[ET Net News Agency, 05 August 2025] With hopes rising for a Federal Reserve rate cut in
September, US equities rebounded sharply, and Hong Kong stocks continued their steady
climb for a second day. By midday, the HSI stood at 24,799, up 66 points or 0.3 per cent.
A black rainstorm warning was in effect in Hong Kong this morning, with main board
turnover reaching nearly HKD 112.4 billion, down 11.1 per cent compared with the same
period on the previous day. The Hang Seng China Enterprises Index was at 8,910, up 16
points or 0.2 per cent. The Hang Seng Tech Index was at 5,499, up 18 points or 0.3 per
cent.
It is worth noting that there was a net southbound outflow of more than HKD 18 billion
yesterday, the first significant outflow in several months, while today southbound funds
resumed buying with a net inflow of nearly HKD 6 billion.

"Wan Kong Shing: Hang Seng results spark concerns over Hong Kong's economy"

After falling below the 20-day moving average last Friday, the Hong Kong market found
support at lows yesterday and rebounded by over 200 points, though it still could not
recover the 20-day line. The HSI saw modest upward momentum again this morning, but met
resistance at the 20-day moving average and only managed a gain of less than 100 points by
midday. Wan Kong Shing, the Chief Investment Officer of iFAST Global Markets, told ET Net
News Agency that the 20-day moving average is indeed a notable resistance level at
present. After several weeks of gains, a one-week pullback is not much, and a correction
is inevitable after sustained rises.
Recently, the Hong Kong market has become more cautious. Wan noted that there are
several events this week, and the market is adopting a wait-and-see approach regarding
external factors such as the United States soon sending an envoy to Russia, as well as
tariff negotiations. In addition, the local earnings season is underway; for example, last
week Hang Seng (00011) reported interim results that fell well short of expectations,
further weighing on sentiment towards Hong Kong's economic outlook. He also pointed out
that despite the market rising yesterday, there was a net southbound outflow of over HKD
18 billion via Stock Connect. Similar situations occurred in May, and in each case the
market subsequently came under pressure, so he expects adjustment pressure to remain
elevated in the near term.
Looking at this week, Wan expects the HSI to find support around 24,000 to 24,500, close
to the 50-day moving average, but after this week the market is still unlikely to shake
off adjustment pressure, and a retreat to around 23,500 near the 100-day moving average
within the month would not be surprising.

"US may not allow Nvidia to export too much technology, Innoscience speculation is
excessive, so it is best to wait"

Recently, Innoscience (02577) announced a collaboration with Nvidia to jointly promote
800VDC power architecture for AI data centres. According to the announcement, this
architecture offers significant advantages over conventional 54V power supplies in terms
of system efficiency, heat loss, and reliability, and could support AI computing power
increases of 100 to 1,000 times. Following the news, Innoscience surged for two trading
days from last Friday, jumping 70 per cent in two days, before facing some selling
pressure this morning, with the share down more than 3 per cent by midday.
Wan analysed that the market is currently chasing Innoscience simply because of the
'Nvidia' name, but in his view this collaboration involves advanced chips, which ties into
China-US competition. The extent of Nvidia's cooperation with Innoscience remains to be
seen. He explained that the market expects Innoscience could obtain some advanced Nvidia
technology through this collaboration, but it is uncertain whether the US government will
allow Innoscience to access such advanced technology. While China and the US previously
reached a 'rare earths for chips' agreement, the US has not fully opened exports of all
high-end chips to China, currently only allowing H20 chips, showing that the US still has
reservations, while China also has its own concerns, having warned Nvidia about 'backdoor'
risks. All these issues restrict the scope of cooperation, so investors should be cautious
in following the speculation.
From a fundamental perspective, Wan noted that Innoscience is still not profitable and
cannot be valued based on current price, though last year's loss narrowed and revenue
increased by 40 per cent, which offers some support. On a price-to-sales basis, the
company is valued at around 29 times sales, so the current rally is driven by speculation.
Those with higher risk appetite could consider following the momentum at the previous high
of HKD 65, but should cut losses at HKD 63 in case of a pullback. More cautious investors
should wait for a retreat to around HKD 44 to 45 before considering entry, as current
levels are not attractive for chasing the rally.