[ET Net News Agency, 08 May 2025] The Federal Reserve announced, as expected, that it would keep interest rates unchanged, but indicated that uncertainty regarding the economic outlook has increased. It will pay close attention to inflation and employment market risks. Following fluctuations, US stocks closed slightly higher on Wednesday, with all three major indices finishing up. However, Chinese concept stocks fell overnight, causing the Hang Seng Index to open lower by over 100 points this morning. Subsequently, A-shares turned positive, allowing Hong Kong stocks to regain upward momentum. The Hang Seng Index reported 22,941, up 250 points or 1.1%, with the main board's turnover nearing HKD 109.8 billion. The Hang Seng China Enterprises Index stood at 8,363, up 121 points or 1.5%. The Hang Seng Tech Index reported 5,280, up 80 points or 1.6%.
"Kwok Ka Yiu: Positive developments are possible, but assessments are crucial; should maintain some gold positions"
Following the mainland's announcement of interest rate cuts and reserve requirement ratio reductions, Hong Kong stocks quickly digested these positive factors. After opening 500 points higher yesterday, the market ultimately rose by less than 100 points. Initially expected to retract, the Hang Seng Index opened slightly lower this morning but saw a rebound, rising over 200 points by midday. Kwok Ka Yiu, the Director of Business Development at Harbour Family Office, told ET Net News Agency that market reactions suggest investors have high hopes for the upcoming China-US talks this weekend, anticipating a significant agreement. However, he cautioned that the final outcome may not meet expectations, as the trade tensions have been ongoing for many years, making it unlikely that one meeting will yield results. Still, he does not completely rule out the possibility of positive developments, such as goodwill gestures from both sides or potential tariff relaxations on specific products, which would benefit the market.
Thus, Kwok Ka Yiu believes that the decision to invest in Hong Kong stocks will depend on investors' assessments of potential returns. Given that the market has rebounded significantly over the past month and many positive effects have already been realized, upward momentum appears to be waning. He stated that substantial positive news would be required to stimulate further breakthroughs in the market.
Kwok Ka Yiu added that while US economic data for the first quarter remains stable, the impact of the tariff war, which began in April, is expected to gradually surface in the second quarter, leading to volatility in global markets. Therefore, he advised investors against switching to an aggressive position just because of a temporary rebound. Instead, they should retain some defensive measures, such as holding a certain amount of gold assets to hedge against risks, especially as central banks in China and India continue to increase their gold reserves, indicating that gold's role as a safe-haven asset is far from over.
"The possibility of Zeekr returning to Hong Kong cannot be ruled out; Geely's current valuation is not high"
Geely (00175) has proposed to privatise Zeekr, offering to acquire all issued and outstanding Zeekr shares at USD 2.566 per share or USD 25.66 per American Depositary Share (ADS), representing a premium of about 13.6% over Zeekr's Tuesday closing price. It is noteworthy that Zeekr has only been listed in the US for about a year. Although Geely claims that privatising Zeekr will benefit the entire group, the proposed purchase price is similar to the ADS offering price from a year ago, even at a premium. Considering the resources required for listing, Zeekr's one-year journey in the US could be seen as a "loss" for Geely. Kwok Ka Yiu believes this could lead the market to perceive the privatisation move as not purely business-driven but rather as a response to recent delisting risks for Chinese concept stocks. He does not rule out the possibility of Zeekr relocating back to Hong Kong for a relisting, especially as the Hong Kong Stock Exchange (00388) has been exploring rapid pathways for the return of Chinese concept stocks, which would facilitate such listings.
However, Kwok Ka Yiu also noted that Geely's rise this morning might not be solely related to the privatisation of Zeekr, as there have been various announcements of stimulus measures from the Mainland China recently, and the market is hopeful for potential measures related to the automotive sector. Geely is set to announce its first-quarter results next week, which could generate interest, but Kwok Ka Yiu pointed out that the monthly data has been fairly neutral, and he does not expect any particularly surprising performance. Therefore, the stock price may struggle to break through resistance at HKD 19 to 20, and the current valuation is not very high.
"Kwok Ka Yiu: Positive developments are possible, but assessments are crucial; should maintain some gold positions"
Following the mainland's announcement of interest rate cuts and reserve requirement ratio reductions, Hong Kong stocks quickly digested these positive factors. After opening 500 points higher yesterday, the market ultimately rose by less than 100 points. Initially expected to retract, the Hang Seng Index opened slightly lower this morning but saw a rebound, rising over 200 points by midday. Kwok Ka Yiu, the Director of Business Development at Harbour Family Office, told ET Net News Agency that market reactions suggest investors have high hopes for the upcoming China-US talks this weekend, anticipating a significant agreement. However, he cautioned that the final outcome may not meet expectations, as the trade tensions have been ongoing for many years, making it unlikely that one meeting will yield results. Still, he does not completely rule out the possibility of positive developments, such as goodwill gestures from both sides or potential tariff relaxations on specific products, which would benefit the market.
Thus, Kwok Ka Yiu believes that the decision to invest in Hong Kong stocks will depend on investors' assessments of potential returns. Given that the market has rebounded significantly over the past month and many positive effects have already been realized, upward momentum appears to be waning. He stated that substantial positive news would be required to stimulate further breakthroughs in the market.
Kwok Ka Yiu added that while US economic data for the first quarter remains stable, the impact of the tariff war, which began in April, is expected to gradually surface in the second quarter, leading to volatility in global markets. Therefore, he advised investors against switching to an aggressive position just because of a temporary rebound. Instead, they should retain some defensive measures, such as holding a certain amount of gold assets to hedge against risks, especially as central banks in China and India continue to increase their gold reserves, indicating that gold's role as a safe-haven asset is far from over.
"The possibility of Zeekr returning to Hong Kong cannot be ruled out; Geely's current valuation is not high"
Geely (00175) has proposed to privatise Zeekr, offering to acquire all issued and outstanding Zeekr shares at USD 2.566 per share or USD 25.66 per American Depositary Share (ADS), representing a premium of about 13.6% over Zeekr's Tuesday closing price. It is noteworthy that Zeekr has only been listed in the US for about a year. Although Geely claims that privatising Zeekr will benefit the entire group, the proposed purchase price is similar to the ADS offering price from a year ago, even at a premium. Considering the resources required for listing, Zeekr's one-year journey in the US could be seen as a "loss" for Geely. Kwok Ka Yiu believes this could lead the market to perceive the privatisation move as not purely business-driven but rather as a response to recent delisting risks for Chinese concept stocks. He does not rule out the possibility of Zeekr relocating back to Hong Kong for a relisting, especially as the Hong Kong Stock Exchange (00388) has been exploring rapid pathways for the return of Chinese concept stocks, which would facilitate such listings.
However, Kwok Ka Yiu also noted that Geely's rise this morning might not be solely related to the privatisation of Zeekr, as there have been various announcements of stimulus measures from the Mainland China recently, and the market is hopeful for potential measures related to the automotive sector. Geely is set to announce its first-quarter results next week, which could generate interest, but Kwok Ka Yiu pointed out that the monthly data has been fairly neutral, and he does not expect any particularly surprising performance. Therefore, the stock price may struggle to break through resistance at HKD 19 to 20, and the current valuation is not very high.