[ET Net News Agency, 03 January 2025] After a sharp decline on the first trading day of
the year, Hong Kong stocks rebounded today. The Hang Seng Index opened high this morning,
rose by several tens of points, but fluctuated in the early session, affected by the
decline in Mainland China A-shares. The index's gains narrowed to less than 13 points at
one point, but there was support at lower levels. Following this, the National Development
and Reform Commission announced subsidies for the purchase of digital products such as
mobile phones, providing subsidies to individuals for buying mobile phones, tablets,
smartwatches, and smart bracelets.
At midday, the Hang Seng Index reported 19,794, up by 170 points or 0.9%, with a
turnover of nearly HKD 86.5 billion. The Hang Seng China Enterprises Index stood at 7,167,
up by 77 points or 1.1%. The Hang Seng Tech Index reported 4,417, an increase of 59 points
or 1.4%.

"Jaseper Tsang: Short-term Hang Seng Index trend is expected to be repeatedly weak"

Yesterday, the Hang Seng Index dropped by over 500 points, but today it rebounded by
over 200 points. Jaseper Tsang, the investment director of Rafter Capital, told ET Net
News Agency that currently, Hong Kong stocks are in a policy vacuum period where their
trend is mainly dictated by Mainland China policies and economic data. He predicted that
in the short term, the Hang Seng Index would continue to exhibit a weak and fluctuating
trend. On the one hand, the Caixin China Manufacturing Purchasing Managers' Index (PMI)
released yesterday recorded 50.5, below the market expectation of 51.7, becoming a major
bearish factor in the absence of Hong Kong stock market policies. On the other hand, the
market is waiting for the economic and trade policies that will be introduced after
Trump's inauguration on 20 January, especially concerning measures regarding China. The US
stock market has also shown consecutive pullbacks, which have to some extent weighed on
the performance of Hong Kong stocks.
He pointed out that the major support level for the short-term Hang Seng Index is around
the hundred-day moving average at approximately 19,400 points. If this level is breached,
it may test the psychological threshold of 19,000 points. Additionally, the major
resistance level above is at 20,200 points, but given the cautious market sentiment, the
chances of testing this level are slim.

"Positive policies stimulating the market are expected to appear before the Two Sessions"

Officials from the National Development and Reform Commission stated that they would
implement subsidies for the purchase of digital products like mobile phones, leading to a
5.6% increase in Xiaomi (01810) stock, reaching HKD 35.9 and breaking the top; BYD
Electronics (00285) rose by 4.1%, reaching HKD 41.7; and Sunny Optical (02382) increased
by 3.9%, reaching HKD 68.4.
Jaseper Tsang mentioned that besides the speculation in the digital product purchase
subsidy benefitting the mobile phone sector, in the long run, major mobile phone
manufacturers emphasizing AI features have triggered a replacement trend, so overall,
brands like Xiaomi and some equipment suppliers are expected to have positive expectations
for their products and orders in the next one to two years. With Mainland China
strengthening policies to stimulate personal consumption, these policies will not only
bring short-term benefits to related stocks but might also have a sustained positive
impact. He anticipated that these policy benefits would intermittently appear before the
Two Sessions, playing a positive role in the market.
Jaseper Tsang advised investors to choose stocks with continuous and clear profit growth
potential, such as BYD Electronics, with a target price of HKD 48. He further suggested
that given the current fluctuating market of mobile device stocks, investors should not
rush and should absorb after the short-term speculative factors of policies recede,
preferably absorbing BYD Electronics around HKD 40 (near the 20-day moving average).

"iPhone's competitiveness in Mainland China declines"

Apple's stock dropped by 3.4% overnight in the US, with the market interpreting it as
the iPhone 16 being discounted within less than three months of its release in Mainland
China, with discounts of up to HKD 800, reflecting increased competition pressure in the
Chinese mobile phone market. Apple's third-quarter financial report for 2024 already
showed five consecutive quarters of revenue decline year-on-year in the Greater China
region.
Jaseper Tsang believed that Apple, especially its flagship products, has indeed lost
some appeal in Mainland China in recent years. On one hand, Apple's products often lack
breakthrough features in terms of product functionality, while on the other hand, high-end
Chinese brands like Huawei and Xiaomi have been increasing their attractiveness in terms
of product features and selling points. For example, Huawei's popular foldable screen
phones and the rise of emerging forces like Honor. Apple, once a leader in the industry,
is now stagnating in technology and other aspects, leading to a gradual loss of market
share to competitors in Mainland China.
Regarding iPhone 16 sales, Jaseper Tsang stated that since its release, it has not been
able to lead the same enthusiastic replacement trend as in the past. Moreover, its allure
as a trendy brand has also been declining in Mainland China. Therefore, iPhone 16 may need
to adjust its pricing to increase sales attractiveness.