[ET Net News Agency, 07 July 2025] Hong Kong stocks continued to retreat, with the
biomedical and photovoltaic sectors declining this morning. By midday, the HSI was down
107 points or 0.4 percent at 23,808, with main board turnover exceeding HKD 109.5 billion.
The Hang Seng China Enterprises Index stood at 8,571, down 37 points or 0.4 percent. The
Hang Seng Tech Index was at 5,208, down 7 points or 0.2 percent.

"Wan Kong Shing: Holding 23,100 is acceptable, otherwise testing 21,900 is possible"

US tariffs are about to be implemented. US President Trump has made it clear that by 9
Jul, most countries will either receive a notification of tariff increases or reach an
agreement. Hong Kong stocks remain in wait-and-see mode, with the HSI continuing to trade
in a narrow range, down about 100 points by midday. Wan Kong Shing, the Chief Investment
Officer of iFAST Global Markets, told ET Net News Agency that Hong Kong stocks have
recently shown signs of turning bearish, with capital outflows becoming apparent. HIBOR
has been rising and Stock Connect has started to see daily net outflows, which has led to
increasing selling pressure on the HSI after its previous gains.
There are several uncertainties affecting Hong Kong stocks recently. Wan highlighted the
imminent tariffs and intensified competition on domestic demand platforms, both adding to
market instability. He believes that if the HSI can stabilise at 23,100 near the 100-day
moving average, that would be considered acceptable. Otherwise, support levels should be
tested at each Fibonacci retracement, starting with the 0.382 level around 22,500,
depending on how capital flows behave within the week. If outflows persist, support may
need to be adjusted further down to the 0.5 level at approximately 21,900.

"Meituan downtrend not over, may see HKD 90; Tencent and Xiaomi as base, Baidu worth
watching"

Alibaba (09988) recently issued an internal call, setting 5 Jul as 'Order Surge Day',
instructing its 'Taobao Flash Sale' to work with 'Ele.me' to achieve a single-day target
of 90 to 100 million orders, signalling its aim to challenge Meituan's (03690) leading
position. Promotion such as 'Spend 16 get 16 off' and 'Spend 18 get 18 off' were
introduced, effectively offering items for free. After enduring pressure for most of the
day, Meituan responded on the evening of 5 Jul with a wave of '0-yuan drink' and '0-yuan
meal' vouchers, leading to such a surge in orders that Meituan's system temporarily
crashed.
As a result, Meituan's daily orders surpassed 100 million at 8:45 pm and further
increased to 120 million by 10:54 pm. However, while the subsidy battle boosted order
volume, it did not improve profitability. The market is concerned that such competition
will erode earnings, and Meituan's share price fell further below HKD 120, touching an
intraday low of HKD 115.8. Wan Kong Shing remarked that investors are only willing to
share in prosperity, not in hardship. Now that Meituan is forced into aggressive
competition, profits will inevitably be squeezed, and a break below HKD 100 is
unavoidable. Facing intense competition from JD.com (09618) and Alibaba, Meituan's initial
pullback target is set at HKD 90.
Given that domestic tech stocks are under pressure from heightened competition, Wan
noted that capital flowing out may benefit other tech names such as Tencent (00700) and
Xiaomi (01810), which have both performed relatively well recently and can serve as core
portfolio holdings. He also observed that Baidu (09888) has shown resilience lately, and
investors interested in tech stocks may consider it. However, he does not expect a sharp
rise in the short term and suggests starting with a small position and monitoring the
reaction before increasing exposure.