[ET Net News Agency, 12 February 2026] US markets initially advanced but later pulled
back overnight, while Asia-Pacific equities remained resilient this morning. However, the
Hang Seng Index (HSI) bucked the regional trend and opened lower. Losses deepened during
the session as technology shares slid further and two major blue-chips disappointed with
quarterly results, dragging the HSI below the 26,000 mark at one stage. Fortunately,
support emerged around the 10-day (26,979) and 20-day (26,966) moving averages, helping
the index to recover. By the midday break, the HSI was down 242 points or 0.9% at 27,023,
with main board turnover close to HKD 127.3 billion. The Hang Seng China Enterprises Index
fell 89 points or 1% to 9,178, while the Hang Seng Tech Index lost 92 points, or 1.7%, to
close at 5,407.

"Nip Chun Pong: HSI's doji candles signal tug-of-war between bulls and bears"

Overnight, the three major US indices posted minor declines, but most Asia-Pacific
markets including both mainland China benchmarks remained firm this morning. The HSI,
however, opened several dozen points lower before losses accelerated. Nip Chun Pong, the
Chief Strategist at Solo Securities, noted to ET Net News Agency that although the HSI had
posted a three-day winning streak, trading volume continued to fall, showing that the
rally was losing momentum due to weak fundamentals. With no new supportive policies from
the mainland and the earlier narrative of renminbi strength running out of steam, there
was no lasting driver for gains, particularly with profit-taking building ahead of the
Lunar New Year holiday. Nip added that the technical picture over the past two days showed
the HSI opening and closing at almost the same price, forming doji patterns that reflect
an ongoing battle between bulls and bears. He commented that the 27,000 level may be
psychologically important, but it is not truly significant. As long as the HSI can hold
above its recent low near 26,900 (recorded on 9 February), the current uptrend remains
intact. If this support gives way, however, the next major support area is expected
between 26,200 and 26,300, where there is a high concentration of bull certificates.

"NetEase misses expectations as new game underwhelms; comeback to 2023 highs unlikely for
now"

NetEase (09999) reported fourth-quarter net profit of RMB 6.241 billion, down 28.8%
year-on-year. Adjusted net profit came in at RMB 7.073 billion, missing consensus
forecasts and falling short of the expected RMB 9.2 billion. Quarterly net revenue was RMB
27.547 billion, up 3% but still below the RMB 28.79 billion predicted by analysts. Revenue
from games and related premium services reached RMB 22 billion, a 3.4% increase, yet also
missed expectations of RMB 23.42 billion.
While gaming and value-added services remain the group's key pillars, online game
revenue was up only 3.5%, far below the market's anticipated 11.3%. The company cited
continued steady content updates for core titles such as Fantasy Westward Journey,
Identity V, Eggy Party, Justice Mobile, and Where Winds Meet, driving player engagement.
In particular, cumulative player numbers for Where Winds Meet surpassed 80 million after
its multi-platform rollout.
Nip Chun Pong noted that compared to the first three quarters of 2025, NetEase's latest
quarterly results were clearly lacklustre. He cited a recent Morgan Stanley report
indicating that some Q4 revenue was deferred, which weighed on both top- and bottom-line
numbers for the period. Furthermore, Nip highlighted that many of NetEase's games are free
to play, which limits predictable revenue flows, including Where Winds Meet, which
required substantial investment but lacks a compelling core storyline and instead relies
on mini-game variety to boost engagement. This disconnect with market expectations has, to
some extent, weighed on current results.
Elsewhere, net revenue at Youdao rose 16.8% to RMB 1.6 billion, while NetEase Music
(09899) brought in RMB 2 billion, up 4.7%. "Innovation and Others" revenue declined 10.4%
to roughly RMB 2 billion. Nip pointed out, however, that Youdao's income is tied to
gaming, while NetEase Music remains a small contributor overall, making it difficult for
either to drive future group growth. The core business for NetEase remains gaming, where a
devoted player base offers some stability, but only truly breakout new hits will
reinvigorate growth. With sizeable gains already recorded in earlier quarters, maintaining
a high rate of growth off an elevated base is increasingly difficult.
NetEase shares dropped as much as 5% today. Nip observed that from the January high of
HKD 232.6, the stock has fallen nearly 20%. NetEase rallied to near HKD 250 last year on
the back of robust quarterly results, but given current circumstances, a return to those
highs looks difficult. He added that following the Q1 results in May last year, NetEase
shares jumped 13% in a single day before moving sideways; currently, the price is similar
to that level, with the pre-rally low just under HKD 170. For those interested in the
stock, Nip suggests considering phased accumulation in the HKD 170-180 range.