[ET Net News Agency, 10 June 2026] US President Trump accused Iran of shooting down a US military Apache helicopter over the Strait of Hormuz, and the US military retaliated, causing the US-Iran conflict to escalate once again. Although Trump repeatedly emphasised that the ceasefire agreement has entered its final stage, market confidence is limited. Financial and resource shares fell, and coupled with Lenovo Group (00992) plunging due to price hike news, the HSI reported 24,294 at midday, down 271 points or 1.1%, falling for the sixth consecutive day. It has now approached this year's March low of 24,203; if it breaks below this, the next low would date back to July last year. The Hang Seng China Enterprises Index reported 8,283, down 41 points or 0.5%. The Hang Seng Tech Index reported 4,688, down 80 points or 1.7%. Main board turnover in the Hong Kong stock market exceeded HKD 170 billion, with southbound net inflows exceeding HKD 6 billion.
"Wan Kong Shing: If US inflation breaks 4%, Federal Reserve will make a major pivot"
The US is about to release its May CPI, which the market regards as the life-or-death chip guiding the US Federal Reserve's interest rate direction. While the market took a wait-and-see attitude overnight, news of the US retaliating against Iran emerged simultaneously, further hammering market expectations. US stocks reversed to close lower in a single day overnight, and Asian markets extended losses this morning. Japan, Korea, and Taiwan were hit across the board, and Hong Kong stocks further tested the 24,200 mark, falling over 300 points again at midday. Wan Kong Shing, the Chief Investment Officer of iFAST Global Markets, told ET Net News Agency that tonight's US May CPI is indeed extremely important. After the inflation rate continued to expand in March and April, the market is worried that the annual inflation rate will further expand to above 4%. The market currently generally expects May to be 4.2%, and even if the final result meets expectations, an annual rate higher than 4% would be an important warning signal. This is because, referring to historical data, when US inflation is higher than 4%, a relatively large pivot occurs in the market, and the Federal Reserve will have no choice but to take action to raise interest rates.
However, predicting that oil prices will remain at a relatively high level, Wan Kong Shing expects a higher chance of bad news. If US inflation breaks 4%, the Federal Reserve will fall into a situation where it only increases and never cuts rates, and might even need to raise rates three times for a total of 0.75 percentage points to meet expectations. The broader market will inevitably be shaken by then, and it is feared that after Hong Kong stocks lose the 24,200 mark, support will shift down to 23,800 or even 23,500.
"High oil prices squeeze Cathay's profits, Swire inevitably trims stake to cash out"
Swire (00019) announced the issuance of convertible bonds to raise HKD 4.7 billion, but used its held Cathay Pacific (00293) shares as the target for conversion. The conversion price of HKD 13.18 represents a 2.89% premium over Cathay's closing price yesterday. If fully converted, Swire will effectively trim its stake in Cathay by 356 million shares, accounting for about 5.9% of Cathay's equity. Meanwhile, Air China (00753), which holds mutual shares with Cathay, completed the allotment of 3.044 billion new A-shares to China National Aviation Holding to raise RMB 20 billion, causing Cathay's shareholding in Air China to be diluted from 15.09% to 12.85%. Under the double squeeze of "being divested" and "forced dilution", Cathay plunged nearly 8% at midday.
Wan Kong Shing pointed out that although Swire's move cannot be confirmed as purely being "short of cash" or taking the opportunity to trim its stake in Cathay due to a bearish outlook, he does not rule out the possibility of both. He explained that with oil prices staying high for a long time, Cathay is indeed facing "difficult business" due to expensive oil. With profits squeezed, it is not without reason for Swire to trim its stake. Deep integration with businesses in Mainland China also imposes certain expansion constraints, increasing Swire's desire to divest. However, he admitted that after today's sharp drop, most of the unfavourable factors have already been reflected, and it is expected that there will be relatively strong support around the year's low of HKD 11 at the furthest.
