[ET Net News Agency, 16 July 2025] Benefitting from Nvidia's resumption of H20 chip
supplies to China, tech stocks rose for a second consecutive day, lifting the Hang Seng
Index to open more than 100 points higher. The index touched an intraday high of 24,867,
just a whisker away from the March high of 24,874, before selling pressure emerged,
trimming its half-day gains to 68 points or 0.3%, closing at 24,658. Main board turnover
exceeded HKD 157.9 billion, with southbound funds locked in a tug-of-war. The Hang Seng
China Enterprises Index stood at 8,911, up 33 points or 0.4%. The Hang Seng Tech Index was
at 5,464, up 33 points or 0.6%.

"Funds continue to flow into tech stocks; HSI breaking three-month high is only a matter
of time"

The Hang Seng Index remained strong today, opening over 100 points higher and at one
point reaching 24,867, almost matching the March high. However, weak performance in
A-shares, with the Shanghai Composite turning negative, dragged on Hong Kong stocks,
narrowing gains significantly. Nip Chun Pong, the Chief Strategist at Blackwell Global
Securities, told ET Net News Agency that market confidence has strengthened, with the HSI
rising consecutively and robust turnover accompanying the rally. Last Friday (the 11th),
turnover in Hong Kong stocks hit HKD 320 billion, and yesterday (the 15th) it was close to
HKD 290 billion, resembling the rally seen in March, with both price and volume climbing.
Although the index may still fluctuate, Nip Chun Pong believes the overall trend remains
strong; even if the index doesn't break the March high today, it should do so in the next
couple of days. It's only a matter of time.
Nip Chun Pong pointed out that yesterday's Mainland China Q2 GDP data beat expectations,
especially considering initial worries that the US's reciprocal tariff policy in April
would pressure China's Q2 growth. Current data shows the Mainland China economy remains
resilient. For the first time in a decade, the Central Urban Work Conference was held in
Beijing from 14 to 15 July. Although the latest remarks did not mention much in the way of
concrete actions, the market expects further stimulus for consumption or the economy may
be announced in July or August. Meanwhile, e-commerce platforms, particularly Meituan
(03690) and JD.com (09618), had seen share prices retreat on price promotions, but now
appear to be rebounding from their lows. The ongoing rebound in e-commerce stocks,
combined with recent capital flows into technology, is supporting further gains in the
HSI.

"Nvidia H20 chip ban lifted: a mixed blessing"

Nvidia's H20 chip has received US clearance for resale to the Mainland China market,
with tech giants like Tencent (00700) and ByteDance reportedly already applying to
purchase. Nip Chun Pong noted that demand for high-quality chips in the Mainland China is
intense, and domestic production cannot fully meet requirements. The H20 ban lift provides
a significant boost for AI development among tech firms. While DeepSeek earlier this year
claimed to have developed OpenAI-rivalling products with lower-grade chips, this doesn't
mean other tech companies can do the same. Therefore, the H20's return is particularly
crucial for AI ambitions. Alibaba (09988), with its Tongyi Qianwen, and Baidu (09888),
with ERNIE Bot, both saw significant share price gains for two straight days.
Baidu's share price surged as much as 5% intraday. Nip Chun Pong attributes this partly
to another development: its autonomous driving service, Apollo Go, has established a
strategic partnership with ride-hailing platform Uber, planning to integrate thousands of
driverless vehicles into Uber's global network. Nip also noted that Baidu has been playing
catch-up. Its share price last Friday (the 11th) dipped to HKD 83, not far from its
52-week low, whereas Alibaba's current price is well above its 52-week low. That said,
Alibaba still faces competition in food delivery and e-commerce pricing, which may limit
its upside. Besides Alibaba and Baidu, Kuaishou (01024) is also worth watching. Its "Kling
AI" continues to drive the share price up. However, at around HKD 70, the stock is nearing
its 2023 resistance of about HKD 72. A short-term breakthrough could see the price
targeting HKD 78-80.
Following the H20's unbanning, chip stocks fell against the trend yesterday, with SMIC
closing down nearly 2%. Nip Chun Pong explained that SMIC had already warned of a likely
quarter-on-quarter revenue decline at its Q1 results. The H20's return could further
impact Q2 revenues, as SMIC's business is heavily weighted towards foundry services, and
its chip specs are relatively high compared to other local players. Thus, the H20's return
could hit SMIC hardest, and its share price is expected to remain under pressure in the
near term.