the
strongest with the largest price fluctuations. It has the background of a state-owned
enterprise, but the risk appetite must be high for immediate trading.
However, he emphasizes that there are significant risks involved in speculating in the
property stocks at the moment. For example, Sino-Ocean has a major support level around
HKD 0.41 to HKD 0.42, which is the 250 SMA and about a 40% downward adjustment from the
current price. Therefore, short-term traders must be nimble enough.