[ET Net News Agency, 09 July 2025] Mainland China's CPI for June rose by 0.1 percent
year-on-year, ending four consecutive months of negative growth and beating expectations,
but concerns over deflation persist. Despite the Shanghai Composite Index breaking above
3,500, the HSI failed to hold the 24,000 level. Dragged down by local property stocks, the
HSI closed the morning at 23,970, down 177 points or 0.7 percent, with main board turnover
close to HKD 122.4 billion. The Hang Seng China Enterprises Index was at 8,642, down 66
points or 0.8 percent. The Hang Seng Tech Index was at 5,265, down 60 points or 1.1
percent.

"Cheung Chi Wai: Valuations for Hong Kong stocks are not attractive"

The HSI opened 86 points lower this morning and then fluctuated, falling more than 230
points at one stage to a low of 23,849.49, once again losing the 24,000 mark. Cheung Chi
Wai, a joint managing director at Prudential Brokerage Ltd, told ET Net News Agency that
US President Trump has announced reciprocal tariffs on multiple countries' goods,
effective 1 Aug this year, with no option for delay or postponement. The US will also
impose a new 50 percent tariff on all imported copper, with potential future tariffs on
semiconductors and pharmaceutical products. These two main factors weighed heavily on Hong
Kong stocks this morning (9 Jul).
Cheung explained that Chinese-made steel is exported not only to the US, but also to
Europe and Southeast Asian countries. Therefore, the US tariffs on all imported copper
directly and indirectly impact Chinese copper and steel companies. He mentioned that
copper and metals concept stocks performed weakly this morning, with shares such as China
Hongqiao (01378), MMG (01208), and Jiangxi Copper (00358) all falling, dragging down the
broader market and affecting investor sentiment in Hong Kong stocks.
Cheung further noted that current valuations for Hong Kong stocks are not attractive to
investors. He expects the HSI could correct to the 23,400 level, with resistance at the
high seen on 25 Jun this year (around 24,533).

"Henderson Land's issues exchangeable bond and it drops 10 percent in the morning,
weakness likely to continue in the short term"

On Tuesday (8 Jul) after market close, Henderson Land announced a proposal to issue HKD
8 billion in secured exchangeable bonds under general mandate, with the net proceeds to be
used for general corporate purposes and/or refinancing. The initial exchange price of the
bonds is set at HKD 36 per share, a premium of about 26.98 percent over Tuesday's closing
price of 28.35. If all bonds are converted at the initial exchange price, about 222
million shares would be issued, accounting for about 4.39 percent of the enlarged share
capital. The share opened nearly 5 percent lower this morning, with losses widening to 10
percent at one stage, hitting a 10-day low of 25.2.
Cheung Chi Wai pointed out that Henderson Land's move to issue exchangeable bonds will
dilute earnings per share and has disappointed investors, raising concerns over the
company's financial performance. As the proceeds are only for general corporate purposes
and refinancing, the issuance may not significantly benefit the company's future
prospects. As a result, Henderson Land led blue chips lower this morning, and its share
price is expected to remain weak in the short term.

"Emperor International and Grand Ming default on debt; caution urged over possible repeat
of Evergrande-Type events"

Meanwhile, financial pressure on Hong Kong's small and medium-sized developers continues
to surface. Both Emperor International (00163) and Grand Ming (01271) have announced
overdue loan situations via HKEX filings.
Cheung Chi Wai believes the vicious cycle of debt defaults among smaller developers has
not ended, and expects to see more developers facing similar crises in future. He warns
investors holding such shares to be cautious, and does not rule out further
Evergrande-type bankruptcy and liquidation events, advising investors to avoid exposure to
the small and medium-sized property sector.