[ET Net News Agency, 18 July 2025] US initial jobless claims for the latest week fell to
221,000, declining for a fifth consecutive week and reaching the lowest level since
mid-Apr. In addition, after two months of decline, US retail sales in Jun rebounded by 0.6
percent month-on-month, exceeding the expected 0.1 percent rise. US stocks ended higher on
Thursday after a volatile session, with all three major indices closing up. Strong
performance in tech stocks led the HSI to open over 200 points higher, reaching 24,821 in
early trading and once again approaching the Mar high. At midday, the HSI stood at 24,676,
up 177 points or 0.7 percent, with main board turnover near HKD 136.1 billion. The Hang
Seng China Enterprises Index was at 8,922, up 69 points or 0.8 percent. The Hang Seng Tech
Index was at 5,490, up 41 points or 0.8 percent.

"Yuen Che Hay: Hong Kong stocks have breakout potential, but stability depends on results
season"

The Hong Kong market continues to consolidate at high levels, with the HSI at one point
rising more than 300 points this morning to approach the Mar peak of 24,874, before gains
narrowed to over 150 points at midday. Yuen Che Hay, the Co-Director of Investment
Strategy of Quam Asset Securities, told ET Net News Agency that although the HSI has
recently only hovered at high levels, he remains confident that Hong Kong stocks will set
new highs within the year. He pointed out that heavyweight tech stocks have lacked major
news lately and have not driven the HSI higher, but capital activity remains strong, with
investors frequently chasing non-heavyweight sectors such as pharmaceuticals, indicating
that while the market is not fully betting on a broad rally, thematic trading sentiment
remains very active.
Yuen Che Hay explained that although a China-US trade agreement has recently been
reached, there are still no signs of a global economic upturn, leading to a wait-and-see
attitude and range-bound trading at high levels. He is optimistic that as news becomes
clearer, the HSI will have the chance to break through 24,874, with an initial breakout
target of 25,200. However, he emphasised that whether the market can stabilise above
25,000 will depend on the coming results season, which will need strong performance to
attract capital and support the market.

"For pharma stocks, only large-caps are worth watching now; if market breaks out and funds
return to tech, pharma rally may end"

Pharmaceutical stocks have been extremely strong in recent days, with gains across the
board. Yuen Che Hay believes the sector was initially driven by expectations of overseas
expansion, especially as year-to-date licensing income from foreign pharma companies for
China pharma firms has already surpassed last year's total. This has led market funds to
actively seek out different pharma stocks in anticipation of positive news pushing share
prices higher. However, given the sector's rapid gains recently, Yuen thinks the best
entry timing has passed, and those looking to invest now should focus only on larger, more
stable names such as CSPC Pharma (01093), Hengrui Pharma (01276), and Hansoh Pharma
(03692). Otherwise, understanding the background and investment rationale for many pharma
stocks is not straightforward at this stage.
Yuen notes that investing in pharma stocks carries considerable risk, as there is
significant R&D funding pressure and frequent share placements, but when there is
progress, share price gains can be substantial, so the sector offers high risk and high
return. As the rally in pharma stocks has been driven by sector rotation, if the broader
market breaks out and funds start to flow back into tech stocks, it could signal the end
of the pharma rally. He expects the next month may still see active trading in pharma
names, but whether this can last the whole quarter remains uncertain.