[ET Net News Agency, 07 March 2025] The US has temporarily postponed tariffs on certain
goods from Canada and Mexico, but the trade deficit for January reached a record USD 131.4
billion, exceeding the expected USD 128.8 billion, and expanding by approximately 34%
month-on-month. The goods trade deficit increased to USD 156.8 billion. On Thursday,
President Trump promised to change the situation regarding the US trade deficit,
indicating that the trade war is unlikely to cool down in the short term.
Overnight, all three major US stock indices fell, leading to a softening of Chinese
concept stocks. The Hang Seng Index opened more than 100 points lower this morning, and
with A-shares declining early on, the index's losses initially widened to 300 points.
However, it found support around the 24,000 mark and turned upwards, closing at 24,504, up
135 points or 0.6%, with a turnover exceeding HKD 183 billion. The Hang Seng China
Enterprises Index stood at 9,020, up 82 points or 0.9%. The Hang Seng Tech Index was at
6,149, up 81 points or 1.3%.

"Jaseper Tsang: As long as US stocks do not fall by more than 3%, Hong Kong stocks can
still rise"

After opening down 187 points, the Hang Seng Index continued its upward trend, breaking
through yesterday's high, reaching 24,528 points in early trading. Jaseper Tsang, the
investment director of Rafter Capital, told ET Net News Agency that as long as US stocks
do not close down more than 3%, Hong Kong stocks will remain in a pattern of large rises
with small pullbacks. The strongest support for the index is at the ten-day moving average
(23,524 points), with a yearly target of 26,000 points. The short-term target is 25,000
points, although fluctuations in US stocks present the biggest resistance to the Hang Seng
Index reaching that level in the near term.
Jaseper Tsang further pointed out that China has recently signalled stability through
policies, including President Xi Jinping meeting with tech leaders and emphasising
economic growth at the Two Sessions. In contrast to the uncertainty surrounding Trump's
policies in the US, this has attracted significant capital inflows. Currently, foreign
investment in Hong Kong stocks remains underweight, leaving ample room for future
increases.

"JD.com performs well but lacks independent AI business, making it hard to attract capital
inflows"

JD.com reported a net profit of RMB 9.854 billion for the fourth quarter of last year, a
year-on-year increase of 191%, with basic earnings per share at RMB 3.39. Adjusted net
profit was RMB 11.294 billion, up 34% year-on-year, beating expectations.
Despite JD.com's strong performance, its stock fell nearly 5% in early trading. Jaseper
Tsang stated that while there are no issues with JD.com's performance, the stock's
softness is partly due to it having already risen in anticipation of these results,
climbing from HKD 154.6 to 180.8 at yesterday. Additionally, in a market increasingly
focused on AI, JD.com lacks a standalone AI business, which makes investors sceptical
about its potential for valuation recovery, thus making it difficult to attract capital
inflows.
JD.com's fourth-quarter revenue was RMB 346.986 billion, a year-on-year increase of
13.4%, marking the largest growth in nearly three years. Jaseper Tsang noted that JD.com's
revenue growth was bolstered by the Double Eleven shopping festival and the government's
old-for-new replacement policy. However, he maintains a conservative outlook for the first
quarter of this year's revenue, stating that last year's old-for-new policy has already
drawn on some consumer spending power, and the timing for the RMB 300 billion in
ultra-long special bonds supporting this initiative is uncertain, likely limiting its
benefits in the first quarter.
While the adjusted net profit saw a significant year-on-year increase of 34% in the
fourth quarter, Jaseper Tsang believes that the performance of JD's food delivery service
will be included in the first quarter results. He noted that JD's food delivery strategy
includes low commissions and social security payments to capture market share. However,
increased initial investments may compress profits in the first quarter.

"Technology sector prioritises AI and robotics"

During yesterday's press conference on economic themes at the Two Sessions, it was
announced that the country is promoting the establishment of a "carrier-level" national
venture capital guiding fund, focusing on cutting-edge areas such as artificial
intelligence, quantum technology, hydrogen energy storage, bio-manufacturing, embodied
intelligence, and 6G. Jaseper Tsang stated that among technology-focused private
enterprises, he is most optimistic about those related to AI and robotics. He further
indicated that for stable companies, Tencent (00700) and Alibaba (09988) are top picks, as
both generate sufficient cash flow to support AI initiatives. Tencent has a target price
of HKD 610 for the year, and Alibaba has a target price of HKD 185. For more aggressive
investors, Horizon Robotics (09660) could be an option, but due to its lack of
profitability, investors should strictly adhere to profit-taking and stop-loss levels for
short-term strategies. Ahead of the unlocking period on 24 April this year, Horizon
Robotics might aim for HKD 11.5 in the short term.
Baidu also has the Wenxin large model and is one of the earlier companies to develop AI
in China, but Jaseper Tsang has not recommended it, citing that Wenxin's main issue is its
initial choice of a closed-source model, which significantly hinders the development of
large models. Additionally, he noted that Baidu's "Apollo Go" has seen slow progress,
reflecting that its intelligent driving system still requires improvement.