[ET Net News Agency, 04 February 2025] The US is expected to engage in talks with China
on tariff issues within 24 hours. Trump stated that if no agreement is reached, tariffs
will be increased. The Wall Street Journal previously cited sources saying that China has
prepared a preliminary plan, including reiterating a commitment not to devalue the yuan.
The market is optimistic about the progress of the negotiations, driving up Hong Kong
stocks. The Hang Seng Index reported 20,622 at midday, up 404 points or 2%, with a
turnover on the main board exceeding HKD 89 billion. The Hang Seng China Enterprises Index
reported 7,574, up 190 points or 2.6%. The Hang Seng Tech Index reported 4,922, up 185
points or 3.9%.

"Yuen Che Hay: Investors should not follow too closely this quarter"

The White House announced a temporary suspension of the 25% tariffs on Canada and Mexico
for thirty days, and also scheduled trade talks with China. The market anticipates a
potential easing of US-China relations, leading to a significant rise in the Hang Seng
Index this morning, with gains exceeding 600 points at one point. Yuen Che Hay, the
Co-Director of Investment Strategy of Quam Asset Securities, told ET Net News Agency that
Trump's actions are following his usual pattern of starting with tough negotiations before
proceeding to talks. However, he cautioned against overly trusting that US-China relations
will smooth sailing from here onwards. For instance, with the postponement of tariffs,
Trump has kept a trump card for later use, suggesting that he will gradually release more
tactics in negotiations with China. He recommended being prepared for volatility and
cautiously accumulating stocks during dips to benefit from market fluctuations.
Within the first quarter at least, Yuen Che Hay advised investors not to follow news too
closely and to be quick in trading stocks. When nearing profit-taking levels, it's wise to
start planning exits. He also mentioned that the US-China trade war will not actually
impact all stocks, and it's more of a sentiment issue. During periods of low sentiment,
investors can pay attention to individual stocks that may be affected by sentiment but not
by actual impact, such as high-yield resource stocks.

"XPeng to become the fourth turnaround force, buy at HKD 60"

XPeng (09868) announced the delivery of 30,350 intelligent electric vehicles in January,
a 268% year-over-year increase, marking the third consecutive month of deliveries
exceeding 30,000 vehicles. XPeng MONA M03 has delivered over 15,000 vehicles for two
consecutive months, and XPeng P7+ has accumulated deliveries of 20,000 vehicles in two
months since its launch. This news boosted the stock price strongly, with gains extending
to a maximum of 13% in the morning session, reaching a high of HKD 67.12, exceeding a
one-year high.
Yuen Che Hay stated that XPeng's recent strong deliveries have the potential to make it
the fourth turnaround force in the automotive industry after Li Auto (02015), Seres
(SH:601127), and Leapmotor (09863). He believes that XPeng will continue to benefit from
economies of scale, as its production capacity has been established. Introducing new
models in the future will help reduce previous investment costs, leading to continued
improvement in performance. Yuen Che Hay currently refrains from making bold estimates,
with future targets referencing previous highs, such as aiming for around HKD 75,
representing a preliminary target based on the high in November 2023. Potential buyers may
consider waiting for a pullback to around HKD 60.
Despite frequent US sanctions on Chinese electric vehicles, Yuen Che Hay stated that
most Chinese companies are not planning to enter the US market. Even BYD (01211), which is
building a factory in Mexico, has responded that its primary focus will be on entering the
South American market. Therefore, the overall risk faced by Chinese auto companies from
US-China trade war is relatively minimal.