[ET Net News Agency, 18 August 2025] After a modestly higher open, the HSI was volatile
and at one point slipped into negative territory. However, A-shares continued to climb,
with the Shanghai Composite closing the morning at 3,740, surpassing the 3,700 level for
the first time this year and helping the HSI extend its gains before midday. At the
half-day break, the HSI was at 25,426, up 156 points or 0.6 per cent, with main board
turnover close to HKD 172 billion. The Hang Seng China Enterprises Index was at 9,130, up
91 points or 1 per cent. The Hang Seng Tech Index was at 5,651, up 108 points or 2 per
cent.

"Jaseper Tsang: 25,000 level will take time to digest, limited downside and negative
catalysts for Hong Kong stocks"

Last Friday, southbound capital inflows into Hong Kong stocks hit a record high of
nearly HKD 35.9 billion in a single day. Yet, the market still lacked momentum this
morning, with the HSI volatile and only rising over 100 points before the midday break.
Jaseper Tsang, the investment director of Rafter Capital, told ET Net News Agency that
despite the impressive performance of southbound flows, Hong Kong equities cannot rely
solely on domestic buying to sustain an upward breakout. He noted that, historically, the
25,000 level has been a key medium- to long-term threshold for the HSI. In the past, the
index consolidated at 25,000 before each push to 30,000, and when the market retraced, it
also found support at this level. He expects that, as the HSI returns to 25,000, many
longer-term investors who bought at higher levels will take the opportunity to sell,
creating overhead resistance and requiring time for the market to absorb this selling
pressure, especially among heavyweight stocks. This will act as a drag on the HSI's
breakout momentum.
Southbound capital remains supportive, but there has recently been news of foreign funds
reducing their holdings, such as Temasek and the Saudi fund. Jaseper Tsang believes that
whether foreign investors join southbound buyers is the key to a market breakthrough. He
cited the rally at the start of this year, which was fuelled by both domestic and foreign
investors betting on the DeepSeek theme. Now, with only southbound interest, that level of
market enthusiasm cannot be replicated. He pointed out that the HSI's forward P/E is about
11 times, compared to the 15-year average of around 12 times, so Hong Kong equities are no
longer particularly cheap. Foreign funds will need more data, such as corporate results,
before re-entering the market. However, most blue chips reporting so far have delivered
unremarkable earnings guidance, giving little reason for foreign capital to return.
Nonetheless, Jaseper Tsang does not expect a significant correction in Hong Kong stocks,
as there are currently no major negative headlines. In the short term, he expects the HSI
to range between 25,000 and 25,800, and with some positive catalysts, it may challenge the
upper boundary near 26,000. However, a breakthrough will require foreign capital to
return.

"Southbound investors pin hopes on policy, but major moves unlikely before October"

Last Friday, Mainland China released a series of economic data that fell short of
expectations, fuelling hopes for urgent policy support to maintain this year's growth
target and, in turn, pushing A-shares higher. The Shanghai Composite Index remained firm
above 3,700 today. Jaseper Tsang noted that A-shares have underperformed Hong Kong stocks
this year, and given no major change in macro fundamentals, capital often rotates between
the two markets, resulting in periods where A-shares rise while H-shares lag. However, he
believes that major policy moves from Beijing are unlikely ahead of the upcoming Fourth
Plenum, so policymakers will remain cautious up to October. The market is also watching
whether the US Federal Reserve cuts rates in September before deciding on future policy
direction. As a result, any short-term policy stimulus is likely to be modest, which also
tempers foreign investors' willingness to re-enter the market in a big way.

"Sands China dividend supports share price, but Galaxy Ent and MGM China favoured for
premium mass performance"

Sands China (01928) reported interim net profit for the six months to June down 23.7 per
cent year-on-year to USD 413 million, with adjusted property EBITDA falling 5.9 per cent
year-on-year to USD 1.1 billion. However, the group announced a dividend, declaring an
interim payout of HKD 0.25 per share for the first time since 2020, which helped the share
price reverse early losses and close up nearly 3 per cent at midday. Jaseper Tsang said
that the "dividend lure" has worked for Sands China, but he cautioned that gaming stocks
are always subject to seasonal trading, and with around six weeks to go before the
National Day Golden Week, investor appetite for the sector remains strong.
However, Jaseper Tsang believes that long-term positioning in gaming stocks should not
focus solely on dividends or seasonal factors. Instead, growth in non-gaming revenue and
the recovery of gaming operations are more important. He sees Galaxy Ent (00027) and MGM
China (02282) as the strongest performers. Since the VIP segment came under pressure,
casinos have shifted towards developing premium mass to fill the profit gap and have
expanded non-gaming operations. Both Galaxy Ent and MGM China have successfully gained
market share from peers. He suggests that investors should use fundamentals rather than
dividends as the basis for their allocations. His preferred entry levels are HKD 38 for
Galaxy Ent and HKD 15.2 for MGM China.