[ET Net News Agency, 27 March 2025] The Hong Kong stock market is entering the earnings
season, with several blue-chip companies reporting strong performances. However, Xiaomi
(01810) faced significant selling pressure despite high trading volumes, leading to a
notable decline and dragging down the overall market performance. The Hang Seng Index
reported a midday figure of 23,729, up 246 points or 1%, with the 20-day moving average
(approximately 23,785 points) reaching a peak. The main board recorded a turnover of over
HKD 141.6 billion. The Hang Seng China Enterprises Index stood at 8,736, up 82 points or
1%. The Hang Seng Tech Index reached 5,647, gaining 74 points or 1.3%.

"Wan Kong Shing: Hong Kong stocks show stronger support than expected, but no significant
rise opportunities are seen"

After reaching a high of 24,800 last week, the Hong Kong stock market began to retrace,
having accumulated a drop of 1,500 points. However, strong support has emerged,
maintaining the "policy peak" from October this year. Wan Kong Shing, the Chief Investment
Officer of iFAST Global Markets, told ET Net News Agency that the support during this
retracement has been stronger than expected. Before falling to the commonly observed
golden ratio of 0.382 at around 22,500, strong support was already evident near the 20-day
moving average and at the 0.236 level, which is relatively well explained, compared to
external market retracements.
He noted that the current situation for Hong Kong stocks is awkward in terms of capital
flows and news. Although there have been instances of southbound capital buying during the
retracement, it is equally willing to exit without hesitation. It remains unclear whether
all parties believe that the Hang Seng Index nearing 25,000 is close enough, contributing
to a status quo. Short-term external news is similarly clouded; US President Trump is set
to provide details on tariffs for various countries on 2 April (next Wednesday). Although
there will be some "flexibility," the risks for China remain high and should not be
overlooked.
Thus, while there was a rebound today, short-term risks persist. Wan Kong Shing
currently identifies the first level of support for the Hang Seng Index at 23,200, the
"policy peak," and the next level at 22,500, corresponding to a golden ratio retracement
of 0.382. He added that while the market bottom is still considered strong, there are no
significant rise opportunities in sight.

"Bank of China Hong Kong's business has limitations and this hinders substantial growth"

As the earnings season approaches its end, bank stocks are announcing their annual
results, with Bank of China Hong Kong (02388) reporting a 16.8% increase in profits to HKD
38.233 billion, and a nearly 24% increase in the final dividend to HKD 1.419, bringing the
total dividend for the year to HKD 1.989, with a payout ratio up by one percentage point
to 55%. Notably, Bank of China announced its intention to implement quarterly dividends
and is studying the possibility of share buybacks. This news led to a sharp increase in
its stock price, rising over 7% in half a day, approaching levels last seen in 2018.
Wan Kong Shing remarked that Bank of China's performance is not particularly impressive,
with net interest income and net interest margin narrowing compared to the 2023 fiscal
year, falling short of expectations. However, the dividend announcement has successfully
attracted market attention. He believes that the dividend news may stimulate further stock
price increases in the short term, potentially rising by another 10% to challenge HKD 35,
although caution is warranted as the stock price is likely to be volatile around the
ex-dividend date.
Bank of China's quarterly dividend and planned buyback convey a sense of aiming to align
with market leader HSBC (00005). However, Wan Kong Shing believes the two are
fundamentally different; HSBC's diverse international operations offer more opportunities
for profit growth, whereas Bank of China is limited to local business. With the local
economy performing modestly and even declining, the earnings outlook for Bank of China is
unlikely to show strong growth, constraining its profit performance. Based on the current
net asset value, significant upward movement for Bank of China appears challenging, with a
short-term trading target yielding only about a 10% potential increase.