Hang Seng Rose 1.3%
Editor’s Note: As always, we would appreciate any feedback you have. It will help us make this app more useful to you.
This week, Hong Kong stocks showed a “rising first, then consolidating” pattern with a steady upward bias. The Hang Seng Index(HSI) gained 1.3%, while the Hang Seng Tech Index(HSTECH) declined 1.2%.
The market opened higher on Monday, boosted by policy tailwinds such as the implementation of new regulations for the Hainan Free Trade Port. A sharp rally on Thursday followed positive developments in China–U.S. trade relations. However, the market pulled back on Tuesday and Friday, weighed down by corrections in U.S. tech stocks and fluctuations in market expectations over a potential Fed rate cut in December. Overall, the week reflected a tug-of-war between policy support and external uncertainties.
By industry group, power equipment and grid-related stocks outperformed, driven by the accelerated construction of new power systems and stronger policy support for energy storage. The surge in lithium hexafluorophosphate prices, which more than doubled, lifted sentiment across the lithium battery and new energy materials sectors. Meanwhile, defensive sectors such as telecommunications and high-dividend utilities also posted solid gains.
In the U.S. stock market, all three major indexes retreated as of Thursday this week. The S & P 500 Index(0S&P5) fell 1.8%, the Nasdaq Composite(0NDQC) lost 2.3%, and the Dow Jones Indus Actual(0DJIA) declined 1.4%.
From a macroeconomic perspective, data from the Institute for Supply Management (ISM) showed that U.S. factory activity contracted for the eighth consecutive month in October, mainly due to weaker production and subdued demand. The ISM Manufacturing PMI came in at 48.7, below both expectations and the prior reading. New orders fell for the second straight month, while soft production prompted firms to maintain low employment levels. The prices-paid index dropped to its lowest level since early this year. Meanwhile, the ISM Services PMI rose to 52.4, beating forecasts and the previous reading, marking the fastest expansion in eight months. The surge was largely driven by a 5.8-point jump in the new orders index to 56.2, the highest level in a year. However, the rebound in demand was accompanied by intensifying inflationary pressures, as the input prices index climbed to 70 — a three-year high.
In the labor market, ADP data showed that U.S. private payrolls increased by 42,000 in October, far exceeding expectations and reversing the revised decline of 32,000 in the previous month. After two months of consecutive slowdown, the job market showed signs of stabilization, though overall labor demand weakened and wage growth stagnated, adding uncertainty to whether the Fed will cut rates in December. According to Challenger, U.S. companies announced 153,074 job cuts in October, nearly triple the number from a year earlier and the highest in 20 years, led by layoffs in the tech and warehousing sectors. Year-to-date, total job cuts have exceeded one million — the highest since the pandemic — while corporate hiring plans fell to their lowest level since 2011. Indeed data showed the job postings index stood at 101.9 as of October 24, the lowest since early February 2021, down about 0.5% from the start of the month and 3.5% from mid-September — the time of the Bureau of Labor Statistics’ last related update. The data also indicated that fewer job ads are leading to lower posted wage offers. A report by Revelio Labs showed nonfarm employment declined by 9,100 in October, compared with a 33,000 increase in the prior month. Labor market activity cooled further, with both hiring and quit rates slowing, reflecting reduced worker mobility and weakening economic momentum. Although the government shutdown delayed official data releases, aggregated figures from multiple private sources clearly pointed to a marked cooling of the labor market.
On interest rates, data from the CME FedWatch Tool showed that as of November 6, the probability of a 25-BP rate cut in December fell to 68.7% from 72.8% a week earlier, marking several consecutive weeks of decline and highlighting growing market divergence over whether the Fed will proceed with another rate cut in December.
In the A-shares market, the market trended higher this week amid fluctuations, with the CSI 300(000300) gaining 0.8% for the week. Trading volume contracted slightly compared with the previous week, as daily turnover over the five trading days remained below the 50-day average, with combined daily turnover for the Shanghai and Shenzhen markets holding around RMB 2 trillion. Sector-wise, gains were driven by policy-related themes such as Hainan Free Trade Port, nuclear power/storage, and power grid equipment, as well as price-hike plays including phosphate chemicals, industrial metals, and memory chips. In contrast, consumer, cyclical, and thematic sectors underperformed.
