[ET Net News Agency, 28 August 2025] Overnight, US equities ended higher after a choppy
session. Although Nvidia's post-close results were slightly ahead of expectations, its
data centre business delivered only average performance, sending the share price down
nearly 3 per cent after hours. Hong Kong stocks opened lower this morning following the
HSI futures, and were dragged down by declines in tech stocks, at one point falling below
the 25,000 level. Later, as A-shares stabilised, the overall market's losses eased. The
HSI closed the morning at 25,035, down 165 points or 0.7 per cent, with main board
turnover exceeding HKD 210.8 billion. The Hang Seng China Enterprises Index finished at
8,943, down 77 points or 0.9 per cent. The Hang Seng Tech Index closed at 5,638, down 58
points or 1 per cent.

"Mak Ka Ka: Support moves down to 24,800"

After briefly slipping below 25,000 in early trade, the HSI recovered. Mak Ka Ka, Head
of Financial Products Trading and Research Department of SinoPac Securities (Asia), told
ET Net News Agency that Hong Kong stocks are now at elevated levels and have breached some
previous technical support zones, with the next support now at 24,800. She expects the
market to face consolidation pressure in the near term. On the other hand, with rising
expectations of a US rate cut in September and a weaker US dollar, Hong Kong stocks have
been indirectly supported and are likely to fluctuate around the 25,000 mark.
In addition, A-shares have already posted substantial gains and may be due for a
correction at high levels, which could also contribute to a cautious tone in Hong Kong,
with long-term funds unlikely to enter the market aggressively. For now, short-term
capital is rotating between sectors depending on earnings news.

"Meituan to remain pressured by price wars for the next two quarters, no new growth
engines to offset subsidies"

Meituan (03690) reported an 89 per cent year-on-year plunge in adjusted net profit for
the second quarter to RMB 1.493 billion, well below expectations of RMB 9.971 billion.
Revenue rose 12 per cent to RMB 91.84 billion, but core local commerce profit slumped
nearly 76 per cent to RMB 3.721 billion. Management has guided that the core local
commerce segment will record a significant loss in the third quarter due to strategic
investments.
Mak Ka Ka said these results were weaker than she had expected, with food delivery
subsidies having a significant impact on Meituan's profitability. Furthermore,
management's outlook is also on the negative side, especially as they have made it clear
that there is no intention to ease competition in the short term, meaning the pace of cash
burn will increase. The market generally remains cautious about Meituan's results this
quarter and even for the fourth quarter.
Mak further pointed out that subsidisation also places considerable pressure on the
company's financial health. Although subsidies may not lead to an immediate and extreme
deterioration, persistent price competition will inevitably weigh on the company's
finances. She frankly stated that she does not see any business segment in the short term
that can offset the cost of these subsidies.

"Longer-term hope for profit growth from in-store services, but little sign of
bargain-hunting for now"

Looking further ahead, there are some positives for Meituan in the medium to long term.
Mak noted that Meituan's user base remains solid, and its in-store services business has
growth potential. She expects in-store services could become the main profit driver by
2026, but this transformation will take time and is unlikely to materialise soon.
On the technical front, Mak highlighted that the share price has broken below one-month
and 52-week lows, with the RSI now in oversold territory and the MACD showing a bearish
divergence. This has established a short-term weak pattern, and a further decline towards
the HKD 100 psychological level cannot be ruled out. She added that there is currently no
sign of aggressive buying to catch a rebound, with capital flows still skewed to the short
side and no sign of a reversal. She does not recommend conservative investors to
bottom-fish at current levels. In the medium to long term, the share price will continue
to be constrained by price competition and ongoing subsidy battles.