The Hang Seng Index remains under pressure this week as investors focus on the ongoing trade war between the United States and China. After peaking at $24,855 on March 19, the blue-chip index has plunged to a low of H$20,000, its lowest level since February 3rd this year. It has plummeted by 20%, meaning that it is in a technical bear market. This article explores the top reasons to buy this dip.

Hang Seng Index stocks don’t do a lot of business in the US

The first main reason why the Hang Seng Index may bounce back is that many of its biggest constituents may not be affected severely by the ongoing trade war between the US and China.

Tencent, the biggest company in the index, makes most of its money in China, with only a tiny part of its business coming from the United States. It is also a service-based company that will not be affected by these tariffs. 

ICBC is the next biggest company in the index, with a market cap of over $305 billion. Banks are not directly affected by these tariffs. Instead, they are affected by China’s stimulus measures that tend to squeeze their margins. 

Alibaba, the third-biggest company in the Hang Seng Index, is a global company that does business around the world. Alibaba’s business may be affected slightly by the ongoing tariffs since the US is the biggest source of traffic to the site. However, the question is whether US importers have an alternative other than buying from China.

The other top companies in the index like China Mobile, Bank of China, Petrochina, HSBC, BYD, and Xiaomi have a small exposure to the United States.

In line with this, data shows that China has continued to reduce its exposure to the United States as tensions between the two countries have worsened. China’s exports to the US stood at over $438 billion in 2024, much lower than the $507 billion it sold in 2017 and the $536 billion it sold during the pandemic. 

China stimulus to offset Trump’s tariffs

The other reason why the Hang Seng Index will bounce back is that China has tools to respond to Trump’s tariffs. Beijing announced a reciprocal 34% tariff on US goods on Friday. In response, Trump warned that he will impose a 50% tariff on all Chinese goods.

In a statement on Tuesday, China said that it would fight to the end to defend its business. On the same day that officials said that, they let the Chinese yuan crash, as we predicted during the weekend. A weaker yuan makes Chinese goods cheaper in other countries.

China is also said to be considering more stimulus measures to support local companies, including those in the Hang Seng Index. Historically, Chinese firms have done well when the government implements stimulus measures.

Hang Seng Index technical analysis

HSI chart by TradingView

The daily chart shows that the Hang Seng Index is still in an uptrend. It remains above the lower side of the ascending channel that connects the lowest swings since August last year. 

It remains above the 200-day moving average, a positive move. Also, the Relative Strength Index (RSI) has moved to the oversold level. Therefore, the index will likely bounce back, and possibly move to the upper side of the channel at H$25,000 in the next few weeks.

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The sell-off in the crude oil market is expected to bring down the pace of US production growth, according to Rystad Energy. 

Global stock markets plummeted to their second-lowest point since 2020 following US President Donald Trump’s April 2nd announcement of sweeping new tariffs.

Trade tensions have resulted in oil prices falling to a more than four-year low as investors fear that a full-blown war is likely to decimate global demand for the fuel.

Rystad Energy forecasts substantial risks for US operators in the current price environment, potentially compelling them to curtail their production growth rate.

Matthew Bernstein, Vice President, North American oil and gas at Rystad Energy, said in an emailed commentary:

The corporate reality for public players means that already modest growth could be at risk if prices remain near $60 per barrel.

Oil prices below breakeven cost

Rystad estimates that the new “all-in” breakeven cost for many US oil players is now above $62, which includes higher hurdle rates, dividend payments, and debt service costs.

At the time of writing, the price of West Texas Intermediate crude oil on the New York Mercantile Exchange was at $60.85 per barrel. WTI is the benchmark price for US crude oil. 

Production growth in the Lower 48 states in the US is already improbable outside the Permian Basin. 

If oil prices remain low, a slowdown in the Permian, the country’s most productive oil basin, would lead to a decrease in the rate of production growth in 2025, Bernstein said. 

In the week ended March 28, oil production in the Lower 48 states was 13.138 million barrels per day, according to the Energy Information Administration. 

Difficult to sustain business model

When prices fall below the above-mentioned level, the business model that US oil producers have been using for the past several years becomes much harder to sustain, according to Rystad. 

“This means that some combination of near-term activity levels, investor payouts or inventory preservation will need to be sacrificed in order to defend margins,” Bernstein said.

While different companies have different sensitivity to the above factors, activity and production will be threatened the most.

Management teams found it difficult to operate in the uncertain environment created by the policy whiplash, although the steel tariffs’ effect on 2025 well costs may be relatively limited.

