[ET Net News Agency, 02 January 2025] Mainland China acknowledged economic challenges
and signalled a more proactive policy to boost the economy. The Hong Kong stock market
encountered a tough start in 2025, with the Hang Seng Index opening down by 127 points or
0.6%, dropping below the 20,000-point mark. During trading, Chinese financial stocks faced
selling pressure, with SMIC (00981) experiencing a sharp decline, leading the Hang Seng
Index to drop by a maximum of 517 points. However, it found support around the 100-day
moving average (19,363 points), followed by a slight recovery. By midday, the Hang Seng
Index closed at 19,762, down by 297 points or 1.5%, with a turnover of over HKD 87.4
billion.
The Hang Seng China Enterprises Index stood at 7,154, down 135 points or 1.9%. The Hang
Seng Tech Index reported 4,407, a decrease of 60 points or 1.3%.
Additionally, the Caixin China Manufacturing Purchasing Managers' Index (PMI) recorded
50.5, a 1 percentage point drop from November, maintaining an expansion trend for three
consecutive months but at a slower pace and below the market's expectation of 51.7. Both
the manufacturing production index and new order index fell to a three-month low.

"Nip Chun Pong: Hang Seng Index trend is challenged by weakening Renminbi"

On the first trading day of the new year, the market dropped more than 500 points,
breaking below the 20,000 mark and hitting a low of 19542.98 points. Nip Chun Pong, the
Chief Strategist at Blackwell Global Securities, told ET Net News Agency that despite the
Hang Seng Index holding above 20,000 for nearly four trading days, the recent weak
external investment sentiment, the decline in the US stock market, and the weaker
performance of the Hong Kong stock market were influenced by the US market. Additionally,
the recently released PMI figures below market expectations also impacted today's market
performance. Moreover, the recent strength of the US dollar, with the US Dollar Index
rising by 4% in the most recent trading day, has caused the Renminbi exchange rate to fall
to 7.33 and remain under pressure. These factors combined led to the poor performance of
the Hong Kong stock market today.
Regarding the future direction of the Hong Kong stock market, he pointed out that the
performance of the Hang Seng Index may follow the trend of the Renminbi. If the Renminbi
continues to weaken, the Hang Seng Index will face pressure. It is crucial to focus on
whether the 19,500-point level can provide effective support at present, as 19,500 points
is a common psychological threshold. If this level holds and Mainland China implements
policies such as interest rate cuts or reserve requirement reductions to boost the economy
this month, the Hong Kong stock market may have the opportunity to rebound to around
20,300 points. Conversely, if there is no corresponding policy support, the Hang Seng
Index may need to fall to 19,000 points to receive significant support.