Hang Seng Rose 3.8%
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This week, the Hong Kong market posted strong gains, with the Hang Seng Index(HSI) surging 3.8% and the Hang Seng Tech Index(HSTECH) climbing 5.3%.
At the start of the week, the Hong Kong market rallied on expectations of Fed rate cuts, with the Hang Seng Index setting a new year-to-date high. This was followed by hedge funds extending their buying streak in Chinese equities for a fourth consecutive month, enabling the Hang Seng Index to break through the key 26,000 level and notch another YTD high. Although geopolitical risks triggered a brief pullback, the index regained momentum on Friday, supported by favorable policy signals and continued capital inflows, once again reaching a fresh peak for the year.
The core drivers of market volatility remain anchored in expectations of global monetary easing, policy catalysts, and structural opportunities across sectors. Funds rotated swiftly among technology, property, and gold stocks, highlighting both a revival in risk appetite and the market’s sensitivity to policy tailwinds.
On the U.S. stock market, as of Thursday this week, equities extended their strong run. The S & P 500 Index(0S&P5), Nasdaq Composite(0NDQC), and Dow Jones Indus Actual(0DJIA) each rose 1.6%, with all three major benchmarks closing at record highs.
On the macroeconomic front, Bureau of Labor Statistics data showed August CPI up 2.9% y/y, in line with forecasts and slightly higher than the prior reading. CPI rose 0.4% m/m, a touch above both consensus and the previous figure. Core CPI increased 3.1% y/y and 0.3% m/m, exactly matching expectations and unchanged from July. The main upward pressure came from autos and services. August PPI rose 2.6% y/y, undershooting both forecasts and July’s level. On a monthly basis, PPI fell 0.1%, below expectations, with July revised down to 0.9%. It was the first negative print in four months, suggesting firms are keeping prices restrained despite higher tariff costs. Core PPI climbed 2.8% y/y, also weaker than both forecasts and the prior figure, while the m/m reading slipped 0.1%, likewise below consensus and July.
In the labor market, nonfarm payrolls increased by only 22,000 in August, well short of both expectations and the prior gain. June payrolls were sharply revised from a gain of 27,000 to a loss of 13,000, the first monthly decline since 2020. The unemployment rate rose to 4.3%, the highest since 2021, in line with forecasts but above July’s 4.1%. For the week ending September 6, initial jobless claims surged to 263,000, up 27,000 from the prior week and the highest since October 2021, far exceeding economists’ median estimate. Continuing claims for the week ending August 30 stood at 1.939 million, unchanged from the prior week and slightly below expectations.
On interest rates, softer inflation pressures combined with signs of a cooling labor market have reinforced expectations of Fed easing. According to the CME FedWatch Tool, as of September 11, markets were pricing in a 92.5% probability of a 25bp cut at the September FOMC meeting and a 7.5% chance of a 50bp cut. For both October and December, the probability of a 25bp move was above 70%.
On trade policy, President Trump signed an executive order exempting metals such as gold, tungsten, uranium, and graphite from U.S. global tariffs, while adding silicon products to the tariff list. These materials are widely used in aerospace, consumer electronics, medical equipment, and other technology sectors. Trump also indicated plans for a second phase of sanctions against Russia, including additional penalties and secondary tariffs on countries purchasing Russian oil, in a bid to “break” the Russian economy. As a precedent for such measures, the U.S. last month imposed a 50% tariff on India over its continued purchases of Russian oil, one of the steepest tariff rates ever levied by Washington on a single country.
On the A-shares market, the CSI 300(000300) trended higher this week, gaining 1.4% to notch a new year-to-date high. Trading volume eased slightly, with weekly turnover contracting m/m; three sessions saw daily turnover above the 50-day average. From a technical perspective, the 21-DMA is providing strong near-term support, while resistance is concentrated around the 4,600 level.
