[ET Net News Agency, 22 January 2026] With external geopolitical tensions and tariff
concerns fading and US-Europe relations showing signs of improvement, US stocks staged a
sharp rebound overnight, although not all losses were recovered. Despite breaking a
four-day losing streak yesterday, the Hang Seng Index failed to follow the upward moves
seen in other Asia-Pacific markets this morning. At midday, the HSI stood at 26,558, down
26 points or 0.1 per cent, with main board turnover exceeding HKD 131.6 billion. The Hang
Seng China Enterprises Index recorded 9,091, down 30 points or 0.3 per cent, while the
Hang Seng Tech Index fell 23 points or 0.4 per cent to 5,722.

"Nip Chun Pong: HSI faces downside risk if it fails to close above 26,600"

While US-Europe relations have eased and US equities rebounded overnight, most
Asia-Pacific markets also performed well, with Japanese stocks rising nearly 2 per cent.
The HSI opened 165 points higher and peaked at 26,779, but the gains never exceeded 200
points and at one stage narrowed to just 20 points. The 10-day moving average was briefly
reclaimed but then lost again as the index followed A-shares lower. Nip Chun Pong, the
Chief Strategist at Solo Securities, told ET Net News Agency that the HSI's failure to
mirror Wall Street's sharp moves suggests that US stocks have limited influence on Hong
Kong now, with A-shares playing a more significant role. He also noted the
unpredictability of US President Trump, who, for now, has decided not to impose additional
tariffs on several EU countries over the Greenland issue, but there remains caution that
other challenges could arise in the future.
Nip also pointed out that there is a price gap on the HSI chart from 12-13 January,
around the 26,600 to 26,800 range. Today's rally brought the index close to the upper end
of this gap, but with no fresh positive catalysts, investors used the opportunity to lock
in profits. Over the past three and a half years, the HSI has only managed to close above
27,000 on three occasions, making that level a key short-term resistance. Since October
last year, a triple-top formation has developed, so unless there is a major positive
catalyst, it is hard to expect a breakout. Conversely, if the HSI fails to close above
26,600 for two consecutive days, the risk of a short-term pullback increases, although
initial support is likely to emerge around 26,000.

"Baidu's quarterly results expected to impress; short-term rally is possible"

Baidu (09888) has seen a strong rally recently, with several major brokerages raising
their target prices ahead of its fourth-quarter results. Overnight, Baidu's ADS surged 8
per cent. Nip Chun Pong said the recent rally was mainly driven by the official launch of
Baidu's Wenxin 5.0 large AI model, which spurred buying interest. The situation is similar
to Alibaba's (09988) spike last week after announcing its Tongyi product had surpassed 100
million users and launched a major upgrade. Wenxin 5.0 is based on native full-modality
modelling, with 2.4 trillion parameters supporting text, image, audio, and video
processing. The official version is now available on Baidu's Qianfan platform, and other
Baidu AI products such as Ernie Bot, Baidu HuiBoxing, and Wenxin Assistant have also
integrated it. This news, combined with Baidu's gains in Hong Kong, helped US-listed
shares catch up overnight.
Nip expects Baidu's Q4 revenue to rise significantly quarter-on-quarter, thanks to the
Double 11 shopping festival and the traditional year-end consumption season, which usually
boosts advertising income. He forecasts further revenue growth into 2026. Baidu Cloud is
also expected to post strong growth in line with the broader industry, similar to Alibaba
Cloud and Tencent (00700) Cloud. On intelligent driving, although Baidu is expanding
trials in the mainland, Hong Kong, the Middle East, and the UK, this business remains in
its early stages and is unlikely to make a major contribution to profits until it matures,
currently at L3, with significant impact expected only once it reaches L4 and
commercialisation scales up.
There are also reports that Baidu is considering upgrading its Hong Kong listing from
"secondary" to "dual primary" status. As things stand, Baidu's secondary listing in Hong
Kong does not qualify for inclusion in Stock Connect. Nip noted that if Baidu upgrades its
status and is included in Stock Connect, more institutions will be able to add the stock
to their ETFs, providing further support for the share price. However, given the recent
strength, much of the good news may already be priced in, with further upside likely
limited to a challenge of the HKD 170 level. Investors should note that if the HSI softens
in the short term, Baidu may also pull back; Nip suggests considering entry if the price
retreats to the HKD 150-155 range.