[ET Net News Agency, 16 December 2024] In Mainland China, economic data for November
reflects inadequate stimulus measures. Last Friday (the 13th), People's Bank of China data
showed that new loans and social financing in the previous month were lower than expected.
As for today's announcement, total social retail sales last month increased by 3%
year-on-year, also lower than the expected 4.6% growth. Following the digestion of this
data, the Hang Seng Index's decline expanded to 114 points or 0.6% by mid-day, closing at
19,856, down 114 points or 0.6%. The main board's turnover shrank to nearly HKD 64.3
billion.

"Kingston Lin: Mainland China is preparing for Trump's new moves, unlikely to introduce
stimulus policies before the Lunar New Year"

The Hang Seng Index trend turned weak after falling below 20,000 last Friday (the 13th).
Combined with today's disappointing economic data from Mainland China, the Hang Seng Index
dropped around 100 points by mid-day. Kingston Lin, a director of the Hong Kong Institute
of Financial Analysts and Professional Commentators Limited, told ET Net News Agency that
while the market anticipates a possible reserve requirement ratio cut in Mainland China in
the short term, it is unlikely to significantly benefit Hong Kong stocks. Currently, Hong
Kong stocks are in a policy vacuum period and are expected to wait until after the
inauguration of U.S. President-elect Trump on the 20th of next month for any policy
adjustments towards China. Subsequently, China may propose countermeasures, which could
stimulate the stock market and improve market conditions. Therefore, he predicts that the
overall market will tend towards volatility in the short term, with initial support likely
around 19,000.
However, if the market continues without policy stimulus, Kingston Lin believes that
there is a high chance the Hang Seng Index could drop below 19,000. Just as today's
economic data suggests, especially with retail consumption figures falling below
expectations, the positive effects of policies are likely to fade away after about one to
two months, leading to a stagnant market amid the absence of positive sentiment. He also
mentioned that Trump will only assume office on 20 January, and if there are policies
targeting China, they are likely to be proposed within a week. Given the time needed for
Mainland China to formulate response policies, it is difficult to expect stimulus policies
to be announced before the Lunar New Year, with the potential for policy-driven market
optimism to emerge only in the Year of the Snake or even at the National People's Congress
in March.

"Funds profit-taking turns to high-yield stocks, telecom stocks surpass electric and oil
stocks"

As market conditions remain uncertain, funds are beginning to favour defensive
positions. This morning, the Hang Seng Index declined, with a focus on dividend-paying
stocks like China characteristics stocks and public utilities, which were generally
performing well against the market trend. Kingston Lin believes that in addition to
decreased risk appetite, there is also a year-end window dressing factor at play. Funds
may begin to take profits on previously strong positions, creating selling pressure and
subsequently shifting towards high-yield stocks for defensive and income purposes.
In a market environment prone to decline, Kingston Lin believes that it is reasonable to
currently favour high-yield stocks. Among them, he continues to prefer Chinese telecom
stocks as they are less affected by economic conditions, exhibit strong resilience to
downturns, and offer attractive dividend yields. The leading China Mobile (00941) stock is
still a distance away from its October highs, making it a viable entry point with limited
downside risk. Conversely, he is less inclined to recommend electric and oil stocks in the
same category due to oil price trends and the subdued Mainland Chinese economy, which have
weaker resistance to downturns compared to telecom stocks.