[ET Net News Agency, 30 July 2025] China and the United States held a third round of
talks in Sweden but failed to reach a final consensus. Following the meeting, the Chinese
side announced both parties would extend the tariff grace period by 90 days, though no
concrete details were provided. In the Hong Kong stock market, Li Auto (02015) dragged
down the entire auto sector, weighing on the Hang Seng Index, which closed the morning
session at 25,415, down 108 points or 0.4%, with main board turnover exceeding HKD 148.2
billion. The Hang Seng China Enterprises Index closed at 9,106, down 39 points or 0.4%.
The Hang Seng Tech Index finished at 5,555, down 88 points or 1.6%.

"HSI consolidates in the short term; 25,200 seen as key support"

Nip Chun Pong, the Chief Strategist at Blackwell Global Securities, told ET Net News
Agency that the HSI had previously risen for five consecutive days, from the 18th to the
24th, and although a pullback has since occurred, the correction has been modest so far.
He considers the recent declines to be a healthy adjustment, and believes the China-US
talks have had only a limited impact on the market. He pointed out that even when the HSI
pulls back, the extent of the correction remains limited. Recently, the index has
repeatedly rebounded near the 25,200 level, suggesting strong support at this point.
However, with the HSI now at a three-and-a-half-year high, further near-term upside may be
capped, with resistance around 25,800. Nip Chun Pong believes that as long as the index
holds above 25,200 this week, the market is likely to turn more positive in August. He
further explained that August is the interim results season for major companies, and with
Mainland China's H1 GDP growth having been solid, most companies' half-year results are
likely to beat expectations, potentially driving the market higher.

"Li Auto shares correct sharply from highs, likely to trade sideways in the short term"

Yesterday (29th), Li Auto (02015) officially launched its second pure electric model,
the i8, priced at RMB 321,800, significantly below the earlier pre-sale range of RMB
350,000 to 400,000. The i8 is positioned in the mid-to-large luxury family segment and
faces direct competition from Xiaomi's (01810) hot-selling YU7, which starts at RMB
253,500, with the Max version priced at RMB 329,900. Li Auto appears to have cut prices to
respond to the competitive pricing pressure from Xiaomi's YU7, raising market concerns
that profit margins may be squeezed.
Nip Chun Pong noted that, given the strong sales of the rival Xiaomi YU7, even after the
price cut, the i8 remains over 20% more expensive than the YU7. Even compared to the Max
version, the i8 does not appear competitive on price, casting doubt over its sales
prospects. He also pointed out that Mainland China carmakers are now facing overcapacity
issues, leading many to slash prices in order to sell stock. Previously, manufacturers had
ambitious plans to target overseas markets as well as the domestic one, but recent tariff
barriers imposed by the US and EU have cast a shadow over exports. As a result, some of
the originally planned export capacity is being redirected to the domestic market,
intensifying local competition, a trend Nip Chun Pong expects to continue. To address
this, regulators may step in to urge automakers to cut production, aiming to ease the
current price war.
Li Auto's share price tumbled by over 11% this morning, with other new energy vehicle
stocks also falling sharply, BYD (01211) and other EV upstarts dropped between 3% and 4%.
Nip Chun Pong commented that auto stocks had been strong in mid-July, and today's moves
are mainly a technical correction. For example, Li Auto surged 26% from a low of HKD 101.4
at the start of the month to a high of HKD 128.1 on the 21st. However, he is not overly
pessimistic on Li Auto's share price, as the recent correction has already been
substantial. Nip Chun Pong expects the stock to trade in a range between HKD 104 and HKD
112 in the short term, and sees little chance of breaching the 23 June low of HKD 100.9.