[ET Net News Agency, 15 April 2025] The US tariff policy is constantly changing and
evolving. President Trump announced exemptions for tariffs on components like smartphones
and computers, leading to a strong rebound in US tech stocks. However, he subsequently
indicated that there would be tariff measures targeting semiconductors and chips, which
narrowed the gains in US stocks at the close. The Hang Seng Index opened 186 points
higher, reaching its peak for the morning, but then turned downwards. The index reported
21,457 at midday, up 40 points or 0.2%, with a turnover of nearly HKD 108.8 billion. The
Hang Seng China Enterprises Index stood at 7,974, up 8 points or 0.1%. The Hang Seng Tech
Index was at 4,969, down 45 points or 0.9%.

"Nip Chun Pong: If the index breaks 21,500 points this week, the outlook remains
optimistic"

The Hang Seng Index opened above the ten-day moving average (approximately 21,388
points) today, but the upward momentum was insufficient, resulting in fluctuations
downwards. Nip Chun Pong, Chief Analyst at the Chief Strategist at Blackwell Global
Securities, told ET Net News Agency that the Hang Seng Index has risen for five
consecutive days, accumulating an increase of about 1,600 points, recovering half of the
losses since 7 April. He anticipates that the future trend will be volatile. He noted that
Trump's recent shift in tariff rhetoric has alleviated market concerns about China's
foreign trade outlook, leading to sustained positive sentiment. If the index can close
above 21,500 points this week, the outlook remains optimistic; otherwise, this rebound may
come to an end. As for support levels, while the index has been above the hundred-day
moving average (21,229 points) for two consecutive days, it has yet to establish
significant support, with initial support around the 21,000-point mark.

"US revenue share declines; actual impact of semiconductor import investigation is
minimal"

The US Department of Commerce has announced that it has begun an investigation under
Section 232 of the Trade Expansion Act regarding the impact of semiconductor and
pharmaceutical imports on US national security. Analysts suggest this is a decisive step
towards imposing tariffs. Additionally, Trump stated that he would announce the tariff
rates for imported semiconductors within the next week, emphasising that the US cannot be
reliant on "hostile trading nations like China" in these sectors. As a result, chip stocks
faced pressure today.
Nip Chun Pong noted that the number of chips exported from China to the US has
significantly decreased. While this news is unfavourable for sentiment, its impact on the
fundamentals of chip stocks is manageable. He explained that, for example, SMIC (00981)
derives only 12% of its revenue from the US, a substantial decline from 25% in 2021. Nip
Chun Pong stated that in the semiconductor sector, the current situation is that China is
more interested in importing high-end chips from the US rather than exporting them in
large quantities, which means that the related tariffs would have a greater impact on
companies like TSMC. He predicts that, following Trump's usual pattern, the initial tariff
rates announced for the semiconductor industry will be high, but may decrease depending on
the progress of negotiations. Compared to the announced tariff rates, the market is
currently more focused on the actual rates that will be implemented in the future, which
could lead to increased market volatility.
Regarding chip stocks, Nip Chun Pong mentioned that, from a medium to long-term business
development perspective, chip stocks are worth considering. However, current research and
development costs are high, with SMIC and Hua Hong Semi (01347) having price-to-earnings
ratios of around 100 or more, indicating limited profit margins. If investors have limited
capital, choosing chip stocks may not be attractive; in contrast, large Chinese tech
stocks offer greater investment value.