Broker: CGS International
Date of Report: June 5, 2025

Hong Kong Trendspotter: Technical Bottoming and Sector Insights – Tianqi Lithium and NIO Inc. in Focus

Market Overview: Shifting Tides Amidst Fed Rate Speculation

Financial markets are responding to a dynamic macro environment, as U.S. Treasuries extended gains on the back of weaker-than-expected economic data, fueling speculation that the Federal Reserve is poised to cut interest rates at least twice in 2025. The contraction in U.S. service providers and a notable deceleration in hiring have pressured bond yields downward and led to a modest slip in the dollar. Meanwhile, the S&P 500 edged higher, led by health-care and communication stocks, while major tech names showed mixed performance.

The Institute for Supply Management’s services index dropped to 49.9 in May, indicating contraction, while hiring slowed to its weakest pace in two years. Market participants anticipate Friday’s jobs report will confirm a slowdown in nonfarm payroll growth with steady unemployment. Despite pockets of sectoral weakness—particularly in health care, technology, and construction—retailers and financial services firms are showing resilience and signs of new growth opportunities. Investors are advised to allocate wisely amid wide dispersion in sector outlooks.

Tianqi Lithium Corp (9696): Technical Buy as Bullish Reversal Takes Hold

Company Overview: Tianqi Lithium Corporation is a leading global developer, manufacturer, and marketer of lithium products, including lithium carbonate, lithium chloride, and lithium hydroxide, serving clients worldwide.

Technical Analysis: Tianqi Lithium is flashing a strong bullish bottoming out pattern, signaling the end of its downtrend that began in October 2023 and hinting at a sustained upward move. Key technical highlights include:

• A decisive breakout above the long-standing downtrend line since October 2023.
• Near-confirmation of an inverted head and shoulders formation, with a robust bullish candle challenging the neckline resistance. This momentum suggests a likely breakout above resistance.
• The Ichimoku indicator is bullish, with all components sloping upward.
• The MACD histogram is positive; a bullish crossover at the bottom is sending the MACD and signal lines toward the zero line.
• The Stochastic Oscillator is on the rise, reinforcing bullish momentum.
• The 23-period Rate of Change (ROC) has moved above the zero line.
• The Directional Movement Index indicates a strong bullish trend.
• Volume trends show healthy expansion, supporting the validity of the breakout.

Conclusion: With these technical indicators aligning, Tianqi Lithium appears poised for a sustained upside. Investors may consider strategic entry at the specified levels, with layered targets up to HK\$61.00 and a prudent stop loss at HK\$18.95.

NIO Inc.: Profitability Pressured by Fierce Competition

Company Overview: NIO Inc. is a prominent electric vehicle manufacturer with a robust pipeline, including its flagship NIO brand, as well as ONVO and Firefly sub-brands.

Financial Highlights:

• Q1 2025 non-GAAP net loss widened to RMB 6.3 billion, up from RMB 4.9 billion in Q1 2024, primarily due to increased operating expenses.
• While the company boasts a strong lineup that could boost sales, intensifying competition in the EV market is expected to temper shipment growth.
• Recommendation: Hold (reiterated), with a lower DCF-based target price of HK\$30.62.

Analyst Perspective: NIO’s product pipeline remains a positive, but profitability pressures and market competition warrant a cautionary stance. Investors are recommended to maintain current positions while monitoring for developments that could shift the competitive landscape or margin outlook.

CGS International: Ratings and Sector Framework

CGS International employs a clear ratings methodology for stock and sector recommendations:

• Add: Total return expected to exceed 10% in the next 12 months.
• Hold: Total return expected between 0% and +10% over the next 12 months.
• Reduce: Total return expected to fall below 0% in the next 12 months.

Stock price targets have a 12-month investment horizon, and sector ratings are based on market cap-weighted recommendations.

As of the quarter ending March 31, 2025, CGS International covered 551 companies.

Conclusion: Navigating Market Uncertainty with Sector and Stock Precision

The current market environment is defined by macroeconomic uncertainty and sectoral dispersion, with distinct opportunities emerging in specific equities. Tianqi Lithium stands out for its strong technical reversal and bullish momentum, offering multiple upside targets for the tactical investor. Meanwhile, NIO Inc. demonstrates strong product potential but faces headwinds from rising competition and profitability concerns, justifying a hold stance.

Investors should weigh sectoral outlooks carefully, diversify strategically, and remain vigilant for macro and company-specific catalysts in the quarters ahead.