[ET Net News Agency, 21 August 2026] There are no signs of improvement in the Middle East situation. US President Donald Trump stated his intention to exert economic pressure on Iran, causing international oil prices to continue rising. Coupled with the rebound in US 30-year and 10-year Treasury yields, US stocks came under pressure on Thursday, with the three major indices falling together. However, Asian stock markets generally rose this morning, and after the HSI opened more than 100 points higher, the index climbed volatilely. Although tech stocks were volatile and soft, major financial stocks performed well. The HSI closed the half-day at 25,883, up 184 points or 0.7%, with main board turnover close to HKD 136 billion. The Hang Seng China Enterprises Index stood at 8,589, up 41 points or 0.5%. The Hang Seng Tech Index stood at 4,724, up 23 points or 0.5%.
"Nip Chun Pong: HSI expected to form support at 25,500 points"
Although US Treasury Secretary Scott Bessent announced overnight that the Treasury Department might further expand the scale of Treasury buybacks, with a single buyback amount potentially exceeding HKD 4 billion, US long-term Treasury yields still rebounded to the level before the policy announcement, putting pressure on US stocks, yet Hong Kong stocks followed Asia-Pacific markets upwards. Nip Chun Pong, the Chief Strategist at Solo Securities, told ET Net News Agency that given US stocks are at historical highs and Hong Kong stocks are performing relatively sluggishly, unless US stocks experience a significant correction, the impact on Hong Kong stocks is limited. Conversely, southbound capital has become active since Tuesday, and it is expected that short-term southbound fund flows will be the key to steering the trend of the HSI. Although there were small net outflows in the subsequent two days, a net outflow after a massive net inflow is a normal phenomenon.
Nip Chun Pong continued that the most important thing currently is to observe whether the market turnover can continue to expand. Yesterday's turnover approached HKD 270 billion, showing a clear rebound compared to HKD 210 billion on Monday. If the turnover can be maintained at the HKD 270 billion level in the next two trading days or even challenge the HKD 300 billion mark, it will provide stronger support for the subsequent market. On the technical front, the immediate focus is whether the HSI can firmly hold above the 26,000-point mark. If it holds steady, the next step is expected to challenge the 26,200-point level. As for the downside support level, it is 25,500 points. Previously, during three consecutive trading days of pullbacks from highs between 17 August and 19 August, the index found support at the 25,500-point level, and the HSI is expected to find support there.
"Alibaba expected to challenge HKD 144 if it stabilises at HKD 120"
Alibaba announced that for the first fiscal quarter ended the end of June this year, non-GAAP net profit was HKD 20.715 billion, down 38% year-on-year, falling short of the market expectation of HKD 25.576 billion. Net profit attributable to ordinary shareholders was HKD 10.537 billion, also down 76%, with diluted earnings per share of HKD 0.46. Capital expenditures were HKD 67.678 billion, up 75% year-on-year. In addition, free cash flow was a net outflow of HKD 44.67 billion, which represents a clear increase compared to a net outflow of HKD 18.815 billion in the same period last year, mainly driven by increased cloud infrastructure spending.
Following the earnings announcement, Alibaba's ADR in US trading dropped by nearly 5% at one point, before management emphasised during the earnings call that the certainty of return on investment for AI CapEx is extremely high, expecting payback within three years. Considering that the gross margins of AI-related products are still continuously rising, the future payback cycle is expected to shorten to 2.5 years or even 2 years, stimulating the US ADR to rebound by the close.
While Alibaba opened more than 2% higher this morning and ultimately fell back by 3%, Nip Chun Pong noted that since rebounding from its low of HKD 88.65, Alibaba has accumulated a rise of over 40%, and profit-taking following the release of earnings is a normal phenomenon. The focus of this financial report is not on the headline figures, but on the cloud business and AI sectors. Among them, AI cloud and computing power service revenue grew significantly by 45%, and the related EBIT surged sharply by 133%. Despite substantial upfront capital expenditures, the market has gradually seen actual returns, which, combined with management's reassurance that "AI computing power capital expenditures are expected to pay off within three years," successfully boosted investors' confidence in its AI development.
Nip Chun Pong pointed out that in the competition among AI concept stocks, Alibaba has demonstrated a stronger leading edge. Compared to Tencent (00700), Alibaba's capital investment in AI started earlier, and its earnings materialisation time is quicker. Compared to Baidu (09888), the market generally believes that Alibaba's "Qwen" large model outperforms Baidu's "ERNIE" large model in performance and acceptance, thus holding relatively higher appeal. However, Nip Chun Pong reminded that given the diversified nature of Alibaba's business, its overall operations may not be entirely compelling. Unless future cloud business revenue accounts for over half of the total, the share price will still experience a certain degree of volatility in the short term. Nevertheless, when the market focuses on AI-related themes, the driving effect on the share price remains significant.
