CGS International

May 13, 2025

Tencent Holdings & China Life: Key Insights from Hong Kong Retail Research

Market Overview: Risk Appetite Surges Amid US-China Trade Reprieve

• Investors responded positively to signs of easing trade tensions between the US and China, triggering a rally in stocks and a shift away from defensive assets. [[1]]
• The S&P 500 jumped over 2.5%, surpassing levels seen before Donald Trump’s “Liberation Day” shock in April. [[1]]
• Technology stocks led the gains, with the Nasdaq 100 approaching bull market territory after a nearly 5% surge in big tech gauges. [[1]]
• Anticipation of reduced inflation led traders to reduce bets on rate cuts, causing short-term yields to rise and the dollar to hit a one-month high. [[1]]
• Comments from Donald Trump about potential talks with Xi Jinping further boosted market sentiment, following discussions aimed at temporarily lowering tariffs. [[1]]
• Carol Schleif at BMO Private Wealth noted that the market was encouraged by the larger-than-expected drop in tariffs and the establishment of a framework for continued discussion. [[1-2]]
• The S&P 500 climbed 2.7%, the Nasdaq 100 rallied 3.2%, and the Dow Jones Industrial Average added 2.4%. [[2]]
• The yield on 10-year Treasuries increased by five basis points to 4.43%, and the Bloomberg Dollar Spot Index rose 0.9%. [[2]]

China Life Insurance: Strong Southbound Investment Beneficiary in 2025

• China Life has experienced the most significant percentage increase in Southbound (SB) investor holdings among China insurers in 2025, with a 16% YTD rise, also showing an 80% year-over-year increase. [[2]]
• This substantial YTD increase is seen partly as a ‘catch-up’ effect, as China Life had previously lagged behind its peers in attracting SB flows since 2017. [[2]]
• Maintaining strong SB flows will depend on providing greater clarity regarding dividends, as both DPS and payout ratios have been historically volatile. [[2]]
• CGS International reiterates an Add rating for China Life, with a target price (TP) raised slightly to HK\$23.80 from HK\$23.20, driven by a higher sustainable ROE assumption. [[2]]

Tencent Holdings Ltd (700): Technical Buy Recommendation

• Current Status: Uptrend Intact [[2]]
• Last Price: 517.50 [[2]]

Key Technical Levels:

• Entry Prices: 517.50, 487.00, 450.00 [[2]]
• Support Levels:
  • Support 1: 487.60 [[2]]
  • Support 2: 440.80 [[2]]
• Stop Loss: 416.00 [[2]]
• Resistance Levels:
  • Resistance 1: 523.00 [[2]]
  • Resistance 2: 620.50 [[2]]
• Target Prices:
  • Target price 1: 560.80 [[2]]
  • Target price 2: 620.80 [[2]]
  • Target price 3: 680.60 [[2]]
  • Target price 4: 705.00 [[2]]

Company Overview (Bloomberg):

• Tencent Holdings Limited operates as a holding company. [[2]]
• The company offers a range of services including social networks, music, gateway websites, e-commerce, mobile gaming, payment systems, entertainment, artificial intelligence, and technology solutions through its subsidiaries. [[2]]

Analyst Information:

• Analyst: CHUA Wei Ren, CMT [[2]]
• Contact: T (65) 6210 8612, E [email protected] [[2]]

Technical Analysis Snapshot:

• Tencent rebounded at the third buy limit of HK\$440.00, as per the previous report dated March 6, 2025. [[2]]
• Strong bullish momentum suggests a potential larger bullish continuation pattern is forming. [[2]]
• CGS International is adding a technical buy recommendation on Tencent based on the following key indicators: [[2]]

Key Pointers:

• Tencent has maintained its position within the uptrend line since March 2024. [[2]]
• Prices have surpassed the gap resistance at HK\$480.00. [[2]]
• Ichimoku Cloud analysis indicates a clear bullish signal. [[2]]
• The Stochastic Oscillator is rising and remains above the 50-midpoint level. [[2]]
• The MACD histogram is near the zero line. [[2]]
• The 23-period ROC is rising above the zero line. [[2]]
• Directional movement index confirms strong bullish strength. [[3]]
• Volume remains in a healthy expansion phase. [[3]]

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• As of May 7, 2025, CGS International has a proprietary position in the securities in the following company or companies covered or recommended in this report: (a) – [[6]]
• Analyst Disclosure: As of May 13, 2025, the analyst(s) who prepared this report, and the associate(s), has / have an interest in the securities in the following company or companies covered or recommended in this report: (a) – [[6]]

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Recommendation Framework

Stock Ratings Definition:

• Add: The stock’s total return is expected to exceed 10% over the next 12 months. [[15]]
• Hold: The stock’s total return is expected to be between 0% and positive 10% over the next 12 months. [[15]]
• Reduce: The stock’s total return is expected to fall below 0% or more over the next 12 months. [[15]]

The total expected return of a stock is defined as the sum of the: (i) percentage difference between the target price and the current price and (ii) the forward net dividend yields of the stock. Stock price targets have an investment horizon of 12 months. [[15]]

Sector Ratings Definition:

• Overweight: An Overweight rating means stocks in the sector have, on a market cap-weighted basis, a positive absolute recommendation. [[15]]
• Neutral: A Neutral rating means stocks in the sector have, on a market cap-weighted basis, a neutral absolute recommendation. [[15]]
• Underweight: An Underweight rating means stocks in the sector have, on a market cap-weighted basis, a negative absolute recommendation. [[15]]

Country Ratings Definition:

• Overweight: An Overweight rating means investors should be positioned with an above-market weight in this country relative to benchmark. [[16]]
• Neutral: A Neutral rating means investors should be positioned with a neutral weight in this country relative to benchmark. [[16]]
• Underweight: An Underweight rating means investors should be positioned with a below-market weight in this country relative to benchmark. [[16]]

Rating Distribution (%)

• Add: 71.0%, Investment Banking clients: 1.3% [[16-17]]
• Hold: 20.9%, Investment Banking clients: 0.7% [[16-17]]
• Reduce: 8.2%, Investment Banking clients: 0.4% [[16-17]]

Distribution of stock ratings and investment banking clients for quarter ended on 31 March 2025. 551 companies under coverage for quarter ended on 31 March 2025. [[17]]