[ET Net News Agency, 08 April 2025] The Hang Seng Index plummeted by over 3,000 points yesterday, setting a historical record in terms of points. Despite US President Trump insisting on maintaining the equivalent tariff policy and threatening an additional 50% tariff on China, the Hang Seng Index rebounded this morning due to positive factors such as central bank assurances to stabilise the market, state-owned enterprises collectively supporting stock prices, and increased expectations of interest rate cuts by the Federal Reserve. The index opened above the 20,000 mark and maintained this level until the half-day close, currently up by 312 points or 1.6%, with main board turnover nearing HKD 226.6 billion. Southbound capital continued to buy, with a net inflow of HKD 8.36 billion through the Stock Connect.
The Hang Seng China Enterprises Index is reported at 7,387, up 124 points or 1.7%. The Hang Seng Tech Index stands at 4,547, up 145 points or 3.3%.
"Jaseper Tsang: If a 50% tariff is implemented, the Hang Seng Index may test 19,000"
As the trade war escalates, following China's announcement of a 34% retaliatory tariff on the US, President Trump warned that if China does not withdraw its counter-tariffs, an additional 50% tariff will be imposed. After the 3,000-point drop in the Hong Kong market yesterday, a technical rebound occurred, with the index rising nearly 600 points at one point, and technology stocks generally recovering. Jaseper Tsang, the investment director of Rafter Capital, told ET Net News Agency that the future direction of the market will depend on tariff developments; if a 50% tariff is realised, it could lead to a deeper decline in the Hang Seng Index, potentially falling below the 250-day moving average and testing the 19,000 level.
He added that there are currently many hopes in the market, including whether the central government will introduce new bold policies, particularly cash incentives similar to earlier measures to boost birth rates, which would benefit the market. Furthermore, rumours of an emergency closed-door meeting by the Federal Reserve have sparked market optimism; in the past, during the Greenspan era, the Fed had previously intervened to stabilise the market, and if such news materialises, it could support the market.
"Trump aims to cause global asset volatility with tariffs, forcing capital inflows and strengthening US bonds"
Regarding tariff policies, Jaseper Tsang believes that despite facing significant pressure, Trump will not back down. He argues that the primary reason behind Trump's initiation of the trade war is not solely about taxation. He explains that the countries subjected to the highest tariffs do not necessarily have significant import volumes, yet the announcement of substantial tariffs has triggered global market turmoil, causing significant fluctuations in all asset markets, including oil and gold, with only the US bond market remaining stable during this period. He hypothesizes that Trump is using tariffs as a weapon, but his real aim is to draw capital into the US bond market to strengthen the bond system.
Jaseper Tsang explains that since taking office, Trump has consistently sought to address the US fiscal deficit, including initiatives like DOGE. The increase in tariffs will provide immediate revenue for the US, but the Trump administration likely hopes to use high tariffs to pressure other countries into negotiations, subsequently encouraging them to use reserves to purchase US long-term bonds, thereby reducing the risk of a US economic recession. Although China has retaliated with counter-tariffs, Jaseper Tsang believes that political factors will prevent the Chinese government from conceding in negotiations as the US desires, resulting in heightened tariff tensions and market volatility.
"Foreign capital has been forced to exit; in a volatile market, choose stocks with on foreign trade"
Jaseper Tsang expects that due to the ongoing tariff struggle between the US and China, the market will remain volatile in the short term. He notes that many foreign investors who had previously anticipated benefits from DeepSeek have already exited the market following yesterday's drop, fully retracing the gains made in the first quarter. He believes this means the Hang Seng Index is reverting to around the 19,000 level, with no current factors suggesting a further drop. Under the current circumstances, stock selection should revert to fundamentals, focusing on companies that rely solely on domestic demand and are not indirectly affected by foreign trade. He adds that many factories are currently suspending operations to observe developments and avoid accumulating inventory.
