[ET Net News Agency, 20 January 2026] Following the People's Bank of China's
announcement of a targeted rate cut, the latest loan prime rates (LPR) for January
remained unchanged. The five-year-plus LPR stayed at 3.5% and the one-year LPR at 3%,
marking eight consecutive months of stability and meeting market expectations. With a lack
of fresh positive drivers, Hong Kong stocks have struggled to push beyond the 27,000 mark.
At midday, the Hang Seng Index was at 26,552, down 11 points or less than 0.1%. The index
briefly climbed to 26,638, breaking above the 10-day moving average (around 26,618), but
quickly slipped back on renewed selling. The Hang Seng China Enterprises Index was at
9,123, down 11 points or 0.1%, while the Hang Seng Tech Index fell 38 points or 0.7% to
5,711. Total main board turnover exceeded HKD 129.8 billion for the morning session.

"Yuen Che Hay: A-Share top signals spell adjustment for HSI, but no urgent need to reduce
holdings"

After the increase in A-share margin requirement ratios, both the Shanghai and Hong Kong
markets have seen a clear drop in turnover. The HSI has found some support near 26,500
after failing to break 27,000, but weaker capital flows are weighing on the market. Yuen
Che Hay, the Co-Director of Investment Strategy of Quam Asset Securities, told ET Net News
Agency that after the margin requirement was restored to 100%, the A-share rally stalled,
with the Shanghai Composite showing topping signals at 4,200. Historically, when A-shares
top out, corrections tend to last longer than just a few days, and he expects both prices
and volumes to fall in the short term, which will inevitably affect Hong Kong stocks.
Yuen said it is difficult to predict when the HSI will rebound, and the key now is to
watch for signs of stabilisation rather than trying to catch the bottom. However, he is
not overly pessimistic in the near term and does not think the index will immediately fall
back to last year's Q4 low of 25,200. He suggests 26,000 as an initial correction target,
with hope that positive earnings surprises during results season could provide support. In
terms of market signals to watch for a rebound, he recommends paying attention to the
average daily turnover of the Shanghai Composite, only when both price and turnover
recover is there a real chance for Hong Kong stocks to bottom out and rebound.
As for positioning, Yuen advises investors to stay on the sidelines for now, as downside
risk is not considered high. Apart from weak names like Meituan (03690), he believes there
is no need to reduce holdings in popular tech stocks such as Alibaba (09988) and Kuaishou
(01024). Resource stocks that are outperforming even in a down market can also be held
with confidence.

"Pop Mart's share buyback offers support, but key level remains HKD 228"

After more than four months of heavy selling, Pop Mart (09992) finally succumbed to
market pressure, launching its first buyback in nearly two years, spending HKD 251 million
to repurchase 1.4 million shares at prices between HKD 177.7 and HKD 181.2 each. This rare
move, after a long absence of buybacks, had a greater impact than any news flow, and the
share price rebounded sharply this morning, surging over 8% to become the best performer
among blue chips for the session.
Yuen acknowledges that the timing and scale of the buyback have a significant positive
effect, as it signals management's belief that the current level represents long-term
value. However, he points out that the key to sustained support is the continued execution
of buybacks. While the HKD 251 million buyback is substantial, it will take more than just
a few rounds of similar scale to drive a lasting recovery in the share price. Investors
should also observe whether the market responds well to these actions. From a technical
perspective, Yuen believes Pop Mart needs to recover the HKD 228 level, corresponding to
the 0.5 retracement of the golden ratio, before any sustained rebound can be expected.
Without this, the share price may lack upward momentum.
Beyond capital management, Yuen notes that the market's fundamental view on Pop Mart
remains unchanged: the scarcity factor of Labubu has faded, and with interest cooling off,
Pop Mart will need to discover a new blockbuster hit to replicate the previous surge in
its share price.