[ET Net News Agency, 04 February 2026] The US House of Representatives has narrowly
passed a government funding bill, bringing an end to the three-day partial federal
shutdown. However, escalating tensions in the Middle East have unsettled investors, US
officials confirmed the military shot down an Iranian drone that approached the USS
Lincoln aircraft carrier in the Arabian Sea. The combination of geopolitical risks and
continued losses in heavyweight tech names pulled all three major US indices lower
overnight. In Hong Kong, the Hang Seng Index (HSI) opened 37 points down and managed an
early rebound. Yet, as soon as the index approached the 27,000 mark, selling pressure
re-emerged, and the HSI has since struggled to hold above its 20-day moving average (about
26,850). By midday, the HSI was down 110 points, or 0.4%, at 26,724, with main board
turnover exceeding HKD 151.4 billion. The Hang Seng China Enterprises Index was down 48
points, or 0.5%, at 9,004, and the Hang Seng Tech Index fell 120 points, or 2.2%, to
5,347.

"Nip Chun Pong: HSI Likely range-bound between 26,500 and 27,000 as early-year rally stays
intact"

All three major US indices ended lower overnight. After a brief recovery in early trade,
the HSI quickly slipped back. Nip Chun Pong, the Chief Strategist at Solo Securities, told
ET Net News Agency that while the HSI was lifted earlier by renminbi appreciation, surging
more than 1,200 points between 27 and 29 January, that driver has faded and the index has
returned to previous levels. Still, Nip Chun Pong noted that this retracement merely
brings the HSI back to where it was before the late-January surge, the market's upward
trend from early January remains intact.
Nip Chun Pong said the dollar's direction is still unclear and there is currently a lack
of positive trading themes for both mainland and Hong Kong markets, resulting in cautious
sentiment. He expects the HSI to trade within a narrow range between 26,500 and 27,000 in
the near term. The index found support at around 26,500 in recent sessions, similar to the
trough seen around 20-21 January, which could serve as a base for another rebound.

"Tech stock drop not mainly due to tax rumours, Kuaishou's technology potential remains
attractive"

There were market rumours yesterday suggesting a VAT hike on sectors including gaming
and financial services, causing a sharp drop in tech stocks, Tencent (00700) fell as much
as 6% and Alibaba (09988) nearly 5% at one point. However, Xinhua News Agency cited
experts and industry insiders to stress that specific VAT rates for gaming and financial
sectors are clear and unchanged, making the rumours unfounded. Despite this clarification,
leading tech stocks failed to rebound; in fact, the sell-off continued today, with Tencent
dropping as much as 4% and Alibaba over 2%.
Nip Chun Pong explained that Tencent's weakness is mostly related to the "red packet
war" with Alibaba. According to reports, WeChat has blocked links related to Yuanbao red
packets within its app, citing excessive marketing and disruptive user activity around
Spring Festival campaigns. Tencent's share price had held support at the HKD 590 level
since mid-August last year, but recently broke below that level. Nip Chun Pong advised
investors to watch for fresh support around the HKD 550 mark, given the deteriorating
price action.
Despite the recent deep declines in tech leaders, Nip Chun Pong cautioned investors to
be selective when bargain hunting. He suggested waiting to see if the HSI can stabilise
above 26,500. Also, continued weakness in Wall Street tech is tempering sentiment for the
sector in Hong Kong. If support is confirmed, Kuaishou (01024) could be considered; Nip
Chun Pong pointed out that Kuaishou's "Kling" AI product is seeing solid market reaction
and competes mainly against Doubao, whose parent ByteDance is not listed. Kuaishou's
strong image and video generation capabilities, along with a focus on micro-drama content,
should continue attracting active users. Nip Chun Pong believes the stock is attractive
around the HKD 68-70 range.
Elsewhere, US firm Anthropic's launch of automated AI tools sparked renewed concerns
that traditional software companies could face destructive competition, driving US and
Hong Kong software stocks sharply lower. Nip Chun Pong argued that if such AI tools are
fully integrated into content creation and software applications, allowing users to bypass
paid SaaS platforms entirely, the threat to existing business models is real. He expects
further pressure on the sector in the short term.