[ET Net News Agency, 14 November 2024] The U.S. CPI rose by 2.6% year-on-year in
October, in line with market expectations and favourable to expectations of the Federal
Reserve cutting interest rates. However, Chinese concept stocks continued to fall
overnight, including Tencent (00700), which had mixed quarterly results. The Hang Seng
Index maintained trading during the first severe weather. The day opened lower by 197
points or 1%. However, driven by the rise of Tencent during the session, the Hang Seng
Index once rose by up to 36 points to 19,859 points. However, the 50-day moving average
(approximately 19,809 points) clearly saw resistance and HSI soon returned to decline.
Mainland properties rose first and then retreated. Gambling stocks and Chinese concept
stocks fell significantly, dragging the Hang Seng Index down 173 points or 0.9% in half a
day to 19,649.
Trading was still smooth despite the bad weather, but the main board turnover shrank to
nearly HKD 81.5 billion, a day-to-day drop of more than 20%.
The Hang Seng China Enterprises Index reported at 7,060, down 69 points or 1%. The Hang
Seng Tech Index reported at 4,392, down 63 points or 1.4%.

"The next wave of central government bailout will wait until Trump takes office"

The Hang Seng Index had fallen for four consecutive days, falling by more than 1,100
points. Today, the Hang Seng Index opened nearly 200 points lower. Cheung Chi Wai, a joint
managing director at Prudential Brokerage Ltd, told ET Net News Agency that the recent
weak trend of the Hang Seng Index is mainly affected by negative factors such as the
continued decline of the offshore RMB and the increasing tension in Sino-US relations. He
pointed out that from signals such as TSMC stopping selling 7nm chips to China, it can be
seen that Sino-US trade friction is expected to become more intense. Tencent opened lower
in the morning market and then rebounded, rising 1.58% in half a day to HKD 410.2, making
it the best performing blue chip currently.
Under the influence of many negative factors, he believes that the Hang Seng Index has
now fallen below the gap level on 26 September (approximately 19,954). It is expected that
the Hang Seng Index will repeatedly fall downwards and may bottom out at the 100-day
moving average (approximately 18,663). As for whether the Hang Seng Index has a chance to
rise again in the short term, he said that it depends on whether the central government
will introduce bailout measures. Now the market is also waiting for the next step of the
central government. However, he believes that the measures may need to wait until Trump
taking office in 2025. It remains on hold now and has entered a period of policy
observation.
Data released by the U.S. Bureau of Labor Statistics on Wednesday (13th) showed that the
U.S. Consumer Price Index (CPI) rose by 2.6% year-on-year in October, 0.2 percentage
points higher than the previous value, in line with market expectations and increasing the
market's confidence that the Federal Reserve will continue to cut interest rates. He said
that since CPI is in line with market expectations, it has less impact on the Hang Seng
Index. Based on the CPI and inflation data, he expects the Federal Reserve to slow down
the pace of future interest rate cuts, and may not cut interest rates in December. The
interest rate cut in 2025 will need to wait until Trump officially takes office.

"Tencent's games are not performing well, but there are short-term speculation
opportunities"

Tencent announced its third quarter results as of the end of September this year, with
non-IFRS profits of RMB 59.813 billion yuan, a year-on-year increase of 33% and a
quarter-to-quarter increase of 4%, far exceeding market expectations of RMB 54.37 billion.
However, the game business, which is the most concerned aspect of the market, fell short
of market expectations. Revenue from value-added service business increased by 9%
year-on-year to RMB 82.7 billion during the quarter. Earlier, many major banks, including
JPMorgan, Nomura, CICC, Citi, etc., expected this business grew by more than 10% in the
third quarter.
Cheung Chi Wai believes that Tencent's performance is good. Although the game business
does not meet market expectations, Tencent's earnings per share still grow strongly. He
continued to point out that Tencent's stock price outperformed the same sector this
morning, indicating that the market recognized Tencent's performance. As for the game
business revenue not meeting expectations, he pointed out that it was mainly affected by
the downgrade of consumption in the general environment and the high unemployment rate
among young people. The number of people willing to top-up and the amount of top-up have
declined.
Regarding Tencent's short-term trend, he said that yesterday Tencent slightly fell below
HKD 400 (about HKD 396), and today it fell first and then rebounded. From the technical
trend, it is expected that the 10-day moving average will break through the 20-day moving
average at about HKD 418, forming a golden cross. There will be an increase of HKD 6 to 8
in the short term.