The majority of the projected increase in oil production within the continental United States (excluding Alaska and Hawaii) for the current year is anticipated to originate from the Permian Basin, a prolific oil-producing region spanning parts of Texas and New Mexico. 

This region’s substantial reserves, coupled with advancements in drilling and extraction technologies, have positioned it as a key driver of US oil output. 

Permian dynamics

While other oil-producing regions in the country may experience some growth, their combined contribution is expected to be dwarfed by the Permian’s expansion. 

This concentration of growth in a single basin underscores its significance in shaping the US energy landscape and highlights its role in meeting the nation’s energy demands.

Although the Permian Basin offers the most commercially viable break-even prices, the promise of high dividends from Exploration and Production (E&P) companies jeopardises the basin’s growth potential. 

This is especially true for operators with less profitable acreage.

Public mid-cap companies operating in the Permian’s Delaware basin are particularly vulnerable if oil prices remain around the low $60s for an extended period, according to Rystad Energy.

These operators face high well costs and steep first-year production declines. 

They must also meet substantial capital return requirements. Additionally, they operate in an environment where major companies have already consolidated the majority of the most profitable inventory, Bernstein noted.

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Ripple said Tuesday it has agreed to acquire Hidden Road for $1.25 billion, marking the crypto firm’s largest acquisition to date and one of the biggest deals in the digital assets sector.

Founded in 2018, Hidden Road provides clearing, financing, and prime brokerage services across multiple asset classes, including foreign exchange, digital assets, derivatives, swaps, and fixed income.

The firm currently clears over $3 trillion annually for more than 300 institutional clients, including hedge funds.

The deal surpasses Stripe’s $1.1 billion acquisition of Bridge earlier this year and signals Ripple’s deepening focus on infrastructure to support institutional adoption of crypto.

Details of Ripple-Hidden road deal

The acquisition strengthens Ripple USD’s (RLUSD) standing as an enterprise-grade, USD-backed stablecoin with real-world utility, as Hidden Road plans to use it as collateral across its prime brokerage services.

This move positions RLUSD as the first stablecoin to support efficient cross-margining between digital assets and traditional financial markets.

As part of the partnership, Hidden Road will shift its post-trade operations to the XRP Ledger (XRPL), aiming to streamline workflows and reduce costs, highlighting XRPL’s potential as a preferred blockchain for institutional DeFi.

Ripple also anticipates leveraging this integration to improve cost efficiency and liquidity in its cross-border payments platform, Ripple Payments, while offering institutional-grade custody solutions to Hidden Road’s clients.

“With new resources, licenses, and added risk capital, this deal will unlock significant growth in Hidden Road’s business, allowing us to increase capacity to our customer base, expand into new products, and service more markets and asset classes,” said Marc Asch, Founder and CEO of Hidden Road.

The acquisition is subject to regulatory approvals, and the transaction is expected to close by the third quarter of 2025.

The move comes shortly after Ripple secured a key legal victory when the US Securities and Exchange Commission dropped a long-running lawsuit that had accused the firm of conducting an unregistered securities offering.

The resolution removed a major overhang for the company and could pave the way for more aggressive expansion.

Improving regulatory climate for crypto

The broader crypto sector has also been buoyed by the re-election of Donald Trump, who has expressed support for digital assets and pledged more favorable regulatory policies.

“We are at an inflection point for the next phase of digital asset adoption – the US market is effectively open for the first time due to the regulatory overhang of the former SEC coming to an end, and the market is maturing to address the needs of traditional finance,” said Brad Garlinghouse, CEO of Ripple.

With these tailwinds, we are continuing to pursue opportunities to massively transform the space, leveraging our position and the strengths of XRP to accelerate our business and enhance our current solutions and technology.”

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 The world has changed significantly ever since President Trump implemented his tariffs to handicap the US’s trading partners.

But by the time you’ve read this column, things may have changed again, given how fluid the situation is!

Whilst volatility has spiked dramatically, making things very interesting yet challenging from a trading perspective, let’s back-track a touch and consider what happened over the first quarter of this year.

It was certainly a quarter of two halves. 

As far as the S&P 500 and NASDAQ were concerned, the world’s most important stock indices, the first six weeks saw a continuation of the bull run that began back in October 2022 (or even post-1929 for those on longer timeframes).

Following a modest pullback from mid-December into January, both the S&P and NASDAQ recovered their respective mojos and pushed up to fresh all-time highs in February.

From there, US equities retreated, led by the tech giants that had been at the vanguard of the rally from the 2022 lows.

The sell-off saw the S&P and NASDAQ shed 10.7% and 15.5%, respectively, by the end of the first quarter, taking both indices into correction territory (defined as a decline of 10% from the most recent high). 

