[ET Net News Agency, 09 September 2025] The market's expectations of US interest rate
cuts drove a rebound in all three major US indices, with the Nasdaq reaching a new record
high. This morning, A-shares softened, but the Hang Seng Index stood out, closing the
morning session at 25,839, up 205 points or 0.8%, with main board turnover close to HKD
159.7 billion. The Hang Seng China Enterprises Index finished at 9,203, up 82 points or
0.9%. The Hang Seng Tech Index rose 59 points or 1% to 5,813.

"Yuen Che Hay: a 50bps cut would signal recession risk; consider locking in profits on
strength"

With US rate cut expectations rising, markets are now speculating that the Fed could cut
rates by 0.5 percentage points this month, fuelling a global equity rally. Hong Kong
stocks opened 77 points higher and extended their gains, with property stocks rallying and
driving the HSI past 26,000 to a near four-year high. Yuen Che Hay, the Co-Director of
Investment Strategy of Quam Asset Securities, told ET Net News Agency that surging market
sentiment has pushed the HSI above 26,000 even before the Fed meeting. If the index climbs
to 26,200-26,500 before the Fed decision, the market may have fully priced in all the
positives from rate cut expectations. While some are now betting on a one-off 50bps cut,
Yuen expects the Fed to cut by just 25bps this month. If the Fed were to cut by 50bps, it
could indicate imminent recession risk.
Given the current exuberant sentiment and more optimistic market interpretation of news,
Yuen highlighted heavyweight Alibaba (09988) as an example. The company has seen a flurry
of headlines, including the launch of its new AI model and collaboration details with
Apple, driving the share price above HKD 140. However, such momentum-driven rallies may be
short-lived and could reverse within a day or two. In this environment, Yuen does not
advise turning outright bearish, but suggests partially taking profits on stocks that have
made significant gains or broken out to new highs. Investors can consider locking in
profits and then reassess whether to re-enter or further reduce positions, depending on
how the shares move.

"Gold retailers' gains driven by more than gold price; sales strategy upgrades underpin
fundamentals"

Rate cut expectations have propelled gold prices to new highs, with New York gold
futures recently hitting USD 3,694, just shy of USD 3,700. The ongoing rally in gold
prices has lifted both gold miners and gold retailers. Yuen believes the gold price
uptrend could continue until the Fed decision on the 17th, with a potential target of USD
3,800. Between miners and retailers, Yuen notes that gold mining stocks are more sensitive
to gold prices, often outperforming the commodity itself, essentially acting as leveraged
plays on gold.
However, he also points out that the recent gains in gold retailers are not just about
gold prices. Improved sales strategies, such as Chow Tai Fook (01929) venturing into
IP-based gold jewellery, have fuelled profit expectations and share price gains. He
expects Chow Tai Fook to reach HKD 18 in the short term, while Mainland China leader Laopu
Gold (06181) has been more volatile; he suggests taking profits if the stock rallies to
HKD 900.

"Property rally hinges on risk appetite; CR Land and MixC stand out on fundamentals"

Hopes of a 50bps Fed rate cut triggered a sharp rebound in Chinese property stocks.
Heavily indebted Country Garden (02007) surged nearly 30% after regaining Stock Connect
eligibility, while peers including Sunac (01918), China Vanke (02202), and Longfor (00960)
also rallied. Yuen notes that the sector's rally is driven more by policy expectations
than fundamentals, with monthly sales data remaining weak. As such, the surge appears to
be a short-term, news-driven move, and whether to participate depends on individual risk
appetite. For example, it is not impossible for Country Garden to attempt a move towards
HKD 1, but investors need to react quickly.
On a fundamental basis, Yuen is only focused on China Res Land (01109) and its affiliate
China Res MixC (01209), both of which have delivered solid monthly data and earnings,
making them more attractive for investment beyond speculative trading compared to peers.