[ET Net News Agency, 02 January 2026] On the first trading day of 2026, with the
Mainland China market still closed for the New Year holiday, Hong Kong stocks opened
higher and continued to climb throughout the morning. Technology shares performed
strongly, pushing the Hang Seng Index above the 26,000 mark within half an hour of trading
and sustaining further gains. By midday, the HSI was up 559 points or 2.2 per cent at
26,189, reaching a one-month high and breaking through all major moving averages. Main
board turnover approached HKD 76.9 billion. The Hang Seng China Enterprises Index rose 201
points or 2.3 per cent to 9,115, while the Hang Seng Tech Index added 186 points or 3.4
per cent to 5,702.

"Kingston Lin: Early surge in HSI unlikely to change range-bound pattern between 25,500
and the 50-day line"

On the first trading day of the year, Hong Kong stocks rallied more than 500 points in
the absence of southbound capital, closing above the 26,000 level. Kingston Lin, a
director of the Hong Kong Institute of Financial Analysts and Professional Commentators
Limited, told ET Net News Agency that the HSI had temporarily broken above 26,000 before
the holiday but ultimately failed to hold that level at the close. With no positive news
released during the break, he does not rule out the possibility that today's gains may not
be sustained by the close. He noted that this morning's rally only recouped losses from
last Wednesday, and does not signal the start of a new uptrend. He expects the HSI to
remain range-bound between 25,500 and the 50-day moving average (around 26,000) in the
short term. He further pointed out that if the HSI is pushed higher while southbound
capital is absent, it is possible that when these funds return next week, there may be
profit-taking at higher levels.
Looking ahead, Lin forecasts that the HSI targeting 30,000 this year is a baseline
expectation. Whether the index can break above 30,000 or even reach new highs will depend
on demand for technology shares and the scale of capital inflows from both the Mainland
China and overseas.

"BYD, Xiaomi, Leapmotor, and XPeng all achieve annual sales targets"

Automakers have released their December and full-year sales figures. BYD (01211)
reported sales of 420,000 vehicles in December 2025, down 18.3 per cent year-on-year and
12.5 per cent month-on-month. For the full year, BYD sold 4.6024 million units, up 7.7 per
cent year-on-year. Xiaomi (01810) delivered over 50,000 vehicles under its Xiaomi Auto
brand in December, bringing full-year sales to more than 410,000 units. Leapmotor (09863)
delivered 60,000 vehicles in December, a 42 per cent year-on-year increase, with full-year
deliveries reaching 596,600, up 103 per cent year-on-year. Li Auto (02015) delivered about
44,000 vehicles in December, down 24.1 per cent year-on-year, with annual deliveries of
around 406,000, down 18.8 per cent compared to last year. NIO (09866) achieved a record
monthly high in December with 48,000 deliveries, up 54.6 per cent year-on-year, with
nearly 330,000 vehicles delivered for the year, a 47 per cent increase. XPeng (09868)
delivered 37,500 vehicles last month, up 2 per cent year-on-year, and 430,000 for the full
year, more than doubling its previous total.

"BYD expected to lead in overseas sales this year"

Reviewing BYD's monthly sales data from last year, the company has experienced
year-on-year declines since September 2025, a trend that continued through the latest
figures. Kingston Lin admits that with reduced government subsidies and fierce market
competition, BYD may not reverse its negative year-on-year growth this year. However, he
points out that BYD's overseas sales are the real highlight. Overseas sales have already
exceeded one million units this year, marking a record high and more than doubling
year-on-year. Overseas markets also offer significantly higher profit margins compared to
the domestic market. If overseas sales growth continues, it will become the main catalyst
for the company's earnings.
Lin commented that BYD remains one of the most promising new energy vehicle makers, and
he is optimistic about the company's outlook for the coming year. He noted that BYD's
overseas expansion is the best among peers, with a strong presence in Asia, Europe, and
even South America, including the establishment of production plants and the deployment of
seven to eight roll-on/roll-off ships. The addition of these ships provides robust
logistics support for overseas markets, something few other automakers have achieved.
Currently, BYD's overseas sales lag behind Chery by only about 10,000 units, and the
company is expected to surpass Chery this year to become the top exporter.
Regarding share price, Lin said investors should watch the HKD 100 resistance level in
the short term. A break above this level could see the stock target HKD 130 within the
year.

"Weaker trade-in subsidies and soft domestic demand put focus on overseas sales"

On 30 December 2025, the National Development and Reform Commission and Ministry of
Finance announced that the "trade-in" policy will be extended to 2026, with subsidy
ceilings remaining the same as in 2025. Scrapping an old vehicle and buying a new energy
passenger car will earn a subsidy of RMB 20,000, while purchasing a fuel vehicle of 2.0
litres or below will give a RMB 15,000 subsidy. However, unlike last year's fixed amount,
this year's subsidies will be linked to the vehicle price on a proportionate basis.
Kingston Lin noted that this year's subsidies are less generous than last year's. With
weak domestic demand and reduced subsidies, the outlook for the auto sector is not
particularly strong, which has already been reflected in falling share prices and pressure
on Mainland China car sales. He advises investors to focus on overseas sales data as the
key indicator going forward.