Regarding Alibaba's share price trend, Nip Chun Pong stated that the most critical defensive price level is HKD 120. Looking back from 3 August onwards, it only closed below HKD 120 on a single day on 14 August. If the share price can firmly hold above HKD 120 in the next two trading days, there is a higher probability that the share price will continue to climb, and the preliminary target for September can look towards the 14 May high of HKD 144.
"Nip Chun Pong: HSI expected to form support at 25,500 points"
Although US Treasury Secretary Scott Bessent announced overnight that the Treasury Department might further expand the scale of Treasury buybacks, with a single buyback amount potentially exceeding HKD 4 billion, US long-term Treasury yields still rebounded to the level before the policy announcement, putting pressure on US stocks, yet Hong Kong stocks followed Asia-Pacific markets upwards. Nip Chun Pong, the Chief Strategist at Solo Securities, told ET Net News Agency that given US stocks are at historical highs and Hong Kong stocks are performing relatively sluggishly, unless US stocks experience a significant correction, the impact on Hong Kong stocks is limited. Conversely, southbound capital has become active since Tuesday, and it is expected that short-term southbound fund flows will be the key to steering the trend of the HSI. Although there were small net outflows in the subsequent two days, a net outflow after a massive net inflow is a normal phenomenon.
Nip Chun Pong continued that the most important thing currently is to observe whether the market turnover can continue to expand. Yesterday's turnover approached HKD 270 billion, showing a clear rebound compared to HKD 210 billion on Monday. If the turnover can be maintained at the HKD 270 billion level in the next two trading days or even challenge the HKD 300 billion mark, it will provide stronger support for the subsequent market. On the technical front, the immediate focus is whether the HSI can firmly hold above the 26,000-point mark. If it holds steady, the next step is expected to challenge the 26,200-point level. As for the downside support level, it is 25,500 points. Previously, during three consecutive trading days of pullbacks from highs between 17 August and 19 August, the index found support at the 25,500-point level, and the HSI is expected to find support there.
"Alibaba expected to challenge HKD 144 if it stabilises at HKD 120"
Alibaba announced that for the first fiscal quarter ended the end of June this year, non-GAAP net profit was HKD 20.715 billion, down 38% year-on-year, falling short of the market expectation of HKD 25.576 billion. Net profit attributable to ordinary shareholders was HKD 10.537 billion, also down 76%, with diluted earnings per share of HKD 0.46. Capital expenditures were HKD 67.678 billion, up 75% year-on-year. In addition, free cash flow was a net outflow of HKD 44.67 billion, which represents a clear increase compared to a net outflow of HKD 18.815 billion in the same period last year, mainly driven by increased cloud infrastructure spending.
Following the earnings announcement, Alibaba's ADR in US trading dropped by nearly 5% at one point, before management emphasised during the earnings call that the certainty of return on investment for AI CapEx is extremely high, expecting payback within three years. Considering that the gross margins of AI-related products are still continuously rising, the future payback cycle is expected to shorten to 2.5 years or even 2 years, stimulating the US ADR to rebound by the close.
While Alibaba opened more than 2% higher this morning and ultimately fell back by 3%, Nip Chun Pong noted that since rebounding from its low of HKD 88.65, Alibaba has accumulated a rise of over 40%, and profit-taking following the release of earnings is a normal phenomenon. The focus of this financial report is not on the headline figures, but on the cloud business and AI sectors. Among them, AI cloud and computing power service revenue grew significantly by 45%, and the related EBIT surged sharply by 133%. Despite substantial upfront capital expenditures, the market has gradually seen actual returns, which, combined with management's reassurance that "AI computing power capital expenditures are expected to pay off within three years," successfully boosted investors' confidence in its AI development.
Nip Chun Pong pointed out that in the competition among AI concept stocks, Alibaba has demonstrated a stronger leading edge. Compared to Tencent (00700), Alibaba's capital investment in AI started earlier, and its earnings materialisation time is quicker. Compared to Baidu (09888), the market generally believes that Alibaba's "Qwen" large model outperforms Baidu's "ERNIE" large model in performance and acceptance, thus holding relatively higher appeal. However, Nip Chun Pong reminded that given the diversified nature of Alibaba's business, its overall operations may not be entirely compelling. Unless future cloud business revenue accounts for over half of the total, the share price will still experience a certain degree of volatility in the short term. Nevertheless, when the market focuses on AI-related themes, the driving effect on the share price remains significant.
Regarding Alibaba's share price trend, Nip Chun Pong stated that the most critical defensive price level is HKD 120. Looking back from 3 August onwards, it only closed below HKD 120 on a single day on 14 August. If the share price can firmly hold above HKD 120 in the next two trading days, there is a higher probability that the share price will continue to climb, and the preliminary target for September can look towards the 14 May high of HKD 144.
