[ET Net News Agency, 17 June 2025] Reports suggest Iran is seeking to ease tensions,
which could help cool the situation in the Middle East. The Bank of Japan, as expected,
kept interest rates unchanged but announced it will reduce its bond purchases by 200
billion yen per quarter starting from Apr next year. The market's attention has now
shifted back to the US Federal Reserve's policy meeting and the G7 summit. The HSI rose
initially before turning lower, closing at 24,028 at midday, down 32 points or 0.1%, with
main board turnover exceeding HKD 108.1 billion. The Hang Seng China Enterprises Index was
at 8,710, down 19 points or 0.2%. The Hang Seng Tech Index was at 5,296, down 3 points or
less than 0.1%.

"Cheung Chi Wai: HSI consolidating around the 24,000 level in the short term"

The HSI opened 46 points higher this morning, but then turned lower, hitting an intraday
low of 23,952. Cheung Chi Wai, a joint managing director at Prudential Brokerage Ltd, told
ET Net News Agency that Hong Kong stocks have seen rather volatile trading recently.
Taking into account the tensions between Iran and Israel, as well as market expectations
for major financial policies to be announced at the Shanghai Lujiazui Financial Forum, he
expects the HSI to consolidate around the 24,000 level in the short term.
Cheung also cautioned that if the financial policies announced at the Lujiazui Financial
Forum fall short of market expectations, or if subsequent economic data released by
Mainland China continues to disappoint, the HSI could retreat to its low from 2 Jun this
year, at 22,668.

"Chow Tai Fook issues convertible bonds to raise funds while conditions remain favourable"

Chow Tai Fook (01929) announced this morning (17 Jun) via a stock exchange filing that
it proposes to issue convertible bonds with a total principal amount of HKD 8.8 billion,
maturing in 2030 with a coupon rate of 0.375%. The company has entered into a subscription
agreement with the sole global coordinator, bookrunner, and lead manager.
Based on the initial conversion price of HKD 17.32 per share, full conversion would
result in the issuance of up to 508 million new shares, representing approximately 5.09%
of the current issued share capital and about 4.9% of the enlarged share capital. The
initial conversion price represents a 26.2% premium to Chow Tai Fook's previous closing
price of HKD 13.72. The share price dropped over 6% this morning, hitting an intraday low
of HKD 12.4.
Cheung Chi Wai believes that Chow Tai Fook's plan to issue convertible bonds is not
aimed at addressing New World (00017) debt issues, but rather to take advantage of
currently stable market conditions in Hong Kong to raise funds. He noted that the Hong
Kong stock market is currently experiencing a wave of fundraising, as many companies are
seeking to raise capital while market conditions remain favourable, especially given the
uncertainty surrounding the outlook for China-US trade relations. Many firms are tapping
the market at high valuations through rights issues or share placements to cash in.
Recent market news has shown several innovative pharmaceutical stocks cashing out at
high levels, including WuXi Bio (02269), where the major shareholder sold shares at a 5%
discount to raise HKD 2.2 billion; Junshi Bio (01877), which raised HKD 1 billion through
a share placement at an 11% discount; and Everest Med (01952), whose controlling
shareholder plans to sell over 7% of shares. However, Cheung expects that traditional
blue-chip stocks with strong fundamentals, such as HSBC (00005) and AIA (01299), are
unlikely to join this current wave of fundraising.
Cheung advises that if Chow Tai Fook's share price does not fall below HKD 9, existing
shareholders can continue to hold their positions. However, he does not see the current
level of HKD 12 as a buying opportunity, suggesting investors should wait for the share
price to drop to around HKD 11 before considering an entry.