[ET Net News Agency, 25 September 2025] US new home sales in August saw their sharpest
monthly jump since January 2022. Despite renewed calls from the US Treasury Secretary for
aggressive rate cuts, all three major US indices continued to retreat. The HSI opened 17
points higher before fluctuating, but from 11:00 onwards was lifted by strength in Xiaomi
and Alibaba, pushing the index up. By midday, the HSI stood at 26,633, up 115 points or
0.4 per cent, with main board turnover approaching HKD 175.8 billion. The Hang Seng China
Enterprises Index stood at 9,499, up 56 points or 0.6 per cent. The Hang Seng Tech Index
rose 120 points or 1.9 per cent to 6,443.

"Yuen Che Hay: Alibaba news squeezes shorts, HSI could hold 27,000 this month"

The HSI rebounded from support at the 20-day moving average yesterday, driven by
optimism over Alibaba's (09988) AI developments, and continued to gain this morning. Yuen
Che Hay, the Co-Director of Investment Strategy of Quam Asset Securities, told ET Net News
Agency that he originally expected the market to see further downside before the end of
the month, but Alibaba's surprise news triggered a sharp rally that squeezed out many
short positions. He now expects the monthly futures settlement level could move up to
27,000. While the index's gain so far is not huge, the fact that more than half of the top
50 traded stocks are rising is a sign of improving sentiment. If this broad-based strength
continues into the close, the HSI stands a good chance of finishing the month above
27,000.
Yuen noted that both US and Hong Kong stocks are currently driven by thematic plays, but
the US rally is less healthy: after the Fed rate cut, money has mainly flowed into the
"Magnificent 7" US tech stocks, while market breadth has narrowed. He advises investors to
reduce exposure to concept stocks and focus on large caps instead. In contrast, Hong
Kong's AI and robotics themes appear more solid.
Overnight, US Treasury yields rose, with the 5-year yield hitting a three-week high at
3.71%, and the 10-year yield climbing to 4.15%, near Monday's peak. Despite strong demand
for tech stocks, gains in the HSI were capped as high-dividend shares such as banks,
telecom and property stocks came under pressure. Yuen believes this reflects a robust
market, as capital is likely rotating from defensive to growth stocks, explaining the
modest index rise but strong gains in individual names. However, he does not recommend
going all-in on growth or completely abandoning defensive holdings at this stage. Instead,
he suggests selectively trading on news, controlling position sizes, and even using small
amounts for short-term warrants trading to capture opportunities.

"Hang Seng's asset cleanup was expected, not a top dividend pick"

In addition to the general weakness in dividend stocks, reports this morning said HSBC
(00005) has instructed its subsidiary Hang Seng Bank to systematically clean up its Hong
Kong property-related non-performing loan book, echoing last week's report that Hang Seng
is seeking to sell at least USD 1 billion (about HKD 7.8 billion) in property-backed
loans. Hang Seng shares fell over 2% this morning, with other banks and Mainland China
lenders also under pressure. Hang Seng has long been seen as having heavier exposure to
the local market. Yuen said cleaning up bad assets was a matter of "when", not "if", and
Hang Seng's share price had already priced in these issues. The recent rebound in bank
shares was largely due to higher HIBOR, but for investors seeking dividend income, local
banks are not the best choice. Still, for those interested in Hang Seng, Yuen expects
strong support for the share price at the HKD 111 level.