He anticipates that the impact of tariffs will become evident at least within this quarter, with global trade contraction likely reflected in upcoming economic data. Thus, stock selection should adhere to these principles, with his top pick being China Mobile (00941), which focuses on pure domestic demand and is unaffected by foreign trade. He suggests that if the stock price falls to around HKD 78.35 to 78.80, it would be a good opportunity for medium to long-term investment. Additionally, he recommends the food stock Tingyi (00322), noting that not only does it offer a good dividend yield, but its main business in instant noodles aligns with China's consumption trends, making it worthwhile to buy if it drops below HKD 12.
The Hang Seng China Enterprises Index is reported at 7,387, up 124 points or 1.7%. The Hang Seng Tech Index stands at 4,547, up 145 points or 3.3%.
"Jaseper Tsang: If a 50% tariff is implemented, the Hang Seng Index may test 19,000"
As the trade war escalates, following China's announcement of a 34% retaliatory tariff on the US, President Trump warned that if China does not withdraw its counter-tariffs, an additional 50% tariff will be imposed. After the 3,000-point drop in the Hong Kong market yesterday, a technical rebound occurred, with the index rising nearly 600 points at one point, and technology stocks generally recovering. Jaseper Tsang, the investment director of Rafter Capital, told ET Net News Agency that the future direction of the market will depend on tariff developments; if a 50% tariff is realised, it could lead to a deeper decline in the Hang Seng Index, potentially falling below the 250-day moving average and testing the 19,000 level.
He added that there are currently many hopes in the market, including whether the central government will introduce new bold policies, particularly cash incentives similar to earlier measures to boost birth rates, which would benefit the market. Furthermore, rumours of an emergency closed-door meeting by the Federal Reserve have sparked market optimism; in the past, during the Greenspan era, the Fed had previously intervened to stabilise the market, and if such news materialises, it could support the market.
"Trump aims to cause global asset volatility with tariffs, forcing capital inflows and strengthening US bonds"
Regarding tariff policies, Jaseper Tsang believes that despite facing significant pressure, Trump will not back down. He argues that the primary reason behind Trump's initiation of the trade war is not solely about taxation. He explains that the countries subjected to the highest tariffs do not necessarily have significant import volumes, yet the announcement of substantial tariffs has triggered global market turmoil, causing significant fluctuations in all asset markets, including oil and gold, with only the US bond market remaining stable during this period. He hypothesizes that Trump is using tariffs as a weapon, but his real aim is to draw capital into the US bond market to strengthen the bond system.
Jaseper Tsang explains that since taking office, Trump has consistently sought to address the US fiscal deficit, including initiatives like DOGE. The increase in tariffs will provide immediate revenue for the US, but the Trump administration likely hopes to use high tariffs to pressure other countries into negotiations, subsequently encouraging them to use reserves to purchase US long-term bonds, thereby reducing the risk of a US economic recession. Although China has retaliated with counter-tariffs, Jaseper Tsang believes that political factors will prevent the Chinese government from conceding in negotiations as the US desires, resulting in heightened tariff tensions and market volatility.
"Foreign capital has been forced to exit; in a volatile market, choose stocks with on foreign trade"
Jaseper Tsang expects that due to the ongoing tariff struggle between the US and China, the market will remain volatile in the short term. He notes that many foreign investors who had previously anticipated benefits from DeepSeek have already exited the market following yesterday's drop, fully retracing the gains made in the first quarter. He believes this means the Hang Seng Index is reverting to around the 19,000 level, with no current factors suggesting a further drop. Under the current circumstances, stock selection should revert to fundamentals, focusing on companies that rely solely on domestic demand and are not indirectly affected by foreign trade. He adds that many factories are currently suspending operations to observe developments and avoid accumulating inventory.
He anticipates that the impact of tariffs will become evident at least within this quarter, with global trade contraction likely reflected in upcoming economic data. Thus, stock selection should adhere to these principles, with his top pick being China Mobile (00941), which focuses on pure domestic demand and is unaffected by foreign trade. He suggests that if the stock price falls to around HKD 78.35 to 78.80, it would be a good opportunity for medium to long-term investment. Additionally, he recommends the food stock Tingyi (00322), noting that not only does it offer a good dividend yield, but its main business in instant noodles aligns with China's consumption trends, making it worthwhile to buy if it drops below HKD 12.