Hang Seng raised 0.9%
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This week, the Hong Kong stock market exhibited a shaky uptrend, with the Hang Seng Index(HSI) rising 0.9% and the Hang Seng Tech Index(HSTECH) up 0.6%.
U.S. tariff threats loomed throughout the week, initially triggering risk-aversion sentiment. However, the market gradually absorbed the “negotiation leverage” aspect of these threats. Additionally, the trade pressure eased as the European Union reached a tariff agreement with Myanmar, helping to restore risk appetite. Domestically, the anti-involution policies continued to take effect in sectors such as photovoltaics and express delivery, while expectations for real estate policy easing and an earnings forecast upgrade from Guotai Junan International boosted both the industrial chain and financial stocks. On the funding front, attention shifted to the “valuation gap” in the technology sector, with the Southbound inflow via the HK-China Stock Connect exceeding HKD 1.9 billion. The global tech stock rally further lifted the Hong Kong tech index.
In the U.S. stock market, as of this Thursday, the three major indexes first dipped and then rebounded. The S & P 500 Index(0S&P5) edged up 0.02%, and the Nasdaq Composite(0NDQC) rose 0.14%, both once again reaching new all-time highs. The Dow Jones Indus Actual(0DJIA), however, declined by 0.4%.
On tariffs, U.S. President Trump stated that he would send tariff letters to trading partners, with rates potentially ranging from 60%-70% to 10%-20%. Goods from the relevant countries will face new tariffs effective August 1. Treasury Secretary Besant disclosed that around 100 countries could be subject to a reciprocal tariff rate of 10%. The first wave of announced tariff letters covers 14 countries including Japan and South Korea, with tariff rates set between 25% and 40%. The second wave targets 8 countries, among which Brazilian goods will face a 50% tariff—the highest rate in this round of reciprocal measures. In addition, the U.S. announced it will impose a 50% tariff on all imported copper starting August 1, 2025.
On interest rates, the Federal Reserve’s June meeting minutes showed that amid an uncertain inflation outlook and sustained White House pressure on Fed Chair Powell, divisions have emerged within the Fed regarding rate cut decisions. Officials disagreed over whether and when to resume rate cuts, though most anticipated easing later this year. Fed Governor Waller noted that the current federal funds rate is overly restrictive and suggested he may support a rate cut at the late July meeting. According to the CME FedWatch Tool, as of July 10, the probability of holding rates steady in July had risen to 95.3%, while the likelihood of a 25-basis-point cut in September stood at 64.5%.
On policy, U.S. President Trump signed the “Grand Beautiful” Act on Independence Day. This comprehensive tax and spending legislation combines $4 trillion in tax cuts, $1.5 trillion in spending reductions, and a $5 trillion increase in the debt ceiling. At its core, the bill extends the corporate and individual tax cuts enacted during Trump’s first term in 2017, while also reducing social welfare expenditures such as Medicaid. The goal is to drive a manufacturing reshoring boom and achieve high economic growth through fiscal stimulus. In addition, according to sources, the U.S. government has informed General Electric Aerospace that it will allow the company to resume supplying jet engines to COMAC in China. Other reports indicated that the U.S. plans to lift export restrictions on Chinese buyers of chip design software and ethane producers.
On employment, data from the U.S. Bureau of Labor Statistics showed that initial jobless claims for the week ended July 5 fell to 227,000, while continuing claims for the week ended June 28 rose to 1.965 million, the highest since November 13, 2021.
In other developments, Elon Musk announced on social media the formation of the “American Party,” claiming it aims to “prevent America from going bankrupt” and outlining plans to run for office next year. His political platform may include reducing debt spending, promoting AI technology development, and broadly rolling back regulations.
In the A-share market, the CSI 300(000300) extended its rally this week, successfully breaking above the resistance level formed by the March 19, 2024 high of 4,025.3 points, with a cumulative gain of 0.8%. Trading volume expanded compared to last week, with four out of five sessions staying above the 50-DMA, except for Monday, which was slightly below. The market remains in a rally attempt phase, with the 100-DMA providing key technical support, while overhead resistance comes from the December 2024 high at 4,098.38 points.