On the macroeconomic side, data from the National Bureau of Statistics showed August CPI was flat m/m and down 0.4% y/y, weighed by a high base and lower food prices. Core CPI rose 0.9% y/y, marking the fourth consecutive month of acceleration. PPI declined 2.9% y/y, narrowing by 0.7ppt from July and posting its first smaller contraction since March. On a monthly basis, PPI was unchanged, ending eight straight months of sequential declines. According to the China National Light Industry Council, in the first seven months, industrial value-added for large-scale light industry firms increased 6.7% y/y, with revenue reaching RMB 13.2 trillion and profit RMB 760.1 billion. Investment growth in major subsectors remained in double digits, outpacing both overall fixed asset investment and manufacturing investment nationwide.
In trade, Customs data showed China’s goods trade reached RMB 3.87 trillion in August, up 3.5% y/y. Exports rose 4.8% to RMB 2.3 trillion, while imports increased 1.7% to RMB 1.57 trillion, marking the third consecutive month of y/y gains on both sides. Rare earth exports surged 34.66% y/y and 51.04% m/m, posting back-to-back monthly gains of over 50% following the turnaround in June. For the first eight months, total trade reached RMB 29.57 trillion, up 3.5% y/y. Data from the Ministry of Commerce showed services trade totaled RMB 4.58 trillion in January–July, up 8.2% y/y. Service exports rose 15.3% to RMB 1.998 trillion, while imports climbed 3.3% to RMB 2.58 trillion, bringing the services deficit to RMB 581.6 billion, RMB 183.6 billion narrower y/y.
In foreign exchange, SAFE data showed China’s FX reserves stood at USD 3.322 trillion at the end of August, up USD 29.9 billion, or 0.91%, from July. The rebound was driven by exchange rate valuation effects and asset price changes, marking a return to growth after a brief decline in July. Reserves have now remained above USD 3.2 trillion for 21 consecutive months. Gold reserves reached 74.02 million ounces at end-August, up 60,000 ounces from July, with growth of 0.08% matching the prior month. This marked the 10th straight month of accumulation, bringing total purchases since November last year to 1.22 million ounces.
Leading stocks advanced this week. The average stock in the MarketSmith Hong Kong 33 rose by 3.1% for this week. Our Hong Kong Model Portfolio rose by 4.7% for this week (see details in the Model Portfolio section). Since June 20, 2013, the Hong Kong 33 is up 1036.9% vs. a 29.3% up for the Hang Seng.
The best performer in our Hong Kong 33 was BABA-W(09988), it’s a globally leading comprehensive technology giant. The stock gained 14.6% this week. EPS rating stands at 90, RS rating of 70, and A/D rating of B.
Our Hong Kong Market Status are in a Confirmed Uptrend.
From a technical perspective, the Hang Seng Index showed strong resilience this week, with upside gaps on both Tuesday and Friday signaling clear bullish momentum. Although Thursday saw a brief pullback on profit-taking, the index quickly stabilized after testing the 5-DMA, reflecting solid buying support and suggesting the short-term correction was merely technical, leaving the broader uptrend intact. In terms of turnover, while weekly volume edged slightly lower from the prior week, all five sessions recorded daily volume above the 50-day average. On key levels, the 21-DMA serves as near-term support, while the 27,000 mark remains the critical resistance.
On capital flows, the Southbound inflow via the HK-China Stock Connect extended its strong momentum, with net inflows of HKD 60.822 billion this week, a sharp increase from the previous week and the fifth-largest weekly inflow this year. Southbound funds have now recorded 17 straight weeks of net inflows, with year-to-date inflows reaching HKD 1.07 trillion.
Overall, Hong Kong equities posted a strong upward move this week, supported by the confluence of loose liquidity, policy catalysts, and continued capital inflows. Looking ahead, the market may sustain its near-term upward trend with intermittent volatility, though attention should be paid to the pace of policy implementation and external risks. The scale of Fed rate cuts will be critical in shaping global liquidity—an outsized cut could trigger another rally in gold and property stocks, while a modest move may prompt a “buy-the-rumor, sell-the-news” reaction. In addition, China is set to release a series of key economic indicators next week, while the Fed’s policy meeting is also on the agenda, both of which are expected to have a significant impact on global markets.
At this stage, investors are advised to remain calm and disciplined, avoid chasing short-term rallies, and prioritize stocks with earnings surprises and solid technical setups, adopting a balanced strategy to navigate market volatility.
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published on September 12, 2025