[ET Net News Agency, 25 November 2025] Interest rate futures now indicate an 80%
probability that the US Federal Reserve will cut rates next month. Supported by strong
turnover, Hong Kong stocks extended their recovery this week, with the Hang Seng Index
briefly breaking above 26,000 in early trade before encountering resistance and paring
gains. By midday, the HSI was up 156 points, or 0.6%, at 25,873, with main board turnover
exceeding HKD 133 billion. The Hang Seng China Enterprises Index climbed 67 points, or
0.7%, to 9,147, while the Hang Seng Tech Index rose 63 points, or 1.1%, to 5,609.

"Kung Wai Ting: Global markets pricing in Russia-Ukraine peace prospects; further oil
price declines would support easing environment"

Expectations of a US rate cut have risen once again. Following dovish remarks from the
New York Fed President, San Francisco Fed President Mary Daly, another noted dove, also
voiced support for a cut next month, despite not having a vote at the upcoming FOMC
meeting. Coupled with news that former US President Trump will visit China next April
after recent US-China leaders' talks, sentiment was buoyed further overnight, with the
Nasdaq jumping 2.7%. Hong Kong stocks opened over 200 points higher, led by gains in
technology and AI concept names, but the HSI saw selling pressure after touching 26,000,
narrowing its morning advance to under 200 points.
The probability of a 25-basis-point Fed cut next month has now risen to around 80%. Kung
Wai Ting, the Chief Investment Officer of China Asset Management (Hong Kong), told ET Net
News Agency that while Daly will not have a vote at next month's meeting, her stance,
closely aligned with former Fed Chair Bernanke, signals a dovish tilt and supports the
view that a cut remains likely.
Beyond US monetary policy, Kung believes optimism around the Russia-Ukraine situation
could also underpin market performance, with much of the potential upside yet to be priced
in. Over the weekend, following high-level talks with Ukraine, US Secretary of State Rubio
indicated that the previously rumoured "28 points" peace framework is no longer on the
table and that the US and Ukraine have made significant adjustments to their peace plan.
Coupled with reports that Europe may allow Russia to rejoin the G8, he sees mounting signs
that a peaceful resolution is becoming more likely. Some research is now starting to
forecast a sharp drop in oil prices, which would have a positive impact globally. If
Russia and Ukraine do reach a settlement, Kung expects oil prices to plunge, easing global
inflationary pressures, including in the US, and providing more room for monetary easing.
He notes that markets are currently weighing the odds of a Russia-Ukraine breakthrough,
which is helping fuel the ongoing rally.
Kung remains upbeat on Hong Kong equities, citing both potential Russia-Ukraine
tailwinds and the Fed's decision to halt balance sheet reduction, which has kept liquidity
abundant. He expects the HSI to continue recovering, with scope to challenge its October
high of 27,300 and possibly set fresh year-to-date highs in the remaining weeks.

"Weaker dollar supports lithium prices, but valuations limit upside"

Driven by supply-demand speculation, mainland lithium prices recently staged a rally.
However, following news that CATL (03750) would restart the Jianxiawo lithium mine, prices
have retreated, and Daiwa expects sentiment towards lithium stocks to weaken, weighing on
both prices and related shares. From a macro perspective, Kung Wai Ting notes that a
weaker US dollar, on the back of rate-cut expectations, should support lithium pricing,
and global EV demand remains robust, underpinning longer-term demand for lithium. However,
he cautions that for Ganfeng Lithium (01772), which has already seen a strong rally, the
current forward P/E exceeds 200 times. While he does not expect a sharp pullback, upside
is likely limited and high-return investors may find better opportunities elsewhere.
Regarding CATL, its H-shares slumped after the recent lock-up expiry, and the
A-share/H-share discount remains roughly 10%. Kung notes that this persistent discount has
added selling pressure to CATL's H-shares, and expects the gap to gradually narrow,
primarily through a recovery in A-shares rather than further declines in H-shares. Given
CATL's larger scale compared to Ganfeng, he views the downside risk for CATL as relatively
limited.