Hang Seng Rose 0.6%
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This week, the Hong Kong market trended higher with volatility. The Hang Seng Index(HSI) rose 0.6%, while the Hang Seng Tech Index(HSTECH) jumped 5.1%, with tech and resource stocks showing divergent performances.
The global market focus this week centered on the Fed’s rate-cut trajectory. Against this backdrop, the Fed delivered a 25 bps rate cut but struck a hawkish tone, dashing market expectations for a 50 bps cut and weighing on tech stocks. However, a consensus between the U.S. and China to delay TikTok negotiations sent a signal of easing tensions, triggering a sharp rebound in internet stocks.
On the domestic front, Hong Kong launched a HK$3 billion AI research fund and implemented a reform to adopt a T+1 settlement cycle, bolstering confidence in tech and financial stocks. Meanwhile, record-high gold prices drove defensive strength in resource stocks, creating a bifurcated market pattern.
In the U.S. stock market, as of this Thursday, U.S. equities extended their choppy uptrend. The S & P 500 Index(0S&P5) rose 0.7%, the Nasdaq Composite(0NDQC) advanced 1.5%, and the Dow Jones Indus Actual(0DJIA) gained 0.7%, with all three major indices once again collectively setting record highs.
On the macroeconomic front, data from the U.S. Department of Commerce showed that August retail sales grew 0.6% m/m, exceeding both expectations and the prior reading, marking the third consecutive month of upside surprises. The momentum was largely driven by back-to-school spending, with strong performances in online retail, apparel, and sporting goods. Adjusted for inflation, real retail sales increased 2.1% y/y, achieving 11 straight months of positive growth.
On interest rates, the Federal Reserve announced after its FOMC meeting that the target range for the federal funds rate was lowered from 4.25%–4.5% to 4.00%–4.25%, a 25-basis-point cut. This marks the Fed’s first rate cut in nine months, with both the magnitude and timing in line with market expectations. Meanwhile, most Fed policymakers now project three rate cuts for this year, compared with two in the June projection, meaning two additional 25-basis-point cuts remain after this week’s move. According to the CME FedWatch Tool, as of September 18, markets priced in a 91.9% probability of a 25-basis-point cut in October and an 83.9% probability of another 25-basis-point cut in December.
On the labor market, data from the U.S. Department of Labor showed that for the week ending September 13, initial jobless claims came in at 231,000, lower than both expectations and the prior reading, returning to the normal range seen over the past four years. Continuing claims for the week ending September 6 were 1.92 million, also below expectations and the prior figure. While initial claims declined, continuing claims remained above the key 1.9 million level, indicating that the labor market is still facing some degree of pressure.
In the A-shares market, the CSI 300(000300) underwent a choppy pullback this week, slipping 0.2% but still setting a new YTD high. Market turnover remained steady, with the A-shares market recording daily turnover above RMB 2 trillion for 28 consecutive trading days. Weekly trading volume edged higher on a w/w basis, but only two trading days saw daily volume exceed the 50-day average. From a technical perspective, the 21-DMA provides strong short-term support, while resistance is concentrated near the 4,600-point level.
On the macroeconomic front, data from the National Bureau of Statistics showed that in August, industrial value-added for enterprises above the designated size grew 5.2% y/y and 0.37% m/m, with equipment manufacturing and high-tech manufacturing maintaining solid momentum. The services production index rose 5.6% y/y, indicating strength in modern services. Total retail sales of consumer goods reached RMB 3.9668 trillion, up 3.4% y/y and 0.17% m/m, with faster growth in services-related consumption. Fixed asset investment (excluding rural households) for January–August came in at RMB 32.6111 trillion, up 0.5% y/y; excluding property development, investment rose 4.2%, with infrastructure and manufacturing investment up 2.0% and 5.1%, respectively, while property development investment fell 12.9%.
On credit and liquidity, PBOC data showed that aggregate social financing (TSF) increased RMB 2.57 trillion in August. New RMB loans rose RMB 590 billion, while RMB deposits increased RMB 2.06 trillion. Broad money supply (M2) grew 8.8% y/y, while narrow money (M1) was up 6% y/y. The M2–M1 gap narrowed 0.4ppt from the prior month, marking its lowest level since June 2021.
On policy, the Ministry of Commerce and eight other government departments jointly issued “Several Policy Measures to Expand Service Consumption,” outlining 19 measures, including eight initiatives to enhance high-quality service supply and pilot programs for new consumption models. Follow-up actions will include designating 50 pilot cities, releasing a series of policy documents, organizing over 25,000 cultural and tourism activities, and distributing more than RMB 330 million in consumption subsidies.
Elsewhere, China and the U.S. held trade talks in Spain this week, focusing on U.S. unilateral tariffs, export controls, and TikTok. The two sides reached a basic framework consensus on issues such as resolving TikTok and reducing investment barriers, stressing the importance of stabilizing bilateral trade relations for both economies and the global economy. Ahead of the talks, the U.S. imposed sanctions on certain Chinese entities, while China launched anti-discrimination and anti-dumping investigations.
Leading stocks advanced this week. The average stock in the MarketSmith Hong Kong 33 fell by 0.8% for this week. Our Hong Kong Model Portfolio rose by 2.3% for this week (see details in the Model Portfolio section). Since June 20, 2013, the Hong Kong 33 is up 1027.8% vs. a 30.1% up for the Hang Seng.
The best performer in our Hong Kong 33 was NEXTEER(01316), it’s a leading global supplier of steering and power transmission. The stock gained 18.7% this week. EPS rating stands at 73, RS rating of 90, and A/D rating of A.
Our Hong Kong Market Status are in a Confirmed Uptrend.
From a technical perspective, the Hang Seng Index continued to notch new year-to-date highs this week, moving upward along the 5-DMA before closing slightly below it on Friday. On volumes, weekly turnover edged higher q/q, with all five trading days seeing daily volumes above the 50-day average. On the downside, the 21-DMA serves as a key support level; on the upside, this week’s high of 27,058.03 marks critical resistance.
On capital flows, the Southbound inflow via the HK-China Stock Connect extended for the week, totaling HK$36.85 billion, though sharply lower than the prior week, suggesting risk appetite has moderated.
Overall, under the dual impact of external policy shifts and domestic reform measures, the Hong Kong market posted a volatile upward trend. In the near term, the market is likely to follow a “policy-driven + portfolio rebalancing” logic. Next week, the magnitude of China’s LPR adjustment and the progress of subsequent U.S.-China negotiations will be key variables. Should policy support exceed expectations, the market may break above this week’s high; otherwise, profit-taking pressure could emerge. AI computing power, high-dividend plays, and U.S.-China sensitive internet stocks remain key investment themes.
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 19, 2025