[ET Net News Agency, 12 December 2024] The market believes that the Central Economic
Work Conference has been held from yesterday until today. Market expectations are high for
significant announcements after the conference, possibly following up on the "stabilize
the stock and property markets" and restart "moderate easing" mentioned in the Central
Political Bureau meeting, or even releasing more proactive signals. The Hang Seng Index
reported 20,501 at midday, rising by 346 points or 1.7%, with a turnover of nearly HKD
81.1 billion. The Hang Seng China Enterprises Index reported 7,397, rising by 148 points
or 2%. The Hang Seng Tech Index reported 4,647, rising by 115 points or 2.6%.

"Wong Wai Ho: southbound funds temporarily deployed in index ETFs"

Waiting for the official announcement from China regarding the economic outlook
following the Central Economic Work Conference, the market remains cautious. Wong Wai Ho,
the First Vice President of the Yan Yun Family Office (HK) Limited, told ET Net News
Agency that despite the previous mention of "more proactive" fiscal policy and "moderate
easing" monetary policy in the Central Political Bureau meeting, the market is hopeful for
the Central Economic Work Conference. However, based on past performances of such
conferences, he maintains a neutral expectation regarding its content. He explains that
the conference mainly elaborates on the Central Political Bureau meeting and sets the
economic tone for the next year, with fewer instances of specific policy details and
concrete figures. He suggests that significant market impact may only occur once specific
measures are released post-conference. Although there's a net inflow of southbound funds,
they are currently deployed in index ETFs without a clear sectoral deployment.
He points out that in the short term, the Hang Seng Index continues to fluctuate between
20,000 and 21,000, with a certain difficulty in breaking through 21,000. If positive
policies are released subsequently, the Hang Seng Index could potentially challenge
23,000. However, the expected P/E ratio corresponding to 23,000 is around ten times, which
is already at the top end of the expected P/E ratio for Hong Kong stocks. Without
adjustments in earnings expectations and valuations in the Hong Kong stock market, the
chances of the Hang Seng Index breaking through 23,000 are relatively small.

"Solar tariffs are not surprising; weak fundamentals suggest caution in buying"

The U.S. Trade Representative's Office (USTR) announced yesterday that starting from 1
January 2025, China's tariffs on imported solar wafers and polysilicon will be increased
from the current 25% to 50% under the "301 clause". The specific Chinese imported tungsten
products used in electronics and semiconductors will see an increase in tariffs from zero
to 25%.
Wong Wai Ho stated that the solar industry has long been a focal point of Sino-U.S.
trade, and the tariff increases are a routine operation. He does not rule out the
possibility of the Trump administration intensifying its crackdown on the solar industry.
He maintains a cautious stance on the solar sector, citing both political factors and the
weak fundamentals of the industry. Currently, silicon prices have plummeted, and despite
some solar companies signing self-discipline agreements to control capacity and stabilize
prices, he expects the actual effects to be visible only in the second quarter of next
year. With fundamentals unchanged, even if the central government introduces subsidy
measures, the impact may be limited. From a technical perspective, the support level for
blue-chip Xinyi Solar (00968) is at HKD 3, which is the bottom of the range from the end
of November.