On May 6, 2025, the Hong Kong dollar is strong, looking for investment opportunities in a stagnant market.

After the holiday, the Hong Kong stock market officially filled the large downward gap left on April 7.

$Hang Seng Index(800000.HK)$ Before the holiday, on May 2, it rose by 385 points or 1.7%. After the holiday, the Hong Kong stock market continued to rise, completely filling the large downward gap left on April 7 today. The market is focused on the China-US trade negotiations, with signs of softened attitudes from both leaders, which is an important factor driving increased market risk appetite. Additionally, the Hong Kong stock market is also at the peak of first quarter earnings releases. Considering that the current PE of the Hang Seng Index is only 10 times, the valuation is still at the average of the past ten years. The stable trend of the macroeconomic environment will aid the short-term performance of the Hong Kong stock market. Short-term attention can be paid to the performance of trading volume, as a rebound in trading volume has significant implications for the market outlook.

A strong Hong Kong dollar brings investment opportunities.

On Monday, the Hong Kong dollar reached its strong end of the allowed trading range for the second consecutive trading day, rising during the day to the upper limit of the range at 7.75. The Hong Kong Monetary Authority sold Hong Kong dollars in the market, acting again after four years. The strength of the Hong Kong dollar and the strong performance of the US dollar against the renminbi reflect signs of improvement in the Sino-US trade relations. President Trump’s tariff policies are likely to lead to continued weakness of the dollar this year, which will benefit the strengthening of the Hong Kong dollar and a temporary stabilization of the renminbi.

A strong Hong Kong dollar will benefit Chinese companies listed in Hong Kong. Companies can benefit directly from the strong Hong Kong dollar, and their earnings per share are expected to benefit from the exchange rate, allowing the undervalued Hong Kong stocks to enhance their valuation.

More importantly, this will increase the investment interest and willingness of international financial institutions in Hong Kong stocks. This is believed to be one of the reasons why today certain large Chinese companies, which have lagged behind the market this year and have low valuations, are experiencing changes.$NONGFU SPRING(09633.HK)$ 、  $SANDS CHINA LTD(01928.HK)$ And $MEITUAN-W(03690.HK)$ Suddenly receiving capital attention. This kind of valuation correction behavior is likely attributed to long-term capital investment. This also explains one of the reasons for today's Hang Seng Index performance.$Hang Seng TECH Index(800700.HK)$ This is one of the reasons.

The market lacks focus after the holiday.

In fact, throughout the holiday period, there has been no progress in the trade negotiations between China and the USA, with only slight signs of softening attitudes from both leaders. Some PMI economic data weakened due to concerns about the trade war, but it had no impact on the market. The author noted that the more influential data during the holiday period included some sales figures announced by auto companies.

By April 2025, China's auto industry maintains stable growth, with new energy vehicles' penetration rate surpassing 50%. Benefiting from the demand for car purchases released before the May Day holiday, the industry is generally estimated to have a month-on-month increase of 10%-15% compared to March, but the year-on-year growth rates vary among different automakers. Brands like BYD, Huawei series (Wenjie/Zhijie), Xiaomi, and Xiaopeng have performed strongly, while some traditional joint venture brands (such as Volkswagen and Toyota) face transformation pressures.

$BYD COMPANY(01211.HK)$ (BYD) maintains its position at the top with sales of 380,089 units, a year-on-year increase of 21.3%. BYD's overseas sales continue to grow strongly, with a year-on-year increase of 92% to 78,705 units, accounting for 20% of total sales.$XIAOMI-W(01810.HK)$ SU7 delivered more than 28,000 units in April, with the high-end quality SU7 ULTRA, which started delivery in March, surpassing 10,000 pre-orders within two hours. The sales are directly threatening the performance of Tesla Model 3 in the domestic market.$LEAPMOTOR(09863.HK)$ Delivered 41,039 units, with April sales showing a year-on-year increase of 173%, highlighting the company's rapid expansion in the low stock price market.

The author is Bullish on the auto stocks.$XPENG-W(09868.HK)$  $XPeng(XPEV.US)$

Xpeng Motors delivered 35,045 vehicles in April, a year-on-year increase of 273% and a month-on-month increase of 6%. This marks Xpeng's sixth consecutive month of delivering over 30,000 vehicles. In the first four months of 2025, Xpeng Motors delivered a total of 129,053 smart electric vehicles, a 313% increase compared to the same period last year.

In addition to strong delivery growth, Xpeng Motors' urban smart navigation-assisted driving (XNGP) had a monthly active user penetration rate of 84% in April 2025. On April 28, 2025, Xpeng Motors officially launched its Xpeng smart assisted driving peace of mind service in China. This service is priced at 239 yuan per year and provides additional guarantees and revenue for the operation of the navigation-assisted driving (NGP), further consolidating NGP's leading position.

The company launched the all-new 2025 models G6 and X9 this year, maintaining strong competitiveness in both domestic and overseas markets. As smart driving technology matures, the driving experience in L3 mode is expected to become a major trend. The 2025 Xpeng X9 has exceeded expectations since its launch, ranking first in pure electric MPV sales for two consecutive weeks, and has initiated delivery in overseas markets such as Thailand, Singapore, and Malaysia. Sales in Xpeng's overseas markets will become a market focus. Additionally, market analysts expect that the gross margin for the new models in 2025 will further improve, which is likely to enhance the company's profitability.

Considering that consumers currently buy electric vehicles not just to save costs, but to focus more on the experience and technological advantages of smart driving, it reflects that Xpeng's continuous investment in R&D for smart driving is the right direction. With strong sales scaling effects increasing, the company's future goal of achieving a turnaround from loss to profit is likely to be achieved, and medium-term investment remains Bullish under the right conditions.

From a technical analysis perspective, the stock price is currently in a 'symmetric triangle pattern', with a descending resistance line around 78 yuan, while a mid-term ascending line is around 69 yuan. Another support level in the short term is at 71 yuan, which the stock price has not breached since April 11. If the stock price can break above the aforementioned symmetric triangle in the upcoming market, it will favor a recovery of the stock price, and the performance of the first quarter results is expected to be a key catalyst.

Options strategy

Facing the short-term weakness of stock prices, conservative investors who wish to buy can use Options strategies to reduce buying risks. For example, short a put to earn the option premium, if the stock price falls below the Strike price, it will maintain the original amount spent on Stocks, which will help reduce the risks of short-term operations.

As for aggressive investors, they can buy some longer-term call options for leveraged deployment, referencing call options with a Strike price of 80-90 yuan and an expiration of over 2 months for leveraged deployment. Taking the call options that expire on July 30, 2025, with a Strike price of 90 yuan as an example. From the chart below, it can be seen that the current IV is at a relatively low level. If the performance brings surprises, it is expected to drive the stock price's implied volatility to rise again.

Futu Securities Chief Analyst Tan Zhile

(The author is a licensed person from the Securities and Futures Commission, and neither the author nor their related parties have any financial interests in the suggested issuers.)