[ET Net News Agency, 29 July 2025] With the market awaiting the outcome of China-US
trade talks and the Federal Reserve's rate decision, alongside a surprise Black Rainstorm
Warning hitting Hong Kong, trading in Hong Kong stocks remained robust, with half-day
turnover reaching HKD 142.4 billion. However, tech stocks were weak, and despite a sharp
rally in biotech shares, the market's pullback trend persisted. The Hang Seng Index closed
the morning session at 25,319, down 242 points or 0.9 percent. The Hang Seng China
Enterprises Index was at 9,068, down 108 points or 1.2 percent. The Hang Seng Tech Index
closed at 5,564, down 99 points or 1.8 percent.

"Yuen Che Hay: Unlikely to see heavy sell-off in Hong Kong stocks"

With the US Federal Reserve set to begin its policy meeting, Hong Kong stocks remained
in wait-and-see mode, continuing the previous day's pullback and falling more than 300
points at one stage during the morning. Yuen Che Hay, the Co-Director of Investment
Strategy of Quam Asset Securities, told ET Net News Agency that he remains confident in
the market. He believes that a 300-400 point correction at this stage is a healthy
adjustment and is not concerned about a significant drop. At present, the 10-day moving
average (around 25,144) or the 25,000 mark is seen as the near-term pivot for the HSI.
Even though the market is pulling back, capital rotation remains active: funds returned to
previously sold-off pharmaceutical and new consumer stocks today, showing that liquidity
is still circulating among different sectors. With such active flows, he does not believe
Hong Kong stocks are at risk of a major sell-off.
However, Yuen notes that the market does require a catalyst. Whether the HSI can break
above 26,000 will depend on the results of the China-US talks, as well as positive
earnings from major tech stocks to attract capital back and lift share prices. Looking at
the recent sector rotation rally, he suggests investors should remain patient and take a
wait-and-see approach during pullbacks in their holdings, such as pharma and new consumer
stock, which could rebound after a healthy correction. There is no need to worry
excessively about short-term adjustments.

"WuXi AppTec: Surging US clients allays sanctions concerns"

WuXi AppTec (02359) kicked off earnings season, posting interim net profit up 95.5
percent to RMB 8.287 billion, with adjusted net profit up 44.4 percent to RMB 6.315
billion. Revenue rose by about 20 percent year-on-year to RMB 20.8 billion, and for the
first time since its H-share listing, the company declared an interim dividend of RMB 0.35
per share. WuXi AppTec shares soared over 10 percent at midday, hitting HKD 112, a
three-year high.
Yuen Che Hay noted that the profit surge was already expected by the market, and the
upgraded full-year revenue guidance was not a huge surprise. What really caught the
market's attention was the over 38 percent growth in revenue from US clients in the first
half, driving today's share price rally. Riding the recent trend of Chinese pharma firms
securing exclusive overseas licensing deals, WuXi AppTec's rebound in US client revenue
suggests that, despite ongoing China-US tensions, US companies remain willing to do
business with Chinese pharma firms. This has eased concerns over China-US pharma trade and
suggests such worries can be put to rest for now.

"US pharma firms unlikely to ditch Chinese suppliers, sector expected to outperform for
prolonged period"

Yuen also observed that, even though US tariffs on pharmaceuticals remain unresolved,
pharma companies have already resumed business with Chinese firms. This indicates that
most do not believe President Trump will impose high tariffs on medicine, unless China-US
pharma trade is directly banned, companies would rather continue working with Chinese
firms, even in a high-tariff environment. The industry supply chain is already
established, and rebuilding it elsewhere would be costly; thus, high tariffs alone are
unlikely to disrupt these partnerships.
Given this, Yuen remains bullish on the outlook for pharmaceutical stocks, recommending
investors hold a certain weighting in the sector. For those unfamiliar with individual
names, holding a pharma ETF still provides exposure to many key industry themes. He
expects the sector to continue outperforming the market for some time.