[ET Net News Agency, 01 August 2025] US core Personal Consumption Expenditures (PCE)
index for June rose 2.8% year-on-year, slightly above expectations of 2.7%, maintaining a
strong pace of growth. On the last trading day of July, US equities opened higher but
closed lower: the Dow extended its decline, while the S&P 500 and Nasdaq both hit record
highs before reversing to close down. On the first trading day of August, Hong Kong stocks
were volatile; the Hang Seng Index closed the morning session at 24,727, down 45 points or
0.2%, with main board turnover close to HKD 119.8 billion. The Hang Seng China Enterprises
Index was little changed at 8,882, down less than a point. The Hang Seng Tech Index
finished at 5,446, down 6 points or 0.1%.

"Southbound inflows stimulate market, September rate-cut expectations cool"

Kwok Ka Yiu, the Director of Business Development at Harbour Family Office, told ET Net
News Agency that the HSI is still consolidating gains from earlier days, with some
investors taking profits. He noted that market optimism towards Mainland China policy has
faded somewhat, fiscal and monetary policies from the central government are major drivers
of heavy trading, and a lack of policy surprises could trigger selling pressure. On the
other hand, southbound inflows remain strong, with turnover exceeding HKD 10 billion,
reflecting Mainland China investors' confidence in Hong Kong equities. He expects they
will continue to focus on the earnings power of Chinese companies. Kwok pointed out that
while there is unlikely to be a major breakout for the HSI in the near term, investors
should closely monitor support at 24,200, near the 50-day moving average.
According to the Fed's inflation measure, the US June PCE price index rose 2.6%
year-on-year, higher than May's 2.4% and above the expected 2.5%. Kwok noted that Powell's
rate-cut decisions are always guided by inflation indicators. Compared to earlier strong
market confidence for a September rate cut, expectations have now cooled significantly,
and given market pressure, the prospect of two cuts within a year may not materialise.

"Apple's earnings beat driven by subsidy policies, outlook for China sales cautious"

Apple reported results yesterday, with third fiscal quarter net profit up 9%
year-on-year and earnings per share of USD 1.57, ahead of the market's USD 1.43 forecast.
Overall quarterly revenue rose almost 10% year-on-year, the largest increase since 2022,
including a 13% jump in iPhone sales to USD 44.58 billion, far exceeding expectations of
USD 40.2 billion. However, related Apple suppliers, such as BYD Electronic (00285), Sunny
Optical (02382), and FIH (02038), were little moved by this positive news. Kwok commented
that Apple's impressive results were largely due to government subsidy policies, with
growth momentum likely to fade and some demand having been brought forward. As such, the
underlying growth is less robust than it appears, leading investors to be more cautious.
Apple's Greater China sales fell 11% and 2% in the first and second fiscal quarters,
respectively, but improved this quarter, rising 4.4% to USD 15.4 billion. Nonetheless,
Kwok noted that domestic Chinese smartphone brands have successfully attracted consumers,
intensifying competition for Apple and limiting its ability to expand market share.
Combined with Apple's relatively high pricing in China and less attractive value
proposition, he is not optimistic about Apple's future sales prospects in the Chinese
market.