[ET Net News Agency, 04 December 2025] Latest US private employment data came in weaker
than expected, heightening investor concerns over an economic slowdown and strengthening
the case for rate cuts. The probability of a 25bps Fed rate cut next week has now risen to
around 89%. Hong Kong stocks opened slightly higher in narrow range trading, but the Hang
Seng Index struggled to make headway against overlapping resistance at the 10-day (c.
25,826) and 100-day (c. 25,805) moving averages. After falling more than 110 points at one
stage, the HSI ended the morning up 48 points, or 0.2%, at 25,809, with main board
turnover close to HKD 92.3 billion. The Hang Seng China Enterprises Index rose 34 points,
or 0.4%, to 9,062, while the Hang Seng Tech Index added 32 points, or 0.6%, to 5,567.

"Nip Chun Pong: Weak A-shares and strong US stocks dampen HSI outlook"

After dropping more than 300 points yesterday, the HSI opened higher by several dozen
points this morning but quickly reversed course, falling over 100 points. Nip Chun Pong,
the Chief Strategist at Solo Securities, told ET Net News Agency that since last Thursday
and Friday, the HSI has been seeing selling into strength, a pattern repeated this
morning. Earlier hopes for new Mainland China consumption stimulus policies in December
had lifted appliance stocks, but with the realisation that such measures are unlikely this
month, sentiment has soured. Weakness in A-shares has further dampened Hong Kong market
sentiment, especially given the heavy reliance on 'northbound' capital flows. Meanwhile,
strength in US stocks has attracted funds back to Wall Street, adding pressure to Hong
Kong equities.
Nip noted that after the HSI fell below its 100-day moving average yesterday, this level
has become a new battleground. If the index fails to reclaim and hold above the 100-day
line in the next couple of sessions, he expects further downside next week, with support
only re-emerging between 25,000 and 25,200. In the near term, he sees the HSI trapped in a
narrow range, with only mild upside even if the 100-day line is regained. His year-end
target for the index is a best-case scenario of around 26,500.

"Li Auto's sales are not ideal; AI smart glasses offer limited help"

Li Auto (02015) unveiled its first AI smart glasses, Livis, priced from RMB 1,999,
matching Xiaomi's (01810) AI glasses and slightly higher than Alibaba's (09988) Quark AI
glasses (starting at RMB 1,899). The device allows users to control features such as air
conditioning, steering wheel heating, and tailgate via voice commands through "Lixiang
Tongxue," without needing to operate a smartphone.
However, the launch failed to lift Li Auto's share price, which fell as much as 4% today
to a near three-year low of HKD 67, underperforming both the market and its new energy
vehicle peers. Nip commented that while the AI glasses may appeal to existing Li Auto
users, their overall impact on group earnings will be limited and are unlikely to drive
the share price. Instead, the market is focused on continued declines in new vehicle
deliveries: November's figures were down 32% year-on-year, in contrast to gains posted by
XPeng (09868) and NIO (09866). Li Auto has now recorded double-digit year-on-year declines
in deliveries for several consecutive months, raising investor concerns about its outlook.
Nip expects the negative trend to persist, with a Q3 swing into loss and sharp
year-on-year delivery drops in October and November pointing to a further deterioration in
Q4.

"Mainland China auto sector faces fierce competition; Li Auto may pivot to robotics"

Latest data from the China Passenger Car Association showed November retail sales of
2.263 million units, down 7% year-on-year, while new energy vehicle sales rose 7%, though
this is a marked slowdown from earlier in the year. Nip notes that while NEV sales are
still growing, the pace is moderating and competition in the sector is set to intensify
further, with another round of industry reshuffling likely ahead. Although sector leaders
BYD and Li Auto both reported full-year profits, Li Auto slipped into the red in Q3 just
as Leapmotor (09863) turned quarterly profitable and Xiaomi neared break-even, putting Li
Auto at a relative disadvantage. Still, given its robust cash reserves from strong
earnings over the past two years and H1 2024, short-term liquidity is not a concern.
Nip suggests that, facing intensifying automotive competition, Li Auto may follow
XPeng's lead and pivot toward robotics to seek new growth avenues. According to company
plans, future versions of its AI glasses will evolve rapidly, integrating AR in the second
generation and ultimately becoming a standalone wearable robot. Nip believes that after a
substantial share price correction and the launch of new products, Li Auto should find
initial support between HKD 62 and HKD 65, with the odds of a drop to its IPO low of HKD
52 now much reduced.