[ET Net News Agency, 20 September 2024] Hong Kong stocks continued their upward trend.
After opening tens of points higher this morning, the index continued to rise. The high
was 18,355, with a maximum increase of 341 points. The Hang Seng Index was at 18,275 at
half-day, up 261 points or 1.5%, with main board turnover of nearly HKD 91 billion. The
Hang Seng China Enterprises Index was at 6,397, up 92 points or 1.5%. The Hang Seng Tech
Index was at 3,717, up 65 points or 1.8%.

"Jaseper Tsang: The downturn in the property market is a structural problem and cannot be
solved by interest rate cuts alone"

After the U.S. Federal Reserve cut interest rates by 0.5%, local banks successively
announced cuts of the prime rate by 0.25% yesterday. After the Hang Seng Index rose by
more than 350 points yesterday, it started to rise again this morning. It rose by up to
300 points to a high of 18,355, but the high level was blocked. The half-day gain narrowed
to less than 200 points. Jaseper Tsang, the investment director of Rafter Capital, told
the ET Net News Agency that the Federal Reserve's interest rate cut was generally in line
with expectations. Although the market had earlier expected that it would only be cut by
0.25% this time, Federal Reserve Chairman Powell mentioned that this time the cut includes
July's share, so this time it is stronger.
As for the reduction of P by local banks, Jaseper Tsang pointed out that the market
originally estimated that Hong Kong would not follow until the Federal Reserve's interest
rate meeting in November, and the magnitude may be very slight. Therefore, the timing and
magnitude of this P reduction exceeded market expectations, reflecting that banks are
willing to lower interest rates in line with local economic conditions, which is expected
to bring short-term positive sentiment to the market. However, he mentioned that the
impact of this move on the local property market remains to be seen, because interest
rates are only one factor. However, what is more important in hindering the recovery of
the property market is the structural problems of the local economy and the prospects of
the Mainland China property market. Whether the positive factors of P reduction can
continue to be effective remains to be seen.

"Only a 10 trillion fund can save the Mainland China property market"

Jaseper Tsang does not deny that reducing P will be beneficial to real estate stocks and
other rent-collecting stocks in the short term. However, the "Golden Nine and Silver Ten"
in the Mainland China this year does not seem to be effective, reflecting that the
deep-rooted economic problems cannot be solved by interest rate cuts. To solve the real
estate problem all at once, it may need extreme drastic policies, such as a 10 trillion
fund to support the market. Otherwise, it will not be able to solve the overall problem of
the property market immediately. Therefore, he maintains that 18,300 will be a major
resistance level for the Hang Seng Index, because this level is the top of the downward
channel extending downward from the high of 22,700 when the Hang Seng Index was the most
optimistic at the beginning of last year. If it is still subject to this level before next
Wednesday, that means the Hang Seng Index has not yet shaken off this resistance.

"Large e-commerce companies perform well, but Kuaishou pales in comparison and it is time
to change horses."

Bloomberg quoted documents showing that DCM Ventures China Fund, one of the major
shareholders of Kuaishou (01024), a technology venture capital company, placed 91.7
million shares of the company at a price of HKD 40.28 per share. Based on this
calculation, the cash out was approximately HKD 3.694 billion, which is a discount of 4.3%
of the closing price of HKD 42.1 yesterday (19th). It is the lower limit of the previously
rumoured placement price range. The news dragged down Kuaishou's stock price to open 3%
lower, but due to market conditions, the half-day decline narrowed to about 1%. Jaseper
Tsang is not surprised that shareholders have reduced their holdings in Kuaishou, saying
that DCM is a cornerstone investor in Kuaishou and will mobilize funds according to its
own asset allocation needs, so it is reasonable.
However, he believes that this reduction of holdings is not groundless. Kuaishou's
interim results announced earlier showed that its growth rate has slowed down, especially
in e-commerce. On the contrary, other large traditional e-commerce companies performed
better, which is reflected in the strategies of large-scale e-commerce companies.
Kuaishou's e-commerce business development space is limited, which may be a major
incentive for DCM to reduce its holdings this time. Therefore, he expects Kuaishou's stock
price to be blocked at the 50-day moving average, and stockholders will leave the market
and instead invest in other e-commerce stocks that perform better.