On the macro front, data from the National Bureau of Statistics showed that China’s CPI rose 0.1% y/y in June, marking the first increase after four consecutive months of decline, primarily driven by a rebound in industrial consumer goods prices. On a m/m basis, CPI declined 0.1%, narrowing by 0.1 percentage point compared to the previous month. Among the components, food prices fell less than their typical seasonal pattern, industrial consumer goods prices shifted from decline to growth, and service prices remained stable with a slight upward bias. Core CPI increased 0.7% y/y, up 0.1 percentage point from May and reaching a 14-month high. The PPI fell 0.4% m/m, unchanged from the previous month, mainly due to seasonal declines in raw material manufacturing prices, increased green electricity output driving energy prices lower, and pricing pressure in some export-oriented sectors. On a y/y basis, PPI decreased 3.6%, with the decline widening by 0.3 percentage point from May.
In gold and foreign exchange reserves, data from the PBOC showed that as of the end of June, China’s gold reserves reached 73.9 million ounces, an increase of 70,000 ounces from end-May, marking the eighth consecutive month of accumulation. The State Administration of Foreign Exchange also reported that as of end-June, China’s foreign exchange reserves stood at USD 3.3174 trillion, up USD 32.2 billion m/m, and have remained above USD 3.2 trillion for 19 straight months since December 2023.
On financial policy, the Implementation Rules for the Management of Program Trading on the Shanghai, Shenzhen, and Beijing Stock Exchanges officially came into effect on July 7. The rules clarify definitions and criteria for high-frequency trading and introduce differentiated regulatory arrangements for such activities.
In other developments, reports indicated that the U.S. government has notified General Electric Aerospace that it will allow the company to resume supplying jet engines to COMAC in China. Additional reports revealed that the U.S. will remove export restrictions on Chinese buyers of chip design software and ethane producers. In response, China’s Ministry of Commerce stated that following the China-U.S. economic and trade talks in London, both sides confirmed the implementation of consensus reached by the two heads of state, and that the U.S. has recently taken concrete steps to lift a series of restrictive measures, which have been formally communicated to China.
Leading stocks raised this week. The average stock in the MarketSmith Hong Kong 33 rose by 2.4% for this week. Our Hong Kong Model Portfolio fell by 0.4% for this week (see details in the Model Portfolio section). Since June 20, 2013, the Hong Kong 33 is up 887.2% vs. a 20.3% up for the Hang Seng.
The best performer in our Hong Kong 33 was Q TECH(01478), it’s a global leading manufacturer of high-end camera modules. The stock gained 23.0% this week. EPS rating stands at 65, RS rating of 92, and A/D rating of A+.
Our Hong Kong Market Status are in a Confirmed Uptrend.
From a technical perspective, this week the Hang Seng Index fluctuated around the 21-DMA, with a pullback on Friday after a brief rally, but it ultimately remained above the 21-DMA. In terms of trading volume, there was a noticeable increase compared to last week, with daily trading volume expanding each day, except for Monday and Tuesday, which were below the 50-day average volume.
From a technical support standpoint, the 50-DMA serves as an important short-term defense level, while the key resistance level lies at the year-to-date high of 24,874.39 points, reached on March 19.
On the funding side, the Southbound inflow via the HK-China Stock Connect continued its net inflow trend, with a total net purchase of HK\$26.356 billion this week, nearly double compared to last week, marking the eighth consecutive week of net inflows.
Overall, industry policy catalysts and optimized funding structures may provide support for the market, creating short-term upward momentum. However, geopolitical uncertainties and technical resistance levels still warrant caution, and the market may continue its “correction within a consolidation” rhythm.
At this stage, we recommend that investors remain calm and rational, avoiding impulsive buying. Priority should be given to stocks with better-than-expected earnings and solid technical setups, using a prudent strategy to navigate market fluctuations.
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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 July 11, 2025