After the sharp drop, if viewing Cathay from a dividend perspective, Wan Kong Shing pointed out that if the stock price drops further to around HKD 11, the expected yield has already exceeded 6%. From a yield-buying perspective, the stock price looks to bottom out in the short term, and it is fast with room for upside, making it indeed suitable to enter for yield purposes. Looking up to HKD 13, there are both capital gains and dividends; even after the US raises interest rates, Cathay is still expected to maintain a level higher than US interest rates.
"Wan Kong Shing: If US inflation breaks 4%, Federal Reserve will make a major pivot"
The US is about to release its May CPI, which the market regards as the life-or-death chip guiding the US Federal Reserve's interest rate direction. While the market took a wait-and-see attitude overnight, news of the US retaliating against Iran emerged simultaneously, further hammering market expectations. US stocks reversed to close lower in a single day overnight, and Asian markets extended losses this morning. Japan, Korea, and Taiwan were hit across the board, and Hong Kong stocks further tested the 24,200 mark, falling over 300 points again at midday. Wan Kong Shing, the Chief Investment Officer of iFAST Global Markets, told ET Net News Agency that tonight's US May CPI is indeed extremely important. After the inflation rate continued to expand in March and April, the market is worried that the annual inflation rate will further expand to above 4%. The market currently generally expects May to be 4.2%, and even if the final result meets expectations, an annual rate higher than 4% would be an important warning signal. This is because, referring to historical data, when US inflation is higher than 4%, a relatively large pivot occurs in the market, and the Federal Reserve will have no choice but to take action to raise interest rates.
However, predicting that oil prices will remain at a relatively high level, Wan Kong Shing expects a higher chance of bad news. If US inflation breaks 4%, the Federal Reserve will fall into a situation where it only increases and never cuts rates, and might even need to raise rates three times for a total of 0.75 percentage points to meet expectations. The broader market will inevitably be shaken by then, and it is feared that after Hong Kong stocks lose the 24,200 mark, support will shift down to 23,800 or even 23,500.
"High oil prices squeeze Cathay's profits, Swire inevitably trims stake to cash out"
Swire (00019) announced the issuance of convertible bonds to raise HKD 4.7 billion, but used its held Cathay Pacific (00293) shares as the target for conversion. The conversion price of HKD 13.18 represents a 2.89% premium over Cathay's closing price yesterday. If fully converted, Swire will effectively trim its stake in Cathay by 356 million shares, accounting for about 5.9% of Cathay's equity. Meanwhile, Air China (00753), which holds mutual shares with Cathay, completed the allotment of 3.044 billion new A-shares to China National Aviation Holding to raise RMB 20 billion, causing Cathay's shareholding in Air China to be diluted from 15.09% to 12.85%. Under the double squeeze of "being divested" and "forced dilution", Cathay plunged nearly 8% at midday.
Wan Kong Shing pointed out that although Swire's move cannot be confirmed as purely being "short of cash" or taking the opportunity to trim its stake in Cathay due to a bearish outlook, he does not rule out the possibility of both. He explained that with oil prices staying high for a long time, Cathay is indeed facing "difficult business" due to expensive oil. With profits squeezed, it is not without reason for Swire to trim its stake. Deep integration with businesses in Mainland China also imposes certain expansion constraints, increasing Swire's desire to divest. However, he admitted that after today's sharp drop, most of the unfavourable factors have already been reflected, and it is expected that there will be relatively strong support around the year's low of HKD 11 at the furthest.
After the sharp drop, if viewing Cathay from a dividend perspective, Wan Kong Shing pointed out that if the stock price drops further to around HKD 11, the expected yield has already exceeded 6%. From a yield-buying perspective, the stock price looks to bottom out in the short term, and it is fast with room for upside, making it indeed suitable to enter for yield purposes. Looking up to HKD 13, there are both capital gains and dividends; even after the US raises interest rates, Cathay is still expected to maintain a level higher than US interest rates.