On the macro front, data from the National Bureau of Statistics showed that in October, manufacturing activity slowed compared with the previous month, due to front-loaded demand ahead of the National Day holiday and increasing external uncertainties. The manufacturing PMI dropped to 49.0%, down 0.8 percentage points from September. However, large enterprises maintained resilience, with the production index and new orders index at 50.9% and 50.1%, respectively—both remaining in expansion territory for six consecutive months. Among key industries, the PMI for high-tech manufacturing, equipment manufacturing, and consumer goods stood at 50.5%, 50.2%, and 50.1%, respectively, all within the expansion range. The services PMI rose by 0.1 percentage point to 50.2%, returning to expansion territory, supported by holiday-related demand during the National Day and Mid-Autumn festivals, as well as promotional activities around the “Double 11” shopping festival. The composite PMI stood at 50.0%, at the threshold level, indicating overall stability in business activity across Chinese enterprises. According to RatingDog data (formerly Caixin), the RatingDog Manufacturing PMI came in at 50.6 in October, remaining above the 50-point threshold for the third consecutive month, suggesting continued improvement in manufacturing sentiment. However, the reading was lower than September’s 51.2, indicating some loss of momentum. New export orders recorded the steepest decline since May, with surveyed firms attributing it to heightened trade volatility. The RatingDog Services PMI edged down slightly to 52.6 from 52.9 in September, as service-sector growth was supported by stronger overall new business despite a mild drop in export sales. The RatingDog Composite PMI registered 51.8, lower than the previous reading.
In trade and economic relations, China announced specific measures to implement the consensus reached during the China–U.S. economic and trade consultations in Kuala Lumpur. These include halting the additional tariffs imposed on certain U.S. imports announced on March 4; extending the suspension of the 24% reciprocal tariff for another year while retaining a 10% tariff; lifting export control measures on 15 U.S. entities while extending the suspension for another 16 entities for one year; removing 11 U.S. companies from the Unreliable Entity List while maintaining the suspension for another 11 for one year; and ending anti-circumvention measures on imports of single-mode optical fiber originating from the U.S. with wavelength cutoff displacement.
Leading stocks advanced this week. The average stock in the MarketSmith Hong Kong 33 rose by 0.7% for this week. Our Hong Kong Model Portfolio rose by 1.1% for this week (see details in the Model Portfolio section). Since June 20, 2013, the Hong Kong 33 is up 1021.8% vs. a 28.6% up for the Hang Seng.
The best performer in our Hong Kong 33 was CHONGQING M&E(02722), it’s the largest comprehensive equipment manufacturing group in western China. The stock gained 18.4% this week. EPS rating stands at 99, RS rating of 95, and A/D rating of A.
Our Hong Kong Market Status are in an Uptrend Under Pressure.
From a technical perspective, the Hang Seng Index successfully reclaimed its 50-DMA this week. However, trading volume did not expand significantly during Thursday’s upside gap breakout. Overall turnover remained subdued throughout the week, with daily trading volume over all five sessions staying below the 50-day average, reflecting a cautious sentiment and strong wait-and-see attitude among investors. On the downside, the 50-DMA serves as a key short-term support level, while on the upside, the October 2 high of 27,381.84 points represents an important resistance area.
Regarding Southbound inflows via the HK–China Stock Connect, net inflows totaled HKD 38.679 billion for the week, widening from the previous week. It marked the 25th consecutive week of net inflows, with the cumulative amount continuing to reach new yearly highs.
Overall, Hong Kong stocks posted modest gains on light volume this week, as policy tailwinds offset external headwinds. The divergence between price and volume signals short-term pullback risks, yet policy-driven sectors and those benefiting from strong fund inflows may continue to show upside potential. In the near term, market performance will likely hinge on the Fed’s policy path and domestic growth stabilization signals. Over the medium to long term, the rollout of the “15th Five-Year Plan,” progress in free trade port construction, and the expansion of the innovative drug list are expected to generate sustained policy dividends, supporting sectoral uptrends. Nonetheless, investors should remain mindful of uncertainties in global supply chains and marginal shifts in Hong Kong’s market liquidity, which could pose potential risks.
At this stage, investors are advised to stay calm and rational, avoid chasing short-term rallies, and focus on fundamentally strong stocks with solid technical setups. A balanced and flexible strategy remains key to navigating market volatility effectively.
What do you think? Please email us any questions or comments.
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 November 7, 2025