[ET Net News Agency, 14 October 2025] Tensions over China-US trade frictions have eased slightly, with a meeting between the two countries' leaders in South Korea still set to go ahead. After rebounding from yesterday's lows, Hong Kong equities opened higher this morning but soon turned volatile and softer, hitting a low of 25,724, a trading range of 378 points. By midday, the Hang Seng Index stood at 25,839, down 50 points or 0.2%, with main board turnover close to HKD 188.8 billion. The Hang Seng China Enterprises Index edged up 7 points, or less than 0.1%, to 9,229, while the Hang Seng Tech Index fell 79 points or 1.3% to 6,066.
"Yuen Che Hay: Resolving China-US issues needed for market recovery; expect HSI to range between 25,000 and 26,200"
The White House continues to play down China-US trade tensions, lifting US equities on Monday, with Chinese ADRs outperforming. However, after yesterday's intraday rebound, Hong Kong stocks showed weaker momentum compared to US markets, with the HSI rising then falling in the morning session. The strong southbound buying seen yesterday afternoon failed to extend. Yuen Che Hay, the Co-Director of Investment Strategy of Quam Asset Securities, told ET Net News Agency that local stocks have clearly underperformed US equities, with major southbound favourites like Alibaba (09988) and SMIC (00981) still facing selling pressure. This reflects the unpredictable nature of capital flows and a volatile market environment.
He emphasised that, at present, optimism over China-US relations is largely one-sided from the US, with China yet to show a positive stance. The situation is far from optimistic and the market will likely remain in a wait-and-see mode, resulting in a range-bound market with limited upside. Yuen noted that recent gains in Hong Kong equities have been driven mainly by AI-related flows. As long as trade-related negatives do not worsen, AI themes can continue to support the market. However, as trade tensions resurface, they are offsetting optimism over AI, leading to a range-bound market. Only once trade frictions are fully resolved will the market have the chance to break higher. He expects the HSI to oscillate between 25,000 and the top of the recent gap at around 26,200.
"GaN technology not unique to China: but shares of Innoscience are overheated"
Innoscience (02577) announced a partnership with NVIDIA (US: NVDA) to jointly develop an 800VDC all-GaN power solution for next-generation AI data centres, AI Factories, aiming to reduce copper usage, improve heat dissipation, and lower carbon emissions. News of further collaboration with NVIDIA sparked a new round of speculation in Innoscience shares, which surged as much as 18% intraday.
Addressing concerns over NVIDIA's China exposure, Yuen said he does not think China-US tensions will affect Innoscience's partnership with NVIDIA. He noted that gallium nitride (GaN) technology is not unique to Innoscience, and although gallium is classed as a rare earth, the technology itself is not exclusive. Therefore, it is unlikely that China would restrict GaN exports, meaning Innoscience faces limited policy risk. He added that NVIDIA has strict requirements for suppliers, so Innoscience's selection reflects certain advantages, and the partnership is expected to continue.
However, he believes Innoscience shares have become overheated, currently trading at nearly double the level before the NVIDIA collaboration news. He does not expect earnings growth to match this pace and suggests investors wait for lower levels, with initial support to watch at HKD 80.
"Chip stock rally has become sentiment-driven; consider taking profits on SMIC"
Other chip stocks remain under selling pressure, with southbound favourites SMIC (00981) and Hua Hong Semi (01347) falling around 5% and 10% respectively by midday. Yuen said these chip stocks have become pure story stocks, driven by nationalism and news flow rather than fundamentals. They now move on China-US headlines. He believes SMIC is trading at a significant sentiment premium, and holders should consider taking some profits, re-entering only if further positive news emerges.
"Yuen Che Hay: Resolving China-US issues needed for market recovery; expect HSI to range between 25,000 and 26,200"
The White House continues to play down China-US trade tensions, lifting US equities on Monday, with Chinese ADRs outperforming. However, after yesterday's intraday rebound, Hong Kong stocks showed weaker momentum compared to US markets, with the HSI rising then falling in the morning session. The strong southbound buying seen yesterday afternoon failed to extend. Yuen Che Hay, the Co-Director of Investment Strategy of Quam Asset Securities, told ET Net News Agency that local stocks have clearly underperformed US equities, with major southbound favourites like Alibaba (09988) and SMIC (00981) still facing selling pressure. This reflects the unpredictable nature of capital flows and a volatile market environment.
He emphasised that, at present, optimism over China-US relations is largely one-sided from the US, with China yet to show a positive stance. The situation is far from optimistic and the market will likely remain in a wait-and-see mode, resulting in a range-bound market with limited upside. Yuen noted that recent gains in Hong Kong equities have been driven mainly by AI-related flows. As long as trade-related negatives do not worsen, AI themes can continue to support the market. However, as trade tensions resurface, they are offsetting optimism over AI, leading to a range-bound market. Only once trade frictions are fully resolved will the market have the chance to break higher. He expects the HSI to oscillate between 25,000 and the top of the recent gap at around 26,200.
"GaN technology not unique to China: but shares of Innoscience are overheated"
Innoscience (02577) announced a partnership with NVIDIA (US: NVDA) to jointly develop an 800VDC all-GaN power solution for next-generation AI data centres, AI Factories, aiming to reduce copper usage, improve heat dissipation, and lower carbon emissions. News of further collaboration with NVIDIA sparked a new round of speculation in Innoscience shares, which surged as much as 18% intraday.
Addressing concerns over NVIDIA's China exposure, Yuen said he does not think China-US tensions will affect Innoscience's partnership with NVIDIA. He noted that gallium nitride (GaN) technology is not unique to Innoscience, and although gallium is classed as a rare earth, the technology itself is not exclusive. Therefore, it is unlikely that China would restrict GaN exports, meaning Innoscience faces limited policy risk. He added that NVIDIA has strict requirements for suppliers, so Innoscience's selection reflects certain advantages, and the partnership is expected to continue.
However, he believes Innoscience shares have become overheated, currently trading at nearly double the level before the NVIDIA collaboration news. He does not expect earnings growth to match this pace and suggests investors wait for lower levels, with initial support to watch at HKD 80.
"Chip stock rally has become sentiment-driven; consider taking profits on SMIC"
Other chip stocks remain under selling pressure, with southbound favourites SMIC (00981) and Hua Hong Semi (01347) falling around 5% and 10% respectively by midday. Yuen said these chip stocks have become pure story stocks, driven by nationalism and news flow rather than fundamentals. They now move on China-US headlines. He believes SMIC is trading at a significant sentiment premium, and holders should consider taking some profits, re-entering only if further positive news emerges.