Yet, thanks to a strong start to the year, the overall losses for the quarter itself were a more modest 4.7% for the S&P and 10.4% for the NASDAQ.

This could be viewed as a healthy move. It certainly took some of the fluff off big tech, helping to bring down dangerously overvalued corporations to seriously overvalued levels.

The fact that the S&P’s losses were less than half of those for the tech-heavy NASDAQ indicated that money hadn’t left equity markets completely.

Instead, investors sought out previously neglected sectors.

Money flowed out of tech, telecoms, and consumer discretionary and headed into financials, healthcare, energy, materials, and consumer staples. 

For those of us wondering when investors were going to pile in and ‘buy-the-dip’, a strategy which had been an absolute winner over the past couple of years, maybe that rotation was part of the answer.

So while certain sectors have done ok, the last six weeks continue to be pretty grim for tech stocks and the ‘Magnificent Seven’.

And given that the ‘Mag 7’ still accounts for 30% of the S&P 500 by market capitalisation, then it’s no wonder that these major indices have also failed to recover. 

Where now? President Trump’s tariff announcement may have provided much-needed clarity for the markets, providing a green light for dip buyers to pile back in.

Alternatively, it could be that his latest round of tariffs are so severe that investors have dumped stocks, plunging equities into a full-blown bear market.

If the latter, then there will come a time when equities are so oversold that the bravest dip buyers emerge and send them back up again. But the former path is also treacherous. 

Markets respond to collective sentiment.

Many may feel that President Trump may be too cavalier in his approach to trade, which is, after all, something that builds up over years of complex negotiations and relationships.

Mr. Trump was widely viewed as a man who understood business and who promised to deregulate and cut taxes to free up commerce.

Instead, he’s making life harder, as US automakers (who the president believes are set to profit from tariffs) have attested. It is a sad fact that what takes a lifetime to create can be destroyed in minutes. 

(David Morrison is a Senior Market Analyst at Trade Nation. Views are his own.)

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Rising competition, new tariffs, brand crisis, and fears of a recession ahead – there’s not much that is particularly going well for Tesla Inc (NASDAQ: TSLA) in 2025.

Still, influential investor Cathie Wood remains super bullish on the EV stock that she believes will hit $2,600 before the end of this decade.

However, her recent purchase was not of TSLA. Instead, the founder and chief executive of Ark Invest parked more than $9.0 million in another “Magnificent 7” stock on April 4.

Enter Amazon.com Inc (NASDAQ: AMZN).

How much did Cathie Wood invest in Amazon stock?

Wood spent $9.3 million to load up on more than 54,000 shares of Amazon on April 4, indicating she reads a 30% decline in AMZN as an opportunity to buy a quality name at a deep discount.

The famed investor remains positive on Amazon stock as the Seattle headquartered giant has been investing rather aggressively to expand its footprint in artificial intelligence.

Other than its continued engagement with Anthropic, the tech titan has recently launched Alexa+.

Alexa+ is the firm’s upgraded AI assistant capable of managing smart home devices, ordering food online, and handling a whole bunch of other tasks.

Investing in AI is broadly expected to help Amazon diversify its revenue beyond retail and cloud.

AMZN is trading at an attractive valuation

Wood has confidence in Amazon’s ability to tap into its global scale and diversified revenue stream to navigate the trade war that’s emerging in response to Trump’s new tariffs.

Additionally, the valuation tied to the tech stock is far too attractive to ignore at writing.

AMZN is currently going for only 30 times its estimated next year’s earnings, sharply below its historical average of about 55.

Wall Street seems to agree with Cathie Wood on Amazon stock.

The consensus rating on AMZN currently sits at “buy” with the mean target of $267, indicating potential upside of well over 50% from here.

Why I disagree with Wood’s view on TSLA shares

Cathie Wood may have been right or at least practical with her investment in Amazon stock, but her call for TSLA hitting $2,600 within the next five years sounds more like a daydream, at least for now.

That’s because Tesla is currently struggling with a delivery slowdown amidst rising competition from its Chinese rivals.

Plus, the EV maker has been a laggard in launching new products as well.

In 2024, the multinational based out of Austin, Texas, saw its net income crash an alarming 52%, and the weakness is broadly expected to persist this year.

That makes Tesla a low-growth company that’s still trading at an unreasonable price-to-earnings multiple of about 117 at writing.

If anything, TSLA’s current valuation suggests the EV stock could tumble further from here, instead of climbing to the $10 trillion valuation as Wood forecasts.

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