[ET Net News Agency, 18 December 2024] The US Dow Jones index has experienced an
unprecedented nine-day decline, while the Hong Kong stock market interrupted its three-day
decline this morning. However, with uncertainty surrounding next year's US interest rate
movements, the Hang Seng Index remains capped below 20,000 points. Chinese characteristics
stocks and automobile sectors led the gains, while consumer stocks declined. The Hang Seng
Index closed at 19,815 at midday, up 114 points or 0.6%, with a turnover of nearly HKD
55.7 billion.

"If the People's Bank of China maintains the LPR unchanged, the Hang Seng Index may
retrace"

On the eve of the Federal Reserve's interest rate decision, the US stock market saw all
three major indices fall, with the Dow Jones falling for the ninth consecutive trading
day. However, the Hong Kong market was unaffected this morning, with the Hang Seng Index
opening over a hundred points higher due to the rebound in Chinese concept stocks. Nip
Chun Pong, the Chief Strategist at Blackwell Global Securities, told ET Net News Agency
that the Hang Seng Index has already fallen for three consecutive days and is undergoing a
technical adjustment today. Even if there is no rebound today, a rebound is expected later
this week. Anticipating the People's Bank of China's upcoming release of the latest LPR
rate, coupled with potential stimulus measures following the Central Economic Work
Conference, some investors are taking advantage of the dip.
From a technical perspective, Nip Chun Pong noted that apart from briefly hitting 21,000
points last week, the Hang Seng Index has mostly remained below 20,500 points recently,
making it challenging to break through that level. Conversely, if it fails to hold above
20,000 points this week, a fallback to the 19,000 to 19,500 range is not ruled out.
Regarding yesterday's announcement by the Hong Kong Stock Exchange to pilot a reduction
in the trading spreads of two groups of stocks by HKD 10 to 20 and HKD 20 to 50
respectively, Nip Chun Pong believes that the initial reduction in spread only affects a
small proportion of stocks and has limited impact on the broader market as top stocks like
Tencent (00700), Meituan (03690), and HSBC (00005) are excluded from these groups.

"New World Dev's Mainland China revenue ratio is high. It is crucial to its recovery"

Reportedly, New World Dev recently sought waivers from banks for breaching financial
covenants due to a net debt-to-asset ratio exceeding 100%. New World has not responded to
these reports. It was mentioned that the Hong Kong Monetary Authority had previously
convened a meeting with banks that lent more to New World, asking financial institutions
to continue providing support. The HKMA stated it does not comment on individual
institutions. On another note, New World's management previously reiterated its commitment
to debt reduction, exploring asset sales and indicated no intention to redeem perpetual
bonds or delay their interest payments.
Nip Chun Pong believes that the market is well aware of New World Dev's heavy debt
burden. Although the debt level is high, there is currently no imminent risk of a blow-up.
Even in the case of severe debt like that of Mainland China property developers, creditors
are still actively cooperating on debt restructuring. New World's leverage continues to
rise, but with ongoing support from its parent company, Chow Tai Fook Enterprises, Nip
Chun Pong believes it is not yet comparable to Mainland China property developers. If
there is gradual improvement in the Hong Kong property market next year, coupled with
continued rate cuts in Hong Kong and the US, the group's debt pressure is expected to
ease.
Regarding the Hong Kong property market, Nip Chun Pong stated that due to Hong Kong's
sluggish economy, poor performance in the stock market, lack of signs of a consumption
recovery, and a decline in Mainland China property buyers in the past two years, the local
property market is still under pressure in the short term. Similarly, related stocks still
face downside risks in the short term. However, among property stocks, CK Asset (01113) is
relatively stable, with support expected around HKD 30, looking towards HKD 32.50 to HKD
33.
Although New World Dev's stock price has fallen to a 13-year low, ongoing debt issues
are expected to continue weighing on its stock price in the short term. Nip Chun Pong
believes there may be support around the psychological level of HKD 5 in the short term,
possibly leading to a mild rebound. However, if the property market does not recover as
expected and global rate cuts slow down, it could put pressure on the group. Additionally,
with New World Dev's Mainland China revenue accounting for over 40%, if the Mainland China
property market fails to turn around, it could impact the group. In the worst-case
scenario, the stock price may further test HKD 4.5 or even HKD 4.