[ET Net News Agency, 03 September 2025] Hong Kong stocks traded in a choppy fashion this
morning. Weaker-than-expected US manufacturing data for August, together with a rise in US
Treasury yields, dragged US equities lower on the first trading day of September. However,
the Golden Dragon Index, which tracks China-concept stocks, rose, and the Hang Seng Index
opened higher, led by tech names. The momentum faded later in the session, dragging the
index into negative territory by the end of the morning. The HSI closed the half-day at
25,395, down 101 points or 0.4 per cent, with main board turnover exceeding HKD 152
billion. The Hang Seng China Enterprises Index finished at 9,060, down 47 points or 0.5
per cent. The Hang Seng Tech Index closed at 5,697, down 31 points or 0.5 per cent.

"HSI fluctuates as A-shares weigh, but outlook remains optimistic"

The HSI saw volatile trading, opening more than 100 points higher and at one point
extending gains to nearly 300 points. Nip Chun Pong, the Chief Strategist at Blackwell
Global Securities, told ET Net News Agency that overall sentiment in Hong Kong remains
positive. Profit-taking in US equities at high levels has, in fact, attracted foreign
capital into Hong Kong stocks. He also noted that trading activity in Hong Kong has been
robust, with daily turnover exceeding HKD 300 billion since last week, indicating
continued investor optimism. Nip Chun Pong pointed out that, with the HSI accumulating
substantial gains recently and rising above 25,500, investors have become more cautious,
and sharp rallies are typically followed by profit-taking. Yesterday's session saw the
index open high but close lower.
The Shanghai Composite Index was weaker this morning, which to some extent limited the
HSI's performance. Nip Chun Pong believes that, despite today's pullback in the Shanghai
Composite, there should be solid support around the 3,800 level, and the pressure for a
significant correction in Hong Kong is also limited. He noted that sentiment is somewhat
cautious, with investors watching for both external factors, such as potential US rate
cuts, and the possibility of new policies in the upcoming Policy Address in mid-September.
He expects the HSI to trade within a narrow range, adding that a close above 25,600 today
would be a good result, especially as the HSI has only closed above that level four times
this year. If so, the chance of testing 26,000 increases considerably.

"NIO's L90 sales continue to rise, but break-even remains a distant prospect"

NIO (09866) reported a second-quarter loss of about RMB 5.14 billion, little changed
from a RMB 5.126 billion loss a year ago, but narrower than the RMB 6.8 billion loss in
Q1. Automotive sales for the quarter reached RMB 16.136 billion, up 2.9 per cent
year-on-year and 62.3 per cent quarter-on-quarter. Total group revenue was RMB 19.009
billion, up 9 per cent year-on-year and 57.9 per cent quarter-on-quarter. Gross profit
stood at RMB 1.897 billion, up 12.4 per cent year-on-year and doubling quarter-on-quarter,
with gross margin rising to 10 per cent.
Management expects third-quarter deliveries of 87,000 to 91,000 vehicles, a year-on-year
increase of 40.7 to 47.1 per cent, setting a new record for the group. Deliveries in July
and August were 21,000 and 31,300 units respectively, meaning September deliveries must
approach 40,000. Nip Chun Pong commented that for NIO's new L90 model, buyers who opt to
lease the battery can purchase the vehicle for under RMB 200,000, making it more
attractive than competitors' new models, which typically cost over RMB 300,000. In
addition, the L90 has received positive market feedback, and sales are expected to
continue rising. He added that, ahead of the Golden Week holiday, the group may launch
promotions to boost sales. Although the September delivery target is ambitious, even if
only 85 to 90 per cent is achieved, the market is likely to accept it, as the year-on-year
growth would still be impressive.
However, the group also expects third-quarter revenue of RMB 21.812 to 22.876 billion,
up around 16.8 to 22.5 per cent year-on-year. This increase is only about half the growth
rate of deliveries, indicating a lower average selling price per vehicle. Nip Chun Pong
noted that intense competition in the EV market is pushing prices down. While NIO's
overall performance is improving, a return to profitability still looks some way off, and
it is almost impossible for the company to break even this year. The earliest possible
timeframe for turning profitable is likely 2026, or even two to three years from now.
Nonetheless, the market has generally accepted NIO's interim results, and major brokers
such as Morgan Stanley and Jefferies have raised their target prices post-results. As a
result, both the ADR and H-shares gained overnight. However, given the strong run-up in
NIO's share price, Nip Chun Pong suggested that investors holding the stock could consider
taking profit at HKD 55, or even at HKD 57-58. Those not holding shares should consider
entering only if the price falls below HKD 50.