[ET Net News Agency, 19 March 2026] The US Federal Reserve kept rates unchanged, but
Chair Powell said that given the uncertainty in the Middle East, progress on taming
inflation has been weaker than expected and even discussed the possibility of a hike.
Brent spiked above 110 US dollars after an Iranian key gas field was hit, sending US
stocks sharply lower overnight. Japan and South Korea fell this morning. Beyond external
pressure, Tencent (00700) post-results and Alibaba (09988) pre-results both slumped,
dragging the HSI. At midday, the HSI was at 25,592, down 432 points or 1.7%, losing the
10-day line around 25,752. Main board turnover topped HKD 153.5 billion. The Hang Seng
China Enterprises Index was at 8,720, down 115 points or 1.3%. The Hang Seng Tech Index
was at 5,027, down 80 points or 1.6%.

"Lee Wai Kit: Chinese tankers' safe passage supports China and Hong Kong equities"

Powell noted Middle East uncertainties and slower-than-hoped disinflation, while fresh
strikes on Iranian oil infrastructure lifted crude and pushed the three major US indices
down over 1%. Asia weakened, and the HSI at one point fell more than 500 points before
finding support near 25,500 and trimming losses by midday. Lee Wai Kit, a financial
commentator of TF International, told ET Net News Agency that with Powell's term nearing
its end, markets are focusing more on the oil-inflation link than his remarks. Despite the
overnight oil spike, Lee said dip buyers continue to accumulate tech on weakness.
Crucially, with Chinese oil tankers transiting the Strait of Hormuz safely, Mainland
China's crude supply and oil prices tend to be more stable, which is a key reason China
and Hong Kong markets are steadier than regional peers.
Given a less tight crude backdrop, Lee expects the market to refocus on heavyweight
earnings. He projects the HSI to range between 25,000 and 26,200 in the short to medium
term.

"After near-term negatives are digested, higher AI spend is positive for Tencent; AI firms
will scale volumes before pricing"

Tencent (00700) reported adjusted net profit up 17% year on year to RMB 64.694 billion,
near expectations. Revenue rose 13% to RMB 194.371 billion, a touch better than expected.
Domestic games rose 15% and international games 32%, both ahead of forecasts; ads rose
17%, slightly below; fintech was up 8%. Despite broadly solid revenue, management guided
that AI product investment will at least double, and that buybacks will be trimmed
accordingly, sending the share down about 6% this morning.
Lee said Tencent's pre-results pause on buybacks foreshadowed this reduction. The
confirmation dented sentiment and drove today's fall. Still, as a tech company, investors
ultimately prefer growth over large buybacks. With reduced buybacks funding heavier AI
investment, once the short-term negative is absorbed, the market is likely to reassess
Tencent's business build-out over capital actions. After stabilisation, capital could
rotate back in; the HKD 500 area should attract large interest and could mark a bottoming
rebound.
Management also indicated that if compute capacity remains tight, further price hikes
are possible. Lee's take is neutral on recent AI price increases by Alibaba (09988) and
Baidu (09888): earlier deep cuts mean current hikes are off a low base. For big AI, volume
matters more than price. With majors scaling aggressively and new entrants proliferating,
platforms must differentiate to grow B2C users to break out. Price hikes can steady
near-term revenue, but boosting active users is the top priority. For now, the AI market
is turning into a red ocean; upstream players such as AI chips and data centres remain the
main beneficiaries.