Hang Seng Index Rises 2.38%
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The Hang Seng Index(HSI) gained 2.38% this week, while the Hang Seng TECH Index(HSTECH) declined by 1.38%. The market exhibited clear structural divergence: it faced brief pressure early in the week due to geopolitical tensions and U.S. Treasury volatility but quickly stabilized and rebounded following coordinated domestic and international policy actions. On the final trading day, HSI volume surged +31.7% above its 50-day average, signaling active capital inflows ahead of the holiday.
The strong performance of Hong Kong equities was underpinned by a resilient external macro backdrop and intensifying domestic policy support. In the U.S., initial jobless claims for the week ending January 24 totaled 209,000—slightly above prior levels but still reflecting labor market resilience. The Federal Reserve maintained the upper bound of the federal funds rate at 3.75% in its January 28 decision, aligning with market expectations and offering no signal of imminent rate cuts, thereby stabilizing global liquidity expectations.
Meanwhile, China continued deploying a multi-pronged policy package. The People’s Bank of China (PBOC) injected liquidity via consecutive Medium-term Lending Facility (MLF) operations, while fiscal authorities affirmed that 2026 expenditure will “only increase,” accompanied by interest-subsidy programs covering service consumption and equipment upgrades. The State Council General Office issued the Action Plan for Accelerating New Growth Drivers in Service Consumption, outlining 12 targeted measures in transportation, home services, automotive aftermarket, and other sectors—effectively boosting domestic demand confidence. Additionally, accelerated RMB internationalization, PBOC support for expanding the Hong Kong RMB Liquidity Facility, and warming Sino-British relations (with China considering unilateral visa-free access for British citizens) collectively enhanced Hong Kong’s appeal as an offshore hub for Chinese assets.
Hong Kong’s policy advantages are becoming increasingly evident. The PBOC doubled the size of the Hong Kong RMB Liquidity Facility to RMB 20 billion and is exploring inclusion of offshore RMB government bonds into the eligible collateral framework—significantly deepening and stabilizing the offshore RMB market. Separately, Hong Kong plans to expand its gold storage capacity to 2,000 metric tons within three years, aiming to become a regional gold reserve hub—a move that reinforces its status as an international financial center and creates major opportunities for local gold-related industries. At the corporate level, tech giants like Alibaba are ramping up AI investments; its newly launched Qwen3-Max-Thinking model rivals global leaders in performance and may catalyze spin-offs of hard-tech assets such as “T-Head” chips, injecting fresh momentum into the Hong Kong market.
At the sector level, industries with high O’Neil industry rankings led gains. CHINA TAIPING(00966), in an industry ranked 28, surged 9.96% for the week, with an RS Rating of 90. WESTCHINACEMENT(02233), in an industry ranked 54, rose 8.7% on infrastructure investment expectations, supported by an O’Neil Score of 82. The resources sector also performed strongly: ZIJIN MINING(02899), in an industry ranked 3, gained 3.66%, boasting an EPS Rating of 99, fully benefiting from robust gold prices.
U.S. markets traded sideways at elevated levels, with mixed results across major indices: the S & P 500 Index(0S&P5) rose 0.77%, the Nasdaq Composite(0NDQC) edged up 0.78%, while the Dow Jones Indus Actual(0DJIA) dipped slightly by 0.06%.
Market dynamics were heavily influenced by earnings season, resulting in sharp stock-level divergence. Microsoft plunged 10% in a single day amid investor concerns over the sustainability of its AI-related capital expenditures, dragging down the broader market; in stark contrast, Meta soared over 10% on better-than-expected results. Although the Fed held rates steady, its hawkish tone delayed rate-cut expectations, keeping the 10-year U.S. Treasury yield near 4.233%, pressuring high-valuation growth stocks. Adding to uncertainty, the Trump administration faces a potential government shutdown (with funding for multiple agencies expiring January 30), and former President Trump’s comments that “it’s reasonable for the dollar to swing like a yo-yo” heightened political risk. Notably, the EIA reported an unexpected drawdown of 2.295 million barrels in crude inventories, combined with Middle East tensions, pushing oil prices above $65/barrel and supporting the energy sector.
Onshore China (A-share) markets posted modest gains, with the CSI 300(000300) rising 0.08%. Trading activity remained robust, with volume on the final day surging +42.72% above the 50-day average, indicating aggressive buying at key levels.
Market leadership shifted from earlier AI-themed speculation toward dual drivers of earnings and policy support. The liquor sector, led by Kweichow Moutai, rallied sharply, while property-linked stocks rebounded significantly—signaling early effectiveness of stabilization policies. Policy tailwinds continued: beyond the new service consumption plan, real estate financing conditions eased marginally, with the “three red lines” reporting requirement no longer mandatory for most developers. Additionally, the Ministry of Industry and Information Technology held a symposium on the photovoltaic sector, urging market-based solutions to curb destructive “involutionary” price wars—helping stabilize supply chain expectations. Together, these measures have established a solid policy floor and sentiment support for A-shares. Official data showed that profits of China’s industrial firms above designated size grew 0.6% YoY in 2025—modest but marking an end to prior declines, suggesting gradual improvement in microeconomic fundamentals.
This week, the HK33 portfolio declined 1.08%, with 15 gainers and 18 decliners. CHINA TAIPING(00966) was the top performer, up 9.96%. The model portfolio fell 2.65%, led by AIA(01299), which rose 8.79%—its sector also showing strong momentum. Since inception, HK33 has consistently outperformed the Hang Seng Index (HSI), validating the effectiveness of a strategy focused on high industry strength and quality fundamentals.
Technically, the HSI trades above all key moving averages, 4.61% above its 50-day average, indicating short-term strength. Key support lies at the psychological 26,000-point level, with resistance near the year-to-date high of 28,056.1 points. Although the HSTECH pulled back this week, it remains firmly above its 50-day average (+1.27%). A sustained breakout above 5,800 points on higher volume could reignite its uptrend.
Southbound flows recorded net inflows of HKD 2.704 billion this week, a sharp slowdown from the prior week’s HKD 29.76 billion, reflecting mainland investors’ caution after the HSI rally. Allocation has turned more structural, favoring high-dividend and policy-beneficiary sectors such as insurance and resources.
In summary, supported by coordinated domestic-external policies and solid economic data, Hong Kong equities have demonstrated leadership, with the HSI reaching a near-four-year high. Looking ahead, as China’s “Fifteenth Five-Year Plan” projects roll out and global liquidity expectations clarify, stocks with high EPS Ratings and positioned in the top 40 O’Neil industry ranks are likely to remain in favor. Investors should closely monitor earnings delivery and the pace of policy implementation. The market involves risks; investment decisions should be made prudently.
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published on January 30, 2026