[ET Net News Agency, 16 June 2025] US stocks slumped over 1% across all three major
indices last Friday on renewed concerns about the Middle East conflict. However, over the
past two days, there has been no sign of the situation escalating. Hong Kong stocks opened
down by 100 points before fluctuating, at one point briefly turning positive. At midday,
the HSI stood at 23,864, down 28 points or 0.1%, with main board turnover close to HKD
130.9 billion. The Hang Seng China Enterprises Index was at 8,651, down 3 points or less
than 0.1%. The Hang Seng Tech Index was at 5,247, up 7 points or 0.1%.

"Kung Wai Ting: Hopes for China-US agreement remain, limited upside in oil prices supports
the market"

The situation in the Middle East continues to attract market attention. Last week, Iran
retaliated against Israel's airstrikes, causing Wall Street to worry about further
escalation, and the Dow plunged more than 700 points last Friday. The Hong Kong market
opened relatively steady, finding support after an initial 100-point drop, with losses
narrowing to just a few dozen points by midday. Kung Wai Ting, the Chief Investment
Officer of China Asset Management (Hong Kong), told ET Net News Agency that although there
have been rumours that the recent China-US talks in London did not result in the
relaxation of restrictions on either side - such as China's rare earth exports or US chip
technology - he does not see this as a negative. In his view, these developments simply
have not met expectations yet, and as nothing has been finalised, there is still hope. He
believes these expectations will continue to support the broader market. He also noted
that recent reports suggest European funds, having previously allocated little to the
Chinese market, are now more likely to increase their exposure, which will further support
Hong Kong stocks.
Despite ongoing geopolitical instability, Hong Kong stocks have shown resilience. Kung
Wai Ting explained that the sharp falls in US stocks were mainly due to fears of
escalation, including concerns about nuclear conflict, but over the weekend there were no
developments in that direction. In addition, reports indicate that US President Trump had
already vetoed a plan for Israel to assassinate Iran's Supreme Leader Khamenei, which
helped ease overall market concerns. Oil prices, which had spiked, also started to
retreat, with NYMEX crude oil briefly rising above USD 75 before quickly pulling back.
Kung Wai Ting believes that unless the crisis escalates, oil prices are unlikely to surge
further and those holding related investments should consider taking profits. He added
that a sharp rise in oil prices would weigh on global equities, and with Trump preferring
negotiations to resolve disputes - and with just over two weeks until US Independence Day
- the White House will likely want to avoid negative news and may even seek to generate
positive headlines in the run-up to the holiday.

"US is unlikely to break free from reliance on Chinese pharmaceutical firms"

The pharmaceutical sector has been strong over the past month, with many pharmaceutical
stocks outperforming the broader market, though high prices have led to profit-taking -
even major shareholders have found it hard to resist cashing in. Following last week's
major shareholder sell-down at Everest Med (01952) and a placement by Junshi Bio (01877),
leading firm WuXi Bio (02269) this morning announced that its controlling shareholder had
sold shares at a 5% discount, raising HKD 2.2 billion, which dragged the sector lower.
Kung Wai Ting does not rule out the possibility of further fundraising activity in the
pharmaceutical sector. After Pfizer, one of the "big four" US pharma firms, made a major
investment and entered into a partnership with 3SBio (01530), market expectations for
Chinese pharmaceutical firms expanding overseas have grown, further boosting recent share
price performance and inevitably attracting shareholder profit-taking.
However, Kung Wai Ting remains positive on the pharmaceutical sector. He points out that
Chinese pharmaceutical firms, including CXOs, offer the lowest service fees globally,
making it difficult for the US to break free from reliance on Chinese firms as part of
their drug R&D process. This should continue to support the sector's performance. While he
acknowledges that fundraising activity may weigh on the sector in the short term, he
suggests that interested investors could consider accumulating pharmaceutical stocks or
related ETFs on any weakness ahead of the US Independence Day early next month. There are
hopes that by then, the US may announce more trade agreements with additional countries
and regions, supporting the sector's outlook.