[ET Net News Agency, 23 September 2025] US equities all closed at new record highs
overnight, though US-listed Chinese stocks fell nearly 1 per cent. The HSI opened 91
points lower and losses widened throughout the morning, falling by as much as 283 points
to reach 26,060. A-shares in both Mainland China markets dropped over 1 per cent at
midday, with the Shanghai Composite Index falling below 3,800. By the midday break, the
HSI stood at 26,090, down 254 points or 1 per cent, with main board turnover exceeding HKD
165.2 billion. The Hang Seng China Enterprises Index was at 9,261, down 109 points or 1.2
per cent. The Hang Seng Tech Index closed at 6,120, down 137 points or 2.2 per cent.

"Kung Wai Ting: Excessive pre-positioning in Hong Kong and US stocks triggers
profit-taking, watch for HSI to consolidate at the 20-day moving average before
rebounding"

Risk appetite for Hong Kong equities has weakened. Since the HSI touched 27,000 last
week, it has continued to retreat. After falling below the 10-day moving average
yesterday, selling pressure persisted, with the index dropping nearly 300 points this
morning to approach the 26,000 mark. Kung Wai Ting, the Chief Investment Officer of China
Asset Management (Hong Kong), told ET Net News Agency that global markets were highly
optimistic on the back of rate cut expectations, with both US and Hong Kong stocks
rallying ahead of the actual move. Now, there are reports that Mainland China may seek to
cool stablecoins and RWA tokenisation, further weakening market sentiment and intensifying
profit-taking in Hong Kong stocks. However, he believes that given the ongoing rate cut
expectations, the downside for Hong Kong stocks should be limited. The market still
expects the Federal Reserve to cut rates twice more this year, by a total of 0.5
percentage points. A persistently weak US dollar is also favourable for emerging markets.
Kung Wai Ting expects the HSI to first consolidate near its 20-day moving average in the
short term, before potentially rebounding.

"Crypto market sees sharp sell-off as leveraged positions are liquidated, cyclical
correction fears intensify"

The cryptocurrency market experienced sudden volatility yesterday, with Bitcoin plunging
over 3 per cent and Ethereum tumbling more than 8 per cent at one point. Reports indicate
that more than USD 1.5 billion in long positions were forcibly liquidated. Bitcoin is now
hovering around USD 112,000, while Ethereum is trading near USD 4,200. Kung Wai Ting
explained that the crypto sell-off was driven by multiple factors, with one major reason
being aggressive positioning ahead of rate cuts. As mentioned, investors had already
pre-positioned not only in equities but also in crypto, particularly through leveraged
products. Once the rate cut was confirmed and the US quadruple witching event had passed,
the market seized the opportunity to unwind leverage, triggering a sharp correction.
Another factor is the cyclical nature of the crypto market. Kung Wai Ting noted that
historically, Bitcoin tends to peak one year after a halving, followed by a sharp decline
the next year. For example, after the 2016 halving, Bitcoin peaked in 2017 and dropped
sharply in 2018; a similar pattern occurred from 2020 to 2022. The latest halving was in
2024, and as Bitcoin has again hit new highs, there are concerns that a similar sharp drop
could occur next year. This has prompted some investors to start taking profits ahead of
the fourth quarter of 2025.

"US Bitcoin strategic reserve hopes could drive rebound in the fourth quarter"

Nevertheless, Kung Wai Ting believes Bitcoin still has potential to rebound in the
fourth quarter of this year. The US Congress is currently discussing the "Bitcoin Act",
which proposes purchasing one million Bitcoins over five years as part of the US national
strategic reserve. Kung Wai Ting expects market speculation around the bill's passage to
fuel a rebound in Bitcoin prices in the fourth quarter, and the bill could be approved
within the year. Traditionally, the fourth quarter is also a seasonally strong period for
Bitcoin. He sees support for Bitcoin at the August low of around USD 107,000, while
Ethereum has already fallen below its August low of USD 4,200. Kung Wai Ting suggests
investors consider accumulating Bitcoin first when bottom-fishing in cryptocurrencies,
then look to Ethereum with a smaller allocation, with a suggested weighting of 70 per cent
Bitcoin to 30 per cent Ethereum.