HONG KONG – The Hong Kong stock market displayed signs of recovery on Wednesday, March 26, 2025, as the Hang Seng Index opened at 23,460.31 points, gaining 116.06 points or 0.5 percent. This upward trend comes as good news following a dip to a three-week low earlier in the week.
The resurgence is not just limited to the Hang Seng Index—the Hang Seng Tech Index also registered a 0.4 percent increase, starting at 5,537 points. Notable companies like Alibaba opened 0.7 percent higher at HK$128.60, and Xiaomi recorded a modest 0.2 percent rise to trade at HK$53.50. Shenzhou International stood out with a remarkable 5 percent rise to HK$58.05 after announcing a 37 percent increase in its net profit for 2024.
The positive streak on the stock exchange coincided with statements from Eddie Yue Wai-man, the chief executive of the Hong Kong Monetary Authority (HKMA). Speaking at HSBC’s Global Investment Summit, Yue expressed optimism about the significant potential for capital inflows from the mainland, indicating these would be crucial for Hong Kong’s financial markets in the coming years.
In addressing the current financial climate, Yue stated, "I think the bigger opportunity in the next few years will come from what we call Southbound, Chinese capital going out to the world through Hong Kong." He highlighted the importance of easing rules related to the wealth connect program with the Guangdong-Hong Kong-Macao Greater Bay Area, which is set to benefit both the Hong Kong economy and investors from mainland China.
Specifically, the HKMA is contemplating extending the wealth connect scheme to cover more mainland cities, having already observed a surge in investor accounts—from 25,000 to 95,000—in just four months following the relaxation of investment guidelines in February 2024.
According to Yue, between 20 percent and 30 percent of Hong Kong's stock market turnover now stems from capital flows from the mainland through the stock connect program. This trend embodies a crucial component of the recovery narrative, as mainland investments overseas have gained momentum, benefitting the SAR’s capital inflows.
Yue mentioned that the outlook is promising, with improved long-term investor sentiment. Encouraged by Beijing’s recent stimulus policies and advancements in artificial intelligence, particularly innovations like DeepSeek, there is a renewed confidence in the market.
Furthermore, the HKMA chief noted that the growth of the Chinese yuan in international trade is fostering increased financial activities in Hong Kong, including a rapid rise in RMB bond issues. He reported that RMB bond issuance doubled within three years, surpassing 1 trillion yuan (approximately $137.66 billion) as of 2024, while RMB lending also experienced a threefold increase, reaching 750 billion yuan.
In summary, the current market conditions and forthcoming policy adjustments signal a potential new chapter for Hong Kong's financial landscape, where optimism reigns over capital inflows and investment opportunities. The anticipated increase in mainland investments and the city's strategic positioning as a financial gateway suggest that the recovery is likely to strengthen further.
With more mainland companies looking toward Hong Kong for offshore listings, the expectation is that Hong Kong will not only maintain but enhance its status as a financial hub in light of ongoing geopolitical shifts and economic dynamics.
