[ET Net News Agency, 06 May 2025] The ongoing uncertainty surrounding the U.S.-China
tariff war has led to narrow fluctuations in Hong Kong stocks during the early session.
The Caixin China Services PMI for April fell short of expectations, yet the renminbi
strengthened. Following the conclusion of the five-day Labour Day holiday in Mainland
China, A-shares showed positive momentum, boosting the Hang Seng Index. By midday, the
Hang Seng Index reported at 22,658, up 154 points or 0.7%, with a main board turnover of
nearly HKD 124.5 billion. The Hang Seng China Enterprises Index stood at 8,250, rising by
19 points or 0.2%. Meanwhile, the Hang Seng Tech Index dropped to 5,238, down 5 points or
less than 0.1%.

"Nip Chun Pong: HSI faces resistance near 50-day moving average because of tariffs"

The Hang Seng Index exhibited a fluctuating upward trend, briefly surpassing the gap
peak from 7 April (approximately 22,638 points) and reaching a high of 22,656 points. Nip
Chun Pong, the Chief Strategist at Blackwell Global Securities, told ET Net News Agency
that the index is likely to fill this gap this week. However, he cautioned that
uncertainties in the news environment may pose challenges, particularly as the gap peak is
close to the 50-day moving average (around 22,800 points). Even if the index fills the
gap, it may encounter resistance at this moving average.
Nip Chun Pong indicated that, without an agreement on U.S.-China tariffs, the Hang Seng
Index could still rise to the 50-day moving average, but this reference point is not
particularly strong. He pointed out that the movement from around 22,600 points to 22,800
points is only about 200 points, and even a rise to 23,000 points represents an increase
of just about 400 points. He suggested that if the index pulls back, it could find support
between 21,800 and 22,000 points, referencing the low from 30 April.

"U.S. pharmaceutical tariffs to be announced within two weeks, watch for WuXi series and
Pharmaron"

U.S. President Trump recently signed an executive order encouraging domestic
pharmaceutical companies to increase the manufacturing of prescription medications. He
also indicated that tariffs on imported drugs will be announced within the next two weeks.
The executive order mandates the U.S. Food and Drug Administration to increase
inspection fees for foreign drug manufacturers, strengthen enforcement of ingredient
sourcing from overseas manufacturers, and consider publishing a list of non-compliant
factories. Additionally, Trump directed the Environmental Protection Agency to expedite
the review of permits needed for constructing drug manufacturing facilities.
Nip Chun Pong noted that the companies most affected by this news are primarily in the
CXO sector, such as WuXi series, Pharmaron (03759), and Viva Biotech (01873).
Approximately 60% of WuXi series' revenue comes from the U.S. market, while over 60% of
Pharmaron's revenue is also derived from North America. The introduction of pharmaceutical
tariffs by Trump has renewed concerns in the market about the potential negative impact of
the Biosecurity Act on the pharmaceutical sector.
In early trading, CSPC Pharma (01093) showed weak performance, leading declines among
blue chips. However, Nip Chun Pong remarked that CSPC's North American revenue comprises
less than 5%, meaning the tariff issue will have minimal impact on its business. The stock
may be adjusting in response to tariff news, having previously shown strong performance,
rising from a low of HKD 4.65 on 7 April to a peak of HKD 6.35 today, an increase of over
25%.
For investors holding shares in WuXi series or related stocks, Nip Chun Pong advised
that if they purchased between 7 and 9 April, they may consider exiting at a suitable
time, given the current gains. If they only bought last week, it may be prudent to hold
for one or two trading days to monitor price performance. Should the price remain weak,
they might consider exiting; if it stabilises or rebounds, they could continue to hold.
For example, investors in WuXi Bio (02269) should watch for support around the HKD 20
mark.