[ET Net News Agency, 05 March 2026] Overnight, The New York Times reported that Iran had
reached out to the United States through backchannels to explore possible negotiations to
end the conflict. Although Iranian authorities swiftly denied the claim, investors'
concerns about the outlook continued to subside as Iran's retaliation diminished,
prompting a rebound in the three major US indices. Asia-Pacific equity markets also
bounced strongly in early trading, though gains narrowed by midday. Hong Kong stocks
gapped higher at the open, with the Hang Seng Index reaching as high as 25,736 around 11
a.m., a half-day high and nearly 500 points up. However, this level was close to the prior
gap at 25,768, which capped the rebound. By midday, the HSI stood at 25,462, up 212 points
or 0.8%, with main board turnover close to HKD 164.2 billion. The Hang Seng China
Enterprises Index stood at 8,504, up 20 points or 0.2%. The Hang Seng Tech Index edged up
by less than 1 point, closing at 4,829.

"Mak Ka Ka: Hong Kong equities enjoy haven status and see support"

Foreign media reports suggesting Iran's willingness to negotiate with the US on ending
the conflict, despite rapid denials by Iranian authorities, fuelled hopes of talks in
financial markets and sparked a sharp rebound in asset prices. The price of gold and
cryptocurrencies stabilised notably, and Japanese and Korean equities surged. The Hong
Kong market opened more than 300 points higher and held steady, although gains narrowed
somewhat by midday, with the HSI up over 200 points for the morning session. Mak Ka Ka,
Head of Financial Products Trading and Research Department of SinoPac Securities (Asia),
told ET Net News Agency that the improvement in risk appetite globally triggered a more
substantial rebound. She expects the HSI to see strong support at 25,200, with 26,000 as
an upper resistance level, defining this as the likely short-term trading range.
Regarding the Middle East situation, Mak noted that the future course of the conflict
remained highly unpredictable, with risk appetite liable to swing sharply. However, she
suggested that investors could use the oil price as a reference point. The principal
market concern at present is that Middle Eastern oil supply disruptions could stoke
inflation, thereby slowing the pace of Federal Reserve interest rate cuts. Investors
should closely monitor developments in the Strait of Hormuz to gauge inflation
expectations and in turn the implications for Fed policy and global risk assets.
Mak believes that, amid the ongoing Middle East conflict, Hong Kong equities have the
potential to serve as a regional safe haven. She explained that higher oil prices drive up
corporate production costs; key Japanese and Korean shares are especially reliant on parts
manufacturing and, being more asset-heavy, are more adversely affected by high oil prices
than Hong Kong-listed peers. As a result, equity volatility in Japan and Korea is likely
to outpace Hong Kong's during episodes of oil price turbulence. In addition, policy
optimism during the "Two Sessions" in China should help support Hong Kong's performance.

"GDP target allows greater flexibility, home appliance shares stand out among policy
plays"

With the National People's Congress opening, Premier Li Qiang delivered the Government
Work Report, setting this year's GDP growth target at 4.5-5% and the budget deficit ratio
at around 4%. Markets are therefore hopeful for greater policy room to support the
economy. Mak described the policy targets as broadly reasonable, with the growth target
offering more flexibility, reflecting a shift in focus from quantity to quality as the
Mainland China undertakes economic restructuring. Domestic demand and technology remain
the key policy themes for boosting growth.
Boosting domestic demand has become the number one economic priority this year. Mak
observed that, with many domestic demand shares having already benefited from earlier
expectations of policy support, upcoming market attention will shift to the actual impact
of detailed measures on these companies' financial performance, potentially extending the
benefit over the longer term. She expects state subsidies to be expanded this year and to
benefit both household appliances and automotive sectors, albeit that auto shares remain
weak, hampered by fierce competition and likely to trade within low ranges in the short-
to medium-term. By contrast, Mak favours home appliance shares: margin pressures are less
acute than among automakers, and sector leaders enjoy a more pronounced advantage. She
recommends accumulating on dips, particularly as the launch of new high-end models could
support profit growth. Specifically, for Midea (00300), she suggests accumulating near HKD
84, with a short-term target of HKD 92.
Though technology shares are also a major focus of policy, Mak noted that leading tech
names continue to struggle amid sector churn and are highly sensitive to swings in overall
risk appetite, resulting in ongoing volatility and rapid capital flows in and out. She
expects bellwether names such as Tencent (00700) will find psychological support levels,
but market sentiment will drive short-term price action, warranting a neutral stance. As
for the currently hot "robotics concept" subsector, Mak anticipates that, over at least
the coming year, most companies will remain in the demonstration phase, with a compound
annual growth rate of around 14%, well short of explosive growth. A year from now,
attention is expected to shift to cost-cutting and efficiency gains among sector leaders,
at which point profit growth could become more significant.