[ET Net News Agency, 20 January 2025] Last Friday, U.S. President-elect Trump spoke with
Chinese President Xi Jinping about issues concerning TikTok, fentanyl, and trade. Reuters
quoted Trump as saying that the call was very good for both China and the U.S. This
conversation marked a significant shift from earlier market expectations that Trump would
heavily pressure China. The Hang Seng Index showed no fear against various moving average
resistances, opening over 200 points higher today. It continued its upward trend in the
morning, with gains expanding to over 400 points, surpassing the 20,000 mark for the first
time since the beginning of the month.
The Hang Seng Index midday reported 20,041, up 457 points or 2.3%, with a turnover
exceeding HKD 97.2 billion. The Hang Seng China Enterprises Index reported 7,272, up 163
points or 2.3%. The Hang Seng Tech Index reported 4,621, up 141 points or 3.2%.

"Cheung Chi Wai: Trump's cabinet picks still target China, unpredictable nature remains
unfavourable for future predictions"

Trump is set to hold his inauguration ceremony soon. Prior to that, he spoke with
Chinese President Xi Jinping last Friday about TikTok, fentanyl, and trade. The market
anticipates an improvement in U.S.-China relations. The Hang Seng Index rose over 400
points midday, surpassing the 20,000 mark. However, Cheung Chi Wai, a joint managing
director at Prudential Brokerage Ltd, told ET Net News Agency that investors should not
blindly trust that U.S.-China relations will immediately improve. Looking back at Trump's
cabinet appointments, each pick has been directed against China. He believes that the
U.S.-China power struggle cannot be easily reversed with just a few words, and investors
should be cautious of Trump's renewed policy to pressure China.
Given Trump's unpredictable nature, Cheung Chi Wai estimates that after the inauguration
ceremony, Trump is likely to take less aggressive measures against China but will not
completely soften his stance. If this materializes, there is a risk of a high-level
pullback in the Hang Seng Index. Using Bollinger Bands as a reference, the Hang Seng Index
is likely to face selling pressure once it reaches around the 20,300 level.

"High risks in CXO, only choose stocks less susceptible to U.S. sanctions"

Biotech stocks are seen as a category where Trump may ease regulations. Over the
weekend, the Trump Trade hype drove the healthcare sector to all-time highs this morning.
Cheung Chi Wai believes that under the unpredictable U.S. policy environment, selecting
healthcare stocks requires careful consideration. For example, the CXO sector, which is a
perennial target of U.S. scrutiny, remains at risk despite the recent decrease in the
Biosecurity Law Act. The possibility of being brought back to the agenda remains
significant, indicating ongoing risks.
Given this, Cheung Chi Wai leans towards selecting non-CXO pharmaceutical stocks.
However, he mentioned that pharmaceutical stocks may face the risk of expanded procurement
from Mainland China. The recent sharp drop in Innovent Bio (01801) last week underscored
the impact of procurement news. Therefore, he considers Akeso (09926) worth watching, as
its Mainland China business is relatively small, with a focus on the U.S. market where
demand for cancer drugs is high and less likely to face pressure. Some major banks have
predicted Akeso's U.S. business to reach USD 600 million. He expects short-term price
appreciation to reach levels between HKD 68 to 70, with a stop-loss point at HKD 54.