[ET Net News Agency, 10 January 2025] The Federal Reserve officials have indicated that
interest rates will remain high and further rate cuts will depend on a significant cooling
of inflation. Fed Governor Bowman even mentioned that there is no need for further rate
cuts, while Boston Fed President Collins leans towards reducing the number of rate cuts
this year. US markets were closed on Thursday (9th), and Asian markets generally traded
lower this morning. The Hang Seng Index showed mixed movements this morning, initially
opening higher by several points, rising over a hundred points in the early session, but
turned downwards due to declines in A-shares, dragging Hong Kong stocks lower.
The Hang Seng Index reported 19,150 at midday, down by 90 points or 0.5%, with a
turnover of nearly HKD 78.2 billion. The Hang Seng China Enterprises Index stood at 6,939,
down by 39 points or 0.6%. The Hang Seng Tech Index reported 4,293, a decrease of 18
points or 0.4%.

"Jaseper Tsang: PBOC's recent measures provide short-term positivity"

Following the announcement of issuing RMB 60 billion offshore central bank bills in Hong
Kong next week, the People's Bank of China also decided to suspend open-market purchases
of national bonds starting from January. Offshore RMB showed an initial increase. Jaseper
Tsang, the investment director of Rafter Capitals, told ET Net News Agency that the
recovery of the Renminbi undoubtedly has a positive impact on Hong Kong stocks. Currently,
a considerable proportion of the Hang Seng Index comprises Mainland Chinese enterprises,
and these enterprises' profit sources are often denominated in RMB. Therefore, the
Renminbi's exchange rate recovery benefits Mainland Chinese enterprises.
However, he cautioned that it is premature to determine a reversal in offshore Renminbi
based on current trends. It can only be said that the Renminbi exchange rate has reached a
critical level. The central bank does not wish for a rapid devaluation of the Renminbi and
is intervening to prevent it. The short-term performance of the Renminbi exchange rate
still needs to be observed. He predicted that the current measures by the People's Bank of
China can only provide short-term positivity. With Trump's inauguration approaching,
China's export outlook is becoming more uncertain, and concerns about the Chinese
government's fiscal pressures and increasing deficits create significant downward pressure
on the Renminbi.
The Hang Seng Index is currently fluctuating around 19,000. Jaseper Tsang stated that
recent performances indicate that the Hang Seng Index has significant support around
19,000 points. However, in the short term, the Hang Seng Index still faces pressure from
two aspects. Firstly, there are concerns that Trump's statements and policies after taking
office may disrupt global trade order and international relations, making the economic
outlook for this year even more uncertain, weakening global fund sentiment. Secondly,
although US stocks have recently undergone adjustments, they have accumulated significant
gains since Trump's election. Many funds are inclined to sell off and exit before he
officially takes office, which could immediately drag down the Hang Seng Index.
Additionally, as Mainland China is in a policy vacuum period, the Hang Seng Index lacks
strong policy support and is lacking upward momentum.

"Cathay Pacific's positive future earnings boost stock prices"

Cathay Pacific (00293) recently announced the resumption of direct flights between Hong
Kong and Rome on June 5th this year, marking Cathay Pacific's second route connecting Hong
Kong hub with Italy. The Milan route will also increase flights from the current five per
week to daily in the upcoming summer. Additionally, Cathay Group's passenger network will
continue to expand, with both Cathay Pacific and HK Express expected to surpass 100 global
passenger destinations by 2025. Yesterday, Cathay Group's CFO Rebecca Sharpe stated that
due to increased cargo demand and decreased fuel prices, the performance in the latter
half of last year is expected to be strong, surpassing the first half of the year. During
trading yesterday, Cathay Pacific's stock price surged by 7%, reaching a five-year high,
and continued to climb today, reaching HKD 10.66.
Jaseper Tsang noted that since November last year, Cathay Pacific's stock price has
shown a fluctuating upward trend, with accumulated gains exceeding 20%. This is primarily
due to operational data showing improved operational efficiency and performance,
particularly in cargo services, coupled with the benefits of international oil prices at
lower levels, leading to optimistic market expectations for future earnings. Furthermore,
after gate opening, Cathay Pacific has continuously strengthened its routes and enhanced
operational efficiency. Measures such as the increase in passenger routes have led the
market to anticipate that its future earnings will benefit from the expanded routes. In
addition, there is strong demand for Mainland China travel, which is bringing robust
business demand for aviation stocks.
Additionally, with strong travel demand in China and falling international oil prices,
the entire aviation sector is expected to thrive. Among the aviation stocks listed in Hong
Kong, Cathay Pacific's operational performance stands out. For instance, their loyalty
programmes like Asia Miles have increased customer retention and loyalty, making them more
attractive and competitive compared to other airlines. For investors without positions,
Jaseper Tsang recommends waiting for the stock price to fall to around HKD 10 before
considering entry, as the recent rise to around HKD 10.6 does not necessarily indicate a
resistance level at this point.