[ET Net News Agency, 25 March 2025] The Hong Kong stock market struggles to breach 24,000, with capital players considering profit-taking. Following BYD (01211), Xiaomi (01810) has initiated a large-scale placement, while Wang Xing has cashed out from Li Auto (02015), earning HKD 700 million. This has led to an arbitrage wave in the Hong Kong market. Even with over HKD 10 billion of net buying from southbound funds, the downward trend continues. The Hang Seng Index closed at HKD 23,387, down 517 points or 2.2%, with the main board turnover nearing HKD 184.5 billion. The Hang Seng China Enterprises Index is at HKD 8,634, down 216 points or 2.4%. The Hang Seng Tech Index reports HKD 5,534, down 202 points or 3.5%.
"Lee Wai Kit: Funds may shift towards consumer stocks and Chinese characteristics stocks"
After a slight rebound, Hong Kong stocks failed to maintain upward momentum. Today, the market was pressured by poor performances from several blue-chip companies and Xiaomi's placement, which saw it fall below the 20-day moving average (HKD 23,802) as the loss widened to over 500 points, dropping below the crucial HKD 23,500 threshold and hovering near the 10-day moving average (HKD 23,988). Lee Wai Kit, a director of the Brokerage Department of TF International Securities, told ET Net News Agency that the Hang Seng Index is at a high level and requires a short-term adjustment, which is a normal performance. It cannot yet be determined if the upward trend has ended. On one hand, previous policy benefits have been largely absorbed; on the other hand, with earnings season upon us, investors are either waiting to see the results of significant stocks or choosing to take profits, placing further adjustment pressure on the index. In the short term, the Hang Seng Index is likely to consolidate, with support levels around HKD 22,800 to HKD 23,000.
Xiaomi's placement may trigger a profit-taking wave during earnings season. Lee Wai Kit noted that the placement has negatively impacted market sentiment, leading to a strong sense of pessimism. However, he believes that if trading volume remains high and there are favourable news releases from the Mainland China, like the recent increase in personal consumption loans, it could still support the market. Nonetheless, funds may shift from tech stocks to consumer shares and Chinese characteristics stocks. He further stated that it is currently difficult to predict if there will be a wave of placements, suggesting investors monitor whether the capital expenditure costs of related companies increase, as this could incentivise further placements.
"Funding needs for Xiaomi's entry into AI are reasonable"
Xiaomi plans to conduct its placement in a "new shares after old" manner. The company's controlling shareholder, Lei Jun, will sell 800 million shares held by Smart Mobile to no fewer than six subscribers, representing approximately 3.1% of the enlarged issued share capital and about 1.2% of voting rights, at a placement price of HKD 53.25 per share, a discount of about 6.6% from the previous closing price of HKD 57. Smart Mobile will also purchase 800 million new shares at the same price. The net proceeds are expected to reach HKD 42.5 billion, which will be used to accelerate business expansion, increase research and development investment to enhance technological capabilities, and support other general corporate purposes.
Lee Wai Kit stated that after the placement news is released, the market is bound to experience fluctuations, but fundraising through placements is inherently part of a company's listing goals. As long as the funds from this placement are used for market-recognised development directions, pessimism may be alleviated. Considering Xiaomi's fundamentals, which include a broad business scope and its entry into AI, the funding needs are reasonable.
Previously, BYD's (01211) placement also caused its stock price to fall, but after consolidation, it reached a historical high. Lee Wai Kit believes BYD's new highs were driven by news of rapid charging. Regarding Xiaomi's trend, it will depend on whether there are positive catalysts after the placement; otherwise, it may consolidate for the next one to two weeks. For investors who do not hold shares, he recommends buying at the previous low of HKD 49, provided the stock can find support around the placement price of HKD 53.2.
Additionally, data from the Stock Exchange show that Wang Xing, who is a non-executive director of Li Auto, sold shares over four consecutive trading days from last Tuesday to Friday (18th to 21st), offloading 1.5 million, 1.5 million, 2 million and 1.5 million shares at average prices of HKD 110.9737, HKD 109.1931, HKD 107.1994, and HKD 102.1508, realising HKD 698 million and reducing his stake from 21.3% to 20.94%. Lee Wai Kit believes Wang Xing's actions may reflect his personal investment stance. Li Auto's fundamentals are solid, with a leading position in new car sales, although last year's models like the MEGA impacted its strategic direction. However, with new models like the L8 launched this year, market expectations remain high. He suggests that investors without shares consider buying around the HKD 97 mark, near the 100-day moving average.
