[ET Net News Agency, 03 June 2025] US stocks fell in early trading, but hopes for a
potential phone call between US President Trump and President Xi Jinping this week saw a
strong rebound on the first trading day of June. The Hang Seng Index opened 123 points or
0.5% higher, with strong gains in banking stocks and a rebound in car stocks. At one
point, the index rose over 300 points, closing up 262 points or 1.1% at 23,420. Southbound
trading resumed, with total turnover on the main board exceeding HKD 115.6 billion. The
Hang Seng China Enterprises Index closed at 8,466, up 107 points or 1.3%. The Hang Seng
Tech Index reported 5,164, up 30 points or 0.6%.

"Nip Chun Pong: Market anticipates another call between US and Chinese leaders"

The Hang Seng Index opened 123 points higher this morning and extended its gains,
reaching a high of 23,477.31 points during the day. Nip Chun Pong, the Chief Strategist at
Blackwell Global Securities, told ET Net News Agency that the tense China-US trade
relations had caused the Hang Seng Index to drop by 131 points on Monday (2 April).
However, market expectations for a phone call between US President Trump and President Xi
Jinping this week, coupled with the resumption of A-shares after the Dragon Boat Festival,
suggest a positive shift for H-shares, although the upside may be limited with resistance
at the 23,800 level and support at 23,000.
Nip Chun Pong noted that following the joint statement in May regarding a 90-day tariff
suspension, the investment market atmosphere has generally remained positive, indicating
that the worst for Hong Kong stocks may be over. With the "618" shopping festival underway
in the Mainland China, there is potential for large Chinese tech stocks to perform well,
alongside earlier statements from the National Development and Reform Commission that
policies to "stabilise employment and the economy" will be implemented by the end of June.
Even with negative news affecting China-US trade, the downside for H-shares may not be
significant.

"Invest in high-yield stocks while being aware of 'earning interest but losing value'
risks"

Hong Kong interbank offered rates (Hibor) generally rose on Tuesday (3 April), with data
from the Hong Kong Association of Banks showing increases across the board, except for
overnight Hibor. The one-month Hibor rose to 0.87423%, although still at a low level,
which has kept short-term fixed deposit rates low, prompting some investors to turn to
high-yield stocks. Nip Chun Pong suggested that investors consider banking stocks and
Chinese telecoms, but should also be cautious of the risks associated with "earning
interest but losing value."
Nip Chun Pong believes that the impact on banking stocks from China-US trade tensions is
relatively small, recommending that investors focus on major banks such as China
Construction Bank (00939), Industrial and Commercial Bank of China (01398), and Bank of
China (03988). Additionally, investors may want to keep an eye on China Mobile (00941) and
China Telecom (00728), as these telecom stocks currently have minimal business exposure in
the US, making them relatively stable amid trade tensions.
He added that if uncertainties from China-US trade disputes persist, China will need to
continue stimulating domestic demand, and further measures such as reserve requirement
ratio cuts or interest rate reductions may be introduced in the second half of the year.
Therefore, banking stocks are expected to be favoured, with China Construction Bank
anticipated to perform the strongest, targeting a price of HKD 7.5.