The Hang Seng Index has been experiencing notable fluctuations recently, driven by both domestic and international economic factors. On January 3, 2025, the index opened positively, gaining 85 points, or 0.43%, to reach 19,708 points. The National Enterprises Index also saw a rise, increasing by 31 points, or 0.44%, and the Technology Index climbed 26 points, or 0.59%.
Within the technology sector, stocks showed relative stability. Tencent registered a gain of 0.4%, Alibaba enjoyed a rise of 2.2%, and Meituan increased by 0.4%. Other notable movers included Xiaomi Group, which gained 1.3%, JD.com up by 1.4%, and Kuaishou remaining stable.
Financial stocks displayed mixed results during this trading session. HSBC Holdings fell by 0.5%, contrasting with AIA Group's 1.1% increase and China Ping An's mild gain of 0.1%. Hong Kong Exchanges and Clearing matched this marginal growth with its own 0.1% increase. Meanwhile, the automobile sector showed upward momentum; BYD up 0.2%, Geely Auto 0.7%, Xpeng Motors 0.7%, NIO surged by 4%, and Li Auto advanced by 0.3%.
The broader global market remains under pressure due to uncertainties surrounding tariffs and potential actions from central banks. Notably, U.S. equity markets kicked off 2025 with losses, as both the Dow and the S&P 500 recorded declines of 0.36% and 0.22%, respectively. The uncertainty around the potential impacts of former President Trump's policies on the Federal Reserve’s interest rate path is testing market sentiment.
After the Asian sessions, it was reported by various financial analysts, including Spencer Hakimian from Tolou Capital Management, on the state of the labor market, noting, "absolutely no one is getting laid off. Corporates don’t fire people when their profits are projected to go up 15% over the next 12 months." This assertion reflects the resilience of the U.S. labor market, which could undermine expectations of multiple interest rate cuts this coming year.
This week's market movements have been heavily influenced by actions from Beijing, where the government announced significant funding through ultra-long Treasury bonds to support large-scale equipment upgrades and consumer goods trading. The People's Bank of China (PBoC) has also signaled intent for policy overhauls, planning to cut interest rates from the current 1.5% to align more closely with Western monetary policy.
Despite the latter, the impact on Mainland China-listed stocks has been more muted. While the Hang Seng Index advanced by 1.09% on January 3, the CSI 300 Index and Shanghai Composite Index fell by 0.16% and 0.32%, respectively. The PBoC's strategies, such as targeting interest rate adjustments over quantitative objectives, offer some room for optimism, albeit tempered by concerns about sluggish demand reflected from December’s PMI data.
Further compounding these trends was the performance of the Hang Seng TECH Index, which rallied by 1.84% amid anticipatory buying behavior following news of increased allowances for consumption subsidies on various electronic products. Companies like Alibaba and Baidu reported gains of 0.50% and 2.21% respectively.
On January 4, 2025, the Hang Seng index managed to inch up by 136 points to 19,760 points, rebounding from previous declines. The mainboard turnover was recorded at HK$160.35 billion, reflecting considerable market activity.
Xiaomi made headlines as it reached its peak, closing at 6.6% higher on news surrounding Chinese governmental expansion of consumption subsidies. Support was also seen among headset-related stocks with BYD Electronic rising by 2.8% and Sunny Optical by 2.4%.
Despite the positive movements, the week-end figures revealed the Hang Seng dropping by 1.6% overall, marking its most significant decline over five days in close to two months, and the tech index struggled similarly, suffering nearly 3% losses during the same timeframe.
Globally, markets will likely keep their eyes on central bank commentary, updates from the U.S. relating to tariffs, and any additional measures from Beijing as they navigate the shifting landscapes of economic recovery. These developments remain key to shaping market responses and investor sentiment.
While U.S. futures showed promise on January 3, investors are bracing for possible volatility as they continue to monitor external influences from central bank interventions alongside domestic financing policy shifts. The outlook extends beyond Hong Kong as it ties back to the overall global economic environment where investor confidence remains fragile yet hopeful.