[ET Net News Agency, 31 March 2026] Expectations for US-Iran negotiations have
deteriorated. US President Donald Trump warned that if a deal is not reached or if
shipping in the Strait of Hormuz is not restored, he would destroy all of Iran's power
plants and oil facilities. Market volatility persists, and with the sell-off in memory
chip stocks yet to conclude, Asia-Pacific equity markets faced selling pressure this
morning, with Japanese and Korean stocks under pressure in early trade. The HSI closed the
midday session at 24624, down 126 points or 0.5%, on main board turnover of nearly HKD
132.9 billion. The HSCEI stood at 8328, down 70 points or 0.8%, while the HSTECH fell 44
points or 0.9% to 4646.

"Jaseper Tsang: Hong Kong stocks unlikely to rally amid Middle East uncertainty; HSI may
test 24000 if situation worsens"

The situation in the Middle East remains unclear, driving oil prices higher and causing
overnight US stocks to trade precariously. The HSI opened up by several dozen points this
morning, once approaching the 25,000 mark, but gains were not sustained as the index
reversed downwards. Jaseper Tsang, Vice-Chairman of the Hong Kong Institute of Financial
Analysts and Professional Commentators Limited, told ET Net News Agency that until a major
breakthrough occurs in the Middle East, investors will maintain a wait and see attitude,
making a significant short term rally unlikely. Beyond the conflict, recent lacklustre
earnings from heavyweight tech stocks failed to drive the market higher. Heavyweight
financial stocks like HSBC (00005) have also softened due to the Middle East conflict,
failing to attract large scale capital. Resistance is expected to be heavy around the
250-day moving average (approximately 25100).
However, Tsang noted that Hong Kong stocks have recently outperformed other Asia-Pacific
markets like Japan and South Korea, as energy supply issues have a greater impact on those
two nations. Furthermore, Mainland China produces a certain amount of its own oil and gas
and sources supplies from Russia and other non-Middle Eastern markets, making the impact
relatively smaller. Nevertheless, as the Middle East situation weighs on the market,
retail investors remain bearish, with bear contract holdings appearing higher than bull
contracts. Tsang expects the HSI to fluctuate between 24300 and 25100. If the Middle East
situation worsens, the HSI could potentially test the 24000 level. Market sentiment also
continues to hinge on China-US relations and southbound capital flows.

"Shenhua results miss expectations; share price had doubled over the past year"

China Shenhua (01088) recorded a profit of approximately RMB 54.22 billion last year, a
decrease of 8.9%, with earnings per share at RMB 2.729. A final dividend of RMB 1.03 per
share was declared. During the period, revenue was approximately RMB 294.9 billion, down
13.2%, while EBITDA fell 5.5% to approximately RMB 102.17 billion.
The group stated that regarding its operating targets for this year, revenue is set at
RMB 280 billion, a decrease of 5.1%; commercial coal production is targeted at 330 million
tonnes, a year on year decline of 0.6%; commercial coal sales are projected at 434.9
million tonnes, a year on year increase of 0.9%; and power generation is expected to rise
by 1.6% year on year.
Jaseper Tsang stated that several of Shenhua's indicators, including coal sales, selling
prices, and power generation, were worse than market expectations and the group's own
targets. Additionally, Shenhua's share price had accumulated significant gains recently
and is now retracing following the results. The stock has risen steadily from last year's
low of approximately HKD 24.8. Specifically, since the US and Israel began strikes against
Iran late last month, the share price surge became more pronounced, hitting a post-listing
high of HKD 49.62 earlier this month, effectively doubling in just over a year.
Tsang believes that if international oil and gas supplies remain affected by the Middle
East conflict, coal prices will likely benefit. This also depends on Mainland China's
strategy; if it cannot fill the oil and gas gap from other markets, it will be more
beneficial for coal prices and Shenhua. Furthermore, the rapid development of AI in
Mainland China is increasing demand for electricity, benefiting Shenhua's coal-to-power
business, though this remains subject to domestic power price controls.
Tsang noted that due to the prior share price rally, Shenhua's forecast dividend yield
has dropped to around 5%, which is not particularly attractive for this stock. He expects
the share price to remain weak in the short term, suggesting the correction is not over
and could reach the 100-day moving average (around HKD 42). He advises against buying for
now, though the stock may become attractive once it reaches the HKD 40 level.