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22/05/2023 12:21

{Market Preview}Semiconductor stocks investors should wait

[ET Net News Agency, 22 May 2023] The Hang Seng Index closed at 19,702 points in the
morning session, up 252 points or 1.3%, with a turnover of HKD 53.741 billion on the main
board. The Hang Seng China Enterprises Index rose 104 points or 1.58% to 6,697 points,
while the Hang Seng Tech Index gained 91 points or 2.4% to 3,913 points.
The top three stocks by turnover on the Hang Seng Index were Tencent Holdings (00700),
Alibaba-SW (09988), and BYD Company (01211). Tencent Holdings closed at HKD 338.6, up HKD
5.4 or 1.62%, with a turnover of HKD 32.7 billion. Alibaba-SW closed at HKD 84, up HKD
1.55 or 1.88%, with a turnover of HKD 23.8 billion. BYD Company closed at HKD 251.4, up
HKD 7.4 or 3.03%, with a turnover of HKD 16.72 billion. The top three stocks by turnover
on the Hang Seng China Enterprises Index were Tencent Holdings, Alibaba-SW, and BYD
Company. The top three stocks by turnover on the Hang Seng Tech Index were Tencent
Holdings, Alibaba-SW, and Meituan (03690), with Meituan closing at HKD 131.3, up HKD 2.7
or 2.1%, with a turnover of HKD 14.49 billion

"Cheung Chi Wai: Hang Seng Index has support at 19,400 in the short term"

The Hong Kong stock market was lack of direction and Hang Seng Index fell below the
support level of 19,500 points the previous day. Today, some capital flowed back into the
market. Several blue-chip stocks performed well, but defensive stocks like public
utilities suffered some selling pressure. Cheung Chi Wai, a joint managing director at
Prudential Brokerage Ltd, told ET Net News Agency that since the Hang Seng Index fell
below the middle axis of the Bollinger Band on 21 April, it has been fluctuating between
the lower band and the middle axis. Therefore, after falling below the lower band the
previous day, it rebounded today, and it is expected to trade within a narrow range of
19,400 to 19,800 points in the short term.

"Hua Hong can be considered when it falls below HKD 25"

Recently, semiconductor stocks have experienced a significant decline, with Hua Hong
(01347) dropping by as much as 35% from its high of HKD 38.8 last month. There are signs
of stabilization near the 250-day moving average. Cheung Chi Wai pointed out that the
competitiveness of domestic chips is lagging behind foreign chips due to technological
gaps, making it difficult to produce high-quality chips. Therefore, after the effects of
favourable policies are digested, there may be an adjustment period. He suggested that if
someone wants to buy the stock, they should wait for it to drop below HKD 25 as Hua Hong
found support and bounced back from a low of HKD 24.6 in December last year.
The G7 summit is ongoing. Cheung Chi Wai expressed concerns that after the summit,
countries may collaborate to further suppress China's semiconductor industry or increase
restrictions on imports, exports, and personnel exchanges. Therefore, investors who are
interested in semiconductor stocks should be aware of the related risks and wait for any
further negative news after the summit before making any investment decisions. It is not
advisable to buy semiconductor stocks too early.

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