[ET Net News Agency, 12 May 2025] Attention is on the post-meeting statement from the
China-US trade negotiations, with market reactions being optimistic. Exports and
e-commerce led the gains, while pharmaceutical stocks came under pressure. The Hang Seng
Index reported 23,079, up 212 points or 0.9%, with main board turnover exceeding HKD 130.2
billion. The Hang Seng China Enterprises Index stood at 8,376, up 67 points or 0.8%. The
Hang Seng Tech Index reached 5,279, up 99 points or 1.9%.

"Wong Wai Ho: Hang Seng Index has risen 4,000 points; significant surprises are needed for
a true breakthrough"

The US and China recently held trade negotiations in Geneva, with both sides describing
the talks as constructive, achieving substantial progress. Vice Premier He Lifeng noted
that the atmosphere was candid and in-depth, and both sides agreed to establish a trade
consultation mechanism, with details to be finalised soon, and a joint statement expected
today. The Hong Kong stock market opened over 300 points higher this morning, but faced
resistance after the Hang Seng Index touched 23,200 before the statement was released.
Wong Wai Ho, the First Vice President of the Yan Yun Family Office (HK) Limited, told ET
Net News Agency that the market is currently awaiting details of the statement, with
today's rise primarily reflecting a positive sentiment after the China-US talks. After a
gain of over 300 points, the index has already factored in the positive elements, and
future movements will depend on the statement's content.
He explained that while the current news indicates the establishment of a trade
consultation mechanism, it does not formally mention any reductions in tariffs. The actual
extent of tariff reductions will significantly impact the market; if, as President Trump
previously mentioned, tariffs decrease to 50%, it would indeed benefit the market.
However, he emphasised that even with a 50% reduction, tariffs would still be considerably
higher than pre-tariff levels. The Hang Seng Index has already recovered the 3,000-point
decline from when tariffs were introduced, returning to levels seen before tariffs. If
tariffs are still a concern, the current index level suggests it has already
"appreciated." Technically, the Hang Seng Index has seen a fluctuation of 4,000 points to
date, and even if the statement is favourable, the odds for new investments at this price
level are low.

"Significant drop in drug prices will impact the industry, affecting CXO stocks like WuXi
series"

As the negotiation statement is being finalised, Trump has begun targeting the
pharmaceutical sector. He plans to sign an executive order tonight at 9 PM HK time, which
will see almost all prescription drug prices "immediately drop by 30% to 80%." The US will
purchase drugs at the lowest prices globally, which Trump claims is to secure true
fairness for Americans. Following this news, pharmaceutical stocks in Hong Kong came under
pressure, with companies like Akeso (09926) and BeiGene (06160) experiencing sell-offs.
Wong Wai Ho noted that Trump's measures resemble China's bulk procurement of
pharmaceuticals, primarily aimed at lowering drug prices. If drug prices drop by up to
80%, even if companies increase sales, they may not achieve sufficient profit margins,
which will inevitably affect their business. He also mentioned that even companies not
exporting to the US would be impacted, as generic drug prices would also decrease due to
the drop in original drug prices.
Regarding CXO stocks like WuXi series, while they are not directly affected
pharmaceutical companies, Wong indicated that if drug companies reduce development
spending in response to falling drug prices, it would also impact the CXO sector. Thus,
the investment risks in WuXi series are likely to increase rather than decrease. He added
that since drug tariffs have not yet been formally introduced, there are concerns that the
US's insistence on lowering drug prices might precede any tariff considerations,
potentially leading to deeper adjustments in pharmaceutical stocks, especially since many
leading pharmaceutical stocks have already seen significant gains, suggesting a generally
bearish outlook for the sector in the short term.