[ET Net News Agency, 28 July 2025] US President Trump announced that the United States
has reached a trade agreement with the European Union: the US will impose a 15% tariff on
EU goods exported to US, while the EU will increase investment in the US by USD 600
billion and purchase USD 750 billion worth of US energy products. Meanwhile, China and US
negotiators are holding a new round of trade talks today in Stockholm, Sweden, focusing on
extending the achievements of the partial tariff truce. The market is watching the
progress of China, US trade talks and the upcoming Fed interest rate decision on
Wednesday. The HSI surged to 25,667, just shy of last week's high of 25,735, before
encountering resistance. At midday, gains narrowed to 102 points or 0.4 percent, closing
at 25,490, with main board turnover exceeding HKD 149.7 billion. The Hang Seng China
Enterprises Index was at 9,157, up 7 points or less than 0.1 percent. The Hang Seng Tech
Index closed at 5,644, down 33 points or 0.6 percent.

"Wan Kong Shing: Delays in the China-US agreement could trigger a pullback in Hong Kong
stocks"

On Sunday, the US and EU successfully reached a trade deal, giving a boost to Hong Kong
stocks, which rose nearly 300 points in the morning before retreating, with midday gains
narrowing to around 100 points. While the US, EU agreement is positive, Wan Kong Shing,
the Chief Investment Officer of iFAST Global Markets, told ET Net News Agency that the
China-US negotiations may not proceed smoothly, with plenty of scope for tussle over the
details. He noted that China imports oil from Russia and Iran, which the US could use as
grounds for secondary tariffs. Coupled with China already allowing rare earth exports in
exchange for chip imports, Wan Kong Shing believes China's bargaining chips are
diminishing, and the China-US agreement is unlikely to be finalised as scheduled, with a
greater chance that the announcement will be postponed. However, he added that this does
not mean relations will break down. Still, with the HSI at high levels, any delay in the
agreement could prompt selling, leading to a market correction. Investors should not be
complacent during this period of market consolidation at higher levels.
This week marks the start of earnings season in Hong Kong, with HSBC (00005) set to
announce interim results on Wednesday. Wan Kong Shing expects HSBC's results will not
disappoint, but with the share price at high levels, a "sell the news" reaction cannot be
ruled out. Important China and US economic data releases are also due this week, adding
uncertainty for Hong Kong stocks. He estimates 25,600 will be the high for the week, with
a possible correction of around 1,000 points, meaning the index could fall to 24,600
during the week, but is likely to end between 24,800 and 25,000.

"State backed buyers likely to step in, but rental property stocks remain out of favour"

McDonald's has announced it will sell all 23 of its Hong Kong retail properties in
stages, with an estimated total value of over HKD 3 billion. The first batch of eight
properties, including the Star House location in Tsim Sha Tsui, will be up for tender by
September. JLL Capital Markets Executive Director Tang Kit Ying stressed that McDonald's
restaurants will continue operating at these locations, with no change in business plans.
However, the move has sparked speculation over whether foreign investors have become more
bearish on the local property market. Wan Kong Shing said it is possible that McDonald's
is indeed turning cautious, given the ongoing weakness in local retail. If nearby shops
are underperforming, property valuations will be reduced, so it is not surprising that
McDonald's is cutting its exposure now to limit losses.
The weak property market is forcing many landlords to reduce their positions as a
precaution, but state-owned enterprises frequently step in as buyers. Wan Kong Shing
believes state-backed "national team" buyers are unlikely to be bearish on the Hong Kong
market; if prices are attractive, there is every chance they will buy. He expects they
will continue absorbing similar property assets. However, he added that rental property
stocks remain firmly out of favour. The market downturn is not just reflected in the
numbers, many property developers are now facing debt crises, and concerns over bank
margin calls make it difficult to hold rental property stocks for the long term.