Hang Seng Index Falls 0.36%
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The Hang Seng Index(HSI) declined modestly by 0.36% this week, while the Hang Seng TECH Index(HSTECH) slipped 0.42%. Despite early-week pressure from global risk-off sentiment triggered by the “Greenland Crisis” and Japanese government bond sell-offs, the Hong Kong market demonstrated notable resilience, stabilizing and rebounding swiftly in the latter half of the week. Trading volume on the final day saw a mild increase, with HSI turnover 8.22% above its 50-day average, indicating that investors remain actively positioned ahead of the holiday.
The stability of the Hong Kong market is primarily driven by continuous optimization and synergy between domestic and external policy environments. On the external front, U.S. initial jobless claims for the week ending January 17 stood at 200,000—slightly higher than the prior reading but below expectations. Coupled with November’s core PCE price index holding steady at a 2.8% year-over-year rate, this data reinforced market expectations that the Federal Reserve will remain on hold in the near term, alleviating concerns about global liquidity tightening.
Domestic policy support has been even more direct and impactful. On January 23, the People’s Bank of China (PBOC) conducted a RMB 900 billion Medium-term Lending Facility (MLF) operation, resulting in a net injection of RMB 700 billion—marking the 11th consecutive month of enlarged rollovers. Governor Pan Gongsheng explicitly stated that in 2026, China will “continue to implement an appropriately accommodative monetary policy,” with room remaining for further RRR cuts and interest rate reductions, providing solid liquidity backing for markets. Fiscal policy has also intensified: the Ministry of Finance emphasized that fiscal spending in 2026 will be “increased, not reduced,” and introduced interest subsidy programs covering personal consumption loans and equipment upgrades, enabling premium borrowers to access consumer loan rates in the “2% range.” Together, these measures form a powerful “monetary-fiscal synergy to boost domestic demand,” effectively offsetting the drag from falling real estate investment (–17.2%) and stabilizing the economic foundation. Additionally, the extension of CDR tax incentives through end-2027 and Hong Kong’s proposed central gold settlement system further enhance the city’s appeal and competitiveness as the premier offshore listing venue for China’s core assets.
At the sector level, manufacturing and resource segments with top O’Neil industry rankings emerged as market highlights. SANY INT’L(00631), ranked Industry Group 28, surged 22.25% this week, benefiting from approximately 4,500 major projects funded by China’s ultra-long-term special treasury bonds and the advancement of high-tech industrial initiatives under the “Fifteenth Five-Year Plan.” Its EPS Rating reached 93, reflecting robust earnings growth. IMPRO PRECISION(01286), in Industry Group 45, rose 20.63%, supported by a strong RS Rating of 93. The gold sector also rallied sharply: CHINAGOLDINTL(02099), ranked #1 in its industry group, gained 15.18%, with revenue surging 35.53% year-over-year, fully capitalizing on spot gold prices breaking past the historic high of USD 4,900 per ounce.
In the U.S., the three major indices ended the week nearly flat after significant volatility: the Dow Jones Indus Actual(0DJIA) edged up 0.05%, the S & P 500 Index(0S&P5) fell 0.38%, and the Nasdaq Composite(0NDQC) declined 0.34%. Early-week selloffs—sparked by Trump’s tariff threats and turmoil in Japan’s JGB market—were quickly reversed as geopolitical risks eased (Trump announced a framework agreement with NATO on Greenland) and strong macro data (Q3 2025 GDP final reading at 4.4%) restored risk appetite. However, resilient economic data also implies persistent inflation stickiness, pushing Fed rate-cut expectations further out and keeping the 10-year Treasury yield elevated—weighing on valuations. Market leadership shifted toward small caps, with the Russell 2000 outperforming for 15 consecutive sessions, signaling investor confidence in economic resilience. Within tech, performance diverged sharply, with AI infrastructure leaders like NVIDIA and Meta holding firm.
The A-share market consolidated in tandem, with the CSI 300(000300) down 0.62% for the week. Notably, volume on the final trading day surged 51.85% above the 50-day average, reflecting active institutional absorption during the pullback.
Market style is shifting from pure thematic speculation toward a dual driver of “earnings + policy.” Commercial aerospace, power grid equipment, and gold led sector rotations—aligning with national strategic investments in low-Earth-orbit satellite constellations (China SatNet has launched over 150 satellites) and energy security. Policy tailwinds continue: beyond the PBOC’s large MLF net injection, the CSRC raised margin requirements for financing from 80% to 100% to curb leveraged speculation while encouraging long-term capital inflows. The Ministry of Finance and Ministry of Housing are jointly advancing a ready-to-move-in housing sales model and extending home-swap tax rebates—multi-pronged efforts to defuse property sector risks and anchor market expectations.
This week, the HK33 portfolio rose 2.88% against the broader market trend, with 21 gainers and 12 decliners, significantly outperforming benchmarks. SANY INT’L(00631) led with a 22.25% weekly gain—its high industry rank and strong earnings growth exemplifying a classic O’Neil stock selection case. Since inception, HK33 has consistently outperformed the Hang Seng Index (HSI), validating the effectiveness of focusing on high-scoring stocks in leading industries. The Model Portfolio dipped slightly by 0.73%; GANFENGLITHIUM(01772) gained 10.24%, supported by lithium carbonate price recovery and better-than-expected NEV production/sales, while ZIJIN MINING(02899) rose 2.43%, boasting an EPS Rating of 99, underscoring the defensive quality of top-tier resource equities.
Technically, the Hang Seng Index(HSI) remains firmly above all key moving averages, trading 2.51% above its 50-day average, suggesting short-term consolidation. Key support sits at the psychological 26,000-point level, with resistance at the prior high of 27,381.84. The Hang Seng TECH Index(HSTECH) also trades 2.61% above its 50-day average; a sustained breakout above 5,800 points on strong volume could signal the start of a new uptrend.
Southbound capital flows surged to a net HK$29.76 billion this week—more than double last week’s HK$10.36 billion—highlighting strong mainland appetite for bargain hunting. Key buying focused on platform economy leaders and high-dividend resource stocks, providing a solid funding floor for Hong Kong equities.
In summary, global markets are navigating a tug-of-war between “economic resilience vs. policy expectations,” resulting in structural opportunities. A-shares are consolidating on domestic demand policies, U.S. equities oscillate between AI narratives and elevated rates, while Hong Kong—leveraging its unique advantage of coordinated domestic-external policy support and attractive valuations—stands out as a strategic hub for allocating China’s core assets, backed by robust southbound flows and potential foreign capital return. As China accelerates implementation of “Fifteenth Five-Year Plan” projects and global geopolitics evolves, stocks with high EPS Ratings and positioned within the top 40 O’Neil industry groups are likely to continue attracting capital. Investors should prioritize earnings quality and industry strength, avoiding overexposure to purely speculative themes.
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Notice: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities. It is for educational purposes only.
published on January 23, 2026