"Lee Wai Kit: Funds may shift towards consumer stocks and Chinese characteristics stocks"
After a slight rebound, Hong Kong stocks failed to maintain upward momentum. Today, the market was pressured by poor performances from several blue-chip companies and Xiaomi's placement, which saw it fall below the 20-day moving average (HKD 23,802) as the loss widened to over 500 points, dropping below the crucial HKD 23,500 threshold and hovering near the 10-day moving average (HKD 23,988). Lee Wai Kit, a director of the Brokerage Department of TF International Securities, told ET Net News Agency that the Hang Seng Index is at a high level and requires a short-term adjustment, which is a normal performance. It cannot yet be determined if the upward trend has ended. On one hand, previous policy benefits have been largely absorbed; on the other hand, with earnings season upon us, investors are either waiting to see the results of significant stocks or choosing to take profits, placing further adjustment pressure on the index. In the short term, the Hang Seng Index is likely to consolidate, with support levels around HKD 22,800 to HKD 23,000.
Xiaomi's placement may trigger a profit-taking wave during earnings season. Lee Wai Kit noted that the placement has negatively impacted market sentiment, leading to a strong sense of pessimism. However, he believes that if trading volume remains high and there are favourable news releases from the Mainland China, like the recent increase in personal consumption loans, it could still support the market. Nonetheless, funds may shift from tech stocks to consumer shares and Chinese characteristics stocks. He further stated that it is currently difficult to predict if there will be a wave of placements, suggesting investors monitor whether the capital expenditure costs of related companies increase, as this could incentivise further placements.
"Funding needs for Xiaomi's entry into AI are reasonable"
Xiaomi plans to conduct its placement in a "new shares after old" manner. The company's controlling shareholder, Lei Jun, will sell 800 million shares held by Smart Mobile to no fewer than six subscribers, representing approximately 3.1% of the enlarged issued share capital and about 1.2% of voting rights, at a placement price of HKD 53.25 per share, a discount of about 6.6% from the previous closing price of HKD 57. Smart Mobile will also purchase 800 million new shares at the same price. The net proceeds are expected to reach HKD 42.5 billion, which will be used to accelerate business expansion, increase research and development investment to enhance technological capabilities, and support other general corporate purposes.
Lee Wai Kit stated that after the placement news is released, the market is bound to experience fluctuations, but fundraising through placements is inherently part of a company's listing goals. As long as the funds from this placement are used for market-recognised development directions, pessimism may be alleviated. Considering Xiaomi's fundamentals, which include a broad business scope and its entry into AI, the funding needs are reasonable.
Previously, BYD's (01211) placement also caused its stock price to fall, but after consolidation, it reached a historical high. Lee Wai Kit believes BYD's new highs were driven by news of rapid charging. Regarding Xiaomi's trend, it will depend on whether there are positive catalysts after the placement; otherwise, it may consolidate for the next one to two weeks. For investors who do not hold shares, he recommends buying at the previous low of HKD 49, provided the stock can find support around the placement price of HKD 53.2.
Additionally, data from the Stock Exchange show that Wang Xing, who is a non-executive director of Li Auto, sold shares over four consecutive trading days from last Tuesday to Friday (18th to 21st), offloading 1.5 million, 1.5 million, 2 million and 1.5 million shares at average prices of HKD 110.9737, HKD 109.1931, HKD 107.1994, and HKD 102.1508, realising HKD 698 million and reducing his stake from 21.3% to 20.94%. Lee Wai Kit believes Wang Xing's actions may reflect his personal investment stance. Li Auto's fundamentals are solid, with a leading position in new car sales, although last year's models like the MEGA impacted its strategic direction. However, with new models like the L8 launched this year, market expectations remain high. He suggests that investors without shares consider buying around the HKD 97 mark, near the 100-day moving average.