[ET Net News Agency, 05 November 2025] Goldman Sachs and Morgan Stanley, among other
major Wall Street banks, have warned that US equities may face a correction. This, coupled
with concerns over a potential bursting of the artificial intelligence (AI) investment
bubble, led to a decline in US stocks, with risk-off sentiment spilling over into
Asia-Pacific markets. Japanese equities fell by more than 2 percent, while Korean stocks
even triggered a circuit breaker. In Hong Kong, the HSI opened 250 points lower due to
weakness in tech stocks, but market sentiment improved as the session progressed, with the
HSI narrowing its midday loss to 73 points or 0.3 percent, closing at 25,878. Main board
turnover exceeded HKD 13.82 billion. The Hang Seng China Enterprises Index stood at 9,144,
down 28 points or 0.3 percent. The Hang Seng Tech Index was at 5,771, down 46 points or
0.8 percent.

"Nip Chun Pong: Not worried about a Hong Kong AI bubble"

Goldman Sachs and Morgan Stanley have cautioned that US equities could see a correction.
Overnight, US tech stocks broadly declined, and hedge fund manager Michael Burry shorted
data analytics firm Palantir and Nvidia, heightening market fears of an AI investment
bubble. The VIX Index, commonly called the "fear gauge", soared by as much as 20 percent.
Japanese and Korean stocks tumbled this morning, with the HSI falling by more than 400
points at one stage. Nip Chun Pong, the Chief Strategist at Blackwell Global Securities,
told ET Net News Agency that since US AI stocks are highly valued, it is understandable
that investors are taking profits, and thus a price correction at high levels is not
surprising. However, AI-related stocks in Hong Kong are not highly valued. Leading AI
stock Alibaba (09988) is trading at around 20 times earnings, while Baidu (09888) is at a
low double-digit multiple. He therefore does not worry about an AI bubble in Hong Kong
stocks.
Additionally, while US equities finished higher in October, Hong Kong stocks ended the
month lower, suggesting limited further downside. However, given the HSI's multi-month
rally from the April China-US tariff war low at 19,260 to the early October peak at
27,831, a gain of over 8,000 points, recent market sentiment has weakened. Average daily
turnover has declined from its peak, so it is possible that some investors are more
inclined to take profits, posing further downside risk for the HSI. Still, the HSI
rebounded from a low of 25,496 today, indicating support at that level. Even if the HSI
falls further, it is expected to stabilise around 25,300. This level represents a
2,000-point correction from the October high, about a quarter of the rise from the April
low to the October peak. As long as 25,300 holds, the outlook should not be too poor.

"Funds chasing news, investors focus on Baidu's future smart driving and ERNIE Bot
strategy"

Baidu recently announced that, as of 31 Oct, its Apollo Go service recorded more than
250,000 weekly orders, all of which were fully driverless. Globally, cumulative orders
have exceeded 17 million, surpassing Alphabet's Waymo, which has over 10 million orders.
With Apollo Go now deployed in 22 cities worldwide, including Beijing, Shanghai, Wuhan,
Shenzhen, Hong Kong, Dubai, and Abu Dhabi, its global footprint continues to grow.
The company also recently showcased this year's leading inventions across a range of AI
breakthroughs, including foundation models, deep learning frameworks, AI computing power,
intelligent agents, AI search, digital humans, and autonomous driving, highlighting the
accelerating impact of Baidu's AI applications. Baidu has ranked first in Mainland China
for total AI-related patents for seven consecutive years, while it leads China in
generative AI and foundation model patent applications and is a global leader in deep
learning and high-level autonomous driving patent families.
Nip Chun Pong observed that funds have recently been chasing companies on news flows,
and Baidu has seen a series of positive developments, attracting capital inflows. Although
Baidu is set to announce its third quarter results mid-month, the market is expected to
pay more attention to management's outlook and plans for the group's future, particularly
in smart driving and the ERNIE Bot ecosystem. Nip notes that Baidu's share price has
strong support near HKD 118; provided the broader market steadies, the stock could test
HKD 128 to 130. Even if the HSI falls to 25,300, Baidu is expected to find support around
HKD 110.
As for leading AI stock Alibaba, its share price has more than doubled from its
year-to-date low. Nip notes that while Alibaba has risen substantially, some profit-taking
could prompt a modest pullback, but a bubble is unlikely. Since August, Alibaba has gained
about 30 percent from around HKD 115, which is not excessive. There is support near HKD
154, and even if the HSI falls to 25,300, Alibaba should find support in the HKD 145 to
150 range.