[ET Net News Agency, 31 July 2025] The Federal Reserve kept interest rates unchanged,
but internal disagreements among voting members have become increasingly intense, making
the direction of the September FOMC meeting difficult to predict. Meanwhile, Hong Kong
stocks are hovering at elevated levels as a wave of profit-taking continues. The Hang Seng
Index opened below 25,000 and losses quickly deepened, falling nearly 400 points at one
stage to 24,778, before finding support near the 20-day moving average (around 24,726). By
midday, the drop narrowed to 270 points or 1.1%, closing at 24,906, with main board
turnover nearing HKD 167.2 billion. The Hang Seng China Enterprises Index closed at 8,944,
down 93 points or 1%. The Hang Seng Tech Index rose 18 points, or 0.3%, to 5,509.

"HSI remains in correction phase; short-term upward momentum for property prices remains
weak"

With rate cut expectations dashed, the September FOMC meeting has become the new focus
for the market. Mak Ka Ka, Head of Financial Products Trading and Research Department of
SinoPac Securities (Asia), told ET Net News Agency that the Fed's rate cut decision will
depend on economic indicators such as unemployment and inflation. Interest rate futures
currently show a 43% chance of a rate cut in September. Mak expects 1-2 rate cuts within
this year, with the peak of the easing cycle likely to extend into 2026.
Although the HSI fell today on the back of diminished rate cut expectations and negative
stock-specific news, Mak believes the index is still undergoing a consolidation at high
levels. She notes that the HSI's price-to-earnings ratio is now near its five-year
average. From a technical perspective, attention should be paid to whether the HSI can
hold the bottom of its upward channel since April at 24,200. Regarding property, Hong
Kong's interest rates remain lower than those in the US, which is supportive for the local
market. However, new housing supply continues to absorb some of the market's buying power,
meaning short-term upward momentum for property prices remains weak.

"HSBC worth accumulating on dips, second-half earnings expected to recover"

HSBC Holdings (00005) announced its results yesterday afternoon, with some operational
metrics disappointing investors. For example, its cost-to-income ratio rose to 49.9%,
indicating higher costs and dragging the share price below the HKD 100 mark. However, Mak
points out that the bank's medium-term dividend policy remains unchanged, with an expected
yield of 5.3%, well above the HSI's yield of 3%. The recent pullback is likely to attract
funds and long-term investors. She also notes that HSBC's mortgage book is more robust
than Hang Seng Bank's, making its stock performance less sensitive to property market
swings. Overall, Mak suggests a strategy of gradually accumulating HSBC shares in tranches
when prices fall below HKD 92.
As for HSBC's outlook in the second half, Mak is confident the bank's performance will
return to normal. Despite a weak interbank rate environment, HSBC's net interest income
has proved more resilient than expected. The bank also made higher impairment provisions
in the second quarter to cover tariff-related and commercial property risks, so overall
results for the second half are expected to be solid.

"WuXi AppTec still has mid-to-long-term potential"

WuXi AppTec (02359) raised HKD 7.7 billion through a discounted share placement, sending
its share price down roughly 3.8% at midday. Mak notes that the company's
medium-to-long-term fundamentals remain strong. As an integrated platform for small
molecules and cell and gene therapy, WuXi AppTec benefits from business synergies within
the WuXi group, supporting ongoing business stability. The funds raised will support
overseas expansion, providing additional growth impetus. Mak suggests taking advantage of
the correction to accumulate shares in stages.