[ET Net News Agency, 06 May 2025] The ongoing uncertainty surrounding the U.S.-China tariff war has led to narrow fluctuations in Hong Kong stocks during the early session. The Caixin China Services PMI for April fell short of expectations, yet the renminbi strengthened. Following the conclusion of the five-day Labour Day holiday in Mainland China, A-shares showed positive momentum, boosting the Hang Seng Index. By midday, the Hang Seng Index reported at 22,658, up 154 points or 0.7%, with a main board turnover of nearly HKD 124.5 billion. The Hang Seng China Enterprises Index stood at 8,250, rising by 19 points or 0.2%. Meanwhile, the Hang Seng Tech Index dropped to 5,238, down 5 points or less than 0.1%.
"Nip Chun Pong: HSI faces resistance near 50-day moving average because of tariffs"
The Hang Seng Index exhibited a fluctuating upward trend, briefly surpassing the gap peak from 7 April (approximately 22,638 points) and reaching a high of 22,656 points. Nip Chun Pong, the Chief Strategist at Blackwell Global Securities, told ET Net News Agency that the index is likely to fill this gap this week. However, he cautioned that uncertainties in the news environment may pose challenges, particularly as the gap peak is close to the 50-day moving average (around 22,800 points). Even if the index fills the gap, it may encounter resistance at this moving average.
Nip Chun Pong indicated that, without an agreement on U.S.-China tariffs, the Hang Seng Index could still rise to the 50-day moving average, but this reference point is not particularly strong. He pointed out that the movement from around 22,600 points to 22,800 points is only about 200 points, and even a rise to 23,000 points represents an increase of just about 400 points. He suggested that if the index pulls back, it could find support between 21,800 and 22,000 points, referencing the low from 30 April.
"U.S. pharmaceutical tariffs to be announced within two weeks, watch for WuXi series and Pharmaron"
U.S. President Trump recently signed an executive order encouraging domestic pharmaceutical companies to increase the manufacturing of prescription medications. He also indicated that tariffs on imported drugs will be announced within the next two weeks.
The executive order mandates the U.S. Food and Drug Administration to increase inspection fees for foreign drug manufacturers, strengthen enforcement of ingredient sourcing from overseas manufacturers, and consider publishing a list of non-compliant factories. Additionally, Trump directed the Environmental Protection Agency to expedite the review of permits needed for constructing drug manufacturing facilities.
Nip Chun Pong noted that the companies most affected by this news are primarily in the CXO sector, such as WuXi series, Pharmaron (03759), and Viva Biotech (01873). Approximately 60% of WuXi series' revenue comes from the U.S. market, while over 60% of Pharmaron's revenue is also derived from North America. The introduction of pharmaceutical tariffs by Trump has renewed concerns in the market about the potential negative impact of the Biosecurity Act on the pharmaceutical sector.
In early trading, CSPC Pharma (01093) showed weak performance, leading declines among blue chips. However, Nip Chun Pong remarked that CSPC's North American revenue comprises less than 5%, meaning the tariff issue will have minimal impact on its business. The stock may be adjusting in response to tariff news, having previously shown strong performance, rising from a low of HKD 4.65 on 7 April to a peak of HKD 6.35 today, an increase of over 25%.
For investors holding shares in WuXi series or related stocks, Nip Chun Pong advised that if they purchased between 7 and 9 April, they may consider exiting at a suitable time, given the current gains. If they only bought last week, it may be prudent to hold for one or two trading days to monitor price performance. Should the price remain weak, they might consider exiting; if it stabilises or rebounds, they could continue to hold. For example, investors in WuXi Bio (02269) should watch for support around the HKD 20 mark.
"Nip Chun Pong: HSI faces resistance near 50-day moving average because of tariffs"
The Hang Seng Index exhibited a fluctuating upward trend, briefly surpassing the gap peak from 7 April (approximately 22,638 points) and reaching a high of 22,656 points. Nip Chun Pong, the Chief Strategist at Blackwell Global Securities, told ET Net News Agency that the index is likely to fill this gap this week. However, he cautioned that uncertainties in the news environment may pose challenges, particularly as the gap peak is close to the 50-day moving average (around 22,800 points). Even if the index fills the gap, it may encounter resistance at this moving average.
Nip Chun Pong indicated that, without an agreement on U.S.-China tariffs, the Hang Seng Index could still rise to the 50-day moving average, but this reference point is not particularly strong. He pointed out that the movement from around 22,600 points to 22,800 points is only about 200 points, and even a rise to 23,000 points represents an increase of just about 400 points. He suggested that if the index pulls back, it could find support between 21,800 and 22,000 points, referencing the low from 30 April.
"U.S. pharmaceutical tariffs to be announced within two weeks, watch for WuXi series and Pharmaron"
U.S. President Trump recently signed an executive order encouraging domestic pharmaceutical companies to increase the manufacturing of prescription medications. He also indicated that tariffs on imported drugs will be announced within the next two weeks.
The executive order mandates the U.S. Food and Drug Administration to increase inspection fees for foreign drug manufacturers, strengthen enforcement of ingredient sourcing from overseas manufacturers, and consider publishing a list of non-compliant factories. Additionally, Trump directed the Environmental Protection Agency to expedite the review of permits needed for constructing drug manufacturing facilities.
Nip Chun Pong noted that the companies most affected by this news are primarily in the CXO sector, such as WuXi series, Pharmaron (03759), and Viva Biotech (01873). Approximately 60% of WuXi series' revenue comes from the U.S. market, while over 60% of Pharmaron's revenue is also derived from North America. The introduction of pharmaceutical tariffs by Trump has renewed concerns in the market about the potential negative impact of the Biosecurity Act on the pharmaceutical sector.
In early trading, CSPC Pharma (01093) showed weak performance, leading declines among blue chips. However, Nip Chun Pong remarked that CSPC's North American revenue comprises less than 5%, meaning the tariff issue will have minimal impact on its business. The stock may be adjusting in response to tariff news, having previously shown strong performance, rising from a low of HKD 4.65 on 7 April to a peak of HKD 6.35 today, an increase of over 25%.
For investors holding shares in WuXi series or related stocks, Nip Chun Pong advised that if they purchased between 7 and 9 April, they may consider exiting at a suitable time, given the current gains. If they only bought last week, it may be prudent to hold for one or two trading days to monitor price performance. Should the price remain weak, they might consider exiting; if it stabilises or rebounds, they could continue to hold. For example, investors in WuXi Bio (02269) should watch for support around the HKD 20 mark.