[ET Net News Agency, 07 February 2025] As US-China tariff negotiations remain unresolved
and trade issues remain unclear, the Hang Seng Index opened slightly lower this morning.
However, driven by strong performances from major tech stocks and a rebound in A-shares,
the index regained upward momentum. Some individual companies or sectors also saw
speculative trading, contributing to the index's rise. The Hang Seng Index closed at
21,210, up 319 points or 1.5%, with a turnover exceeding HKD 129.2 billion. The Hang Seng
China Enterprises Index reported 7,803, rising 113 points or 1.5%, while the Hang Seng
Tech Index was at 5,200, up 141 points or 2.8%.

"Ryan Chan: Breaking 21,000 still faces volatility"

In light of the ongoing US-China tariff negotiations and unclear trade outlook, the Hang
Seng Index initially dropped 33 points today before climbing higher, breaking through the
21,000 mark. Ryan Chan, an executive director of Eddid Financial, told ET Net News Agency
that the overall situation in US-China relations is unlikely to change significantly. He
expects that US trade restrictions on China and the bilateral relationship will continue
to deteriorate, with various stimulating factors potentially impacting market
fluctuations. He emphasized that when discussing US-China trade, currency factors should
be closely monitored. A continued weakening of the Renminbi could drag down Hong Kong
stocks.
Given the current global situation, he believes that Hong Kong stock strategies should
not be overly aggressive, but there is no need for excessive pessimism. Today's break
through the 21,000 level and deviation from the ten-day moving average indicate that
short-term pullbacks are normal. Until the index surpasses the previous peaks of 21,355
points from early October and November last year, the overall trend remains one of
volatility, with support around the ten-day moving average (approximately 20,366 points).
Currently, there are no strong catalysts visible to challenge the 21,355 level.

"Saturation in Mainland China smartphone market: iPhone SE has limited growth potential"

Insiders have revealed that Apple plans to launch the long-anticipated iPhone SE upgrade
in the coming days to stimulate growth and attract consumers from other brands. The
announcement is expected as early as next week, with the device set to hit the market
later this month. However, it is unlikely that Apple will hold a launch event for this
product, opting instead to announce it on their website.
Ryan Chan noted that the introduction of a budget iPhone could help improve sales in
China's sluggish smartphone market. Previous budget iPhone models performed well in the
low-cost segment, featuring the same interface as the standard or high-end versions.
Although some camera features or screen quality may be slightly inferior, the market has
accepted these trade-offs. Additionally, the budget iPhone will benefit from the local
trend of upgrading digital products. However, pricing will still be a factor; while past
budget models were priced around RMB 3,000, they are still not as cheap as domestic
brands.
In 2024, with Apple's sales in the mainland market remaining weak, Chan remarked that
the Chinese market is one Apple cannot abandon, but it will not be a significant driver of
future growth. The market is largely saturated, with limited growth potential and intense
competition leading to price undercutting across various industries. While the sheer size
of the Chinese market necessitates Apple's continued presence, high profits and growth are
not to be expected.
Since yesterday, Apple-related stocks have surged, with Chan suggesting that Sunny
Optical (02382) could reach HKD 95. While the expected price-to-earnings ratio is 33
times, there is still upward momentum from a technical standpoint. However, the risks of
chasing stocks at high prices are substantial. BYD Electronic (00285) has also seen a
price increase, but Chan cautioned that it is among the 28 stocks previously identified by
Morgan Stanley as having high US tariff exposure. Although BYD's expected P/E ratio is
lower than Sunny Optical's, it remains at a relatively high level and shows signs of being
overbought, significantly deviating from the ten-day moving average, which could lead to a
pullback. For those still interested in speculative trading, the target would be the 2021
peak of HKD 62, but caution is advised.