Hang Seng Rose 3.6%
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This week, the Hong Kong stock market staged a rebound. The Hang Seng Index(HSI) gained 3.6% for the week, while the Hang Seng Tech Index(HSTECH) performed even stronger with a weekly rise of 5.2%.
A series of positive developments boosted sentiment. The Fourth Plenary Session of the 20th CPC Central Committee identified “accelerating high-level technological self-reliance” as a strategic priority, with the word “technology” appearing more frequently in the official communiqué, significantly lifting sentiment across semiconductor and other tech-related sectors. Meanwhile, Fed Chair Jerome Powell signaled that the balance sheet reduction process could conclude in the coming months, reinforcing expectations of another rate cut this month. In addition, easing U.S.-China trade tensions further supported market sentiment.
Industry Sector-wise, semiconductors, internet, and robotics stocks led the gains, while defensive sectors such as coal and utilities saw corrections. Morgan Stanley projected that the memory chip industry is entering a “supercycle” driven by the AI boom.
In the U.S. stock market, as of Thursday this week, the three major indexes extended last week’s upward momentum. The S & P 500 Index(0S&P5) rose 1.1%, the Nasdaq Composite(0NDQC) gained 1.2%, and the Dow Jones Indus Actual(0DJIA) advanced 1.2%, reaching a new all-time high.
On the macro front, the U.S. government shutdown has lasted for 22 days, becoming the second-longest in history, as the two parties remain deadlocked over healthcare subsidies. With President Trump set to visit Asia, lawmakers and aides believe the shutdown could extend into November, potentially surpassing the 35-day record during Trump’s first term. Meanwhile, data from the U.S. Treasury showed that as of October 21, total federal government debt exceeded US$38 trillion for the first time — just over two months after crossing the US$37 trillion mark.
On the policy front, the U.S. Department of Commerce plans to extend the tariff credit arrangement for auto manufacturers on imported parts by five years, beyond its original expiration in two years. The move aims to help automakers reduce tariff costs on imported components. However, the Trump administration has simultaneously tightened trade protection measures. On October 17, Trump signed an executive order to impose new tariffs effective November 1 — 25% on imported medium and heavy-duty trucks and related parts, and 10% on imported passenger buses. At the same time, the administration has quietly relaxed several tariff policies in recent weeks, exempting dozens of products from reciprocal tariffs and signaling a willingness to exclude more items as trade agreements with other nations are reached.
In terms of cooperation, President Trump and Australian Prime Minister Anthony Albanese signed an agreement at the White House on rare earths and critical minerals. Both sides agreed to streamline approval procedures for mining, processing, and related operations to boost production of rare earths and key minerals. The U.S. and Australian governments plan to jointly invest over US$3 billion in critical mineral projects over the next six months, while the Pentagon will fund the construction of a gallium processing plant in Western Australia with an annual capacity of 100 tons.
In the A-shares market, the overall trend remained positive this week, with the CSI 300(000300) rising 3.2% for the week. Trading volume, however, showed signs of contraction — the daily average remained below the 50-day moving average volume throughout the week. The combined daily turnover of the Shanghai and Shenzhen markets stayed below RMB 2 trillion for all trading days, reflecting subdued market activity. Sector rotation was evident: defensive sectors outperformed early in the week, while technology growth sectors rebounded strongly in the latter half, particularly those related to AI and computing power chips.
On the macroeconomic front, data from the Ministry of Finance showed that national fiscal revenue for the first three quarters reached RMB 16.39 trillion, up 0.5% y/y, with growth accelerating to 2.5% in Q3 — indicating steady improvement in overall economic momentum. Over the same period, national fiscal expenditure rose 3.1% y/y to RMB 20.81 trillion. According to the National Bureau of Statistics (NBS), China’s GDP grew 5.2% y/y in the first three quarters, with quarterly growth at 5.4% in Q1, 5.2% in Q2, and 4.8% in Q3.
In terms of consumption, NBS data showed that retail sales of consumer goods totaled RMB 4.20 trillion in September, up 3.0% y/y. Excluding automobiles, retail sales grew 3.2% y/y to RMB 3.73 trillion. For the January–September period, total retail sales reached RMB 36.59 trillion, up 4.5% y/y, while non-auto retail sales increased 4.9% y/y, reflecting solid resilience in non-automotive consumption.
Regarding industrial production, NBS data showed that the value-added of industrial enterprises above designated size rose 6.5% y/y in September (real growth excluding price factors), and 0.64% m/m. For the first nine months, growth stood at 6.2% y/y. Notably, high-tech manufacturing maintained strong momentum, with value-added up 9.6% y/y. Output of industrial robots, service robots, and high-speed trains rose 29.8%, 16.3%, and 8.6%, respectively.
On the interest rate front, the People’s Bank of China authorized the National Interbank Funding Center to announce that the Loan Prime Rate (LPR) on October 20, 2025, was 3.0% for one year and 3.5% for five years or above — unchanged for the fifth consecutive month.
In terms of trade talks, China’s Vice Premier He Lifeng is scheduled to lead a delegation to Malaysia from October 24 to 27 for trade negotiations with the U.S. Both sides will discuss key issues related to China–U.S. economic and trade relations and work to implement the major consensuses reached by the two heads of state in previous communications.
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 2.3% for this week (see details in the Model Portfolio section). Since June 20, 2013, the Hong Kong 33 is up 1016.0% vs. a 28.2% up for the Hang Seng.
The best performer in our Hong Kong 33 was CHINA LIFE(02628), it’s a leading enterprise in the domestic life insurance industry in China. The stock gained 8.4% this week. EPS rating stands at 72, RS rating of 79, and A/D rating of A.
Our Hong Kong Market Status are in an Uptrend Under Pressure.
From a technical perspective, the HSI successfully reclaimed both the 50-DMA and the key 26,000-point level this week but encountered resistance near the 21-DMA. Trading volume remained subdued, with daily turnover consistently below the 50-day average, indicating cautious investor sentiment. Key support is at the 50-DMA, while the October 2 high of 27,381.84 serves as a major resistance point.
As for fund flows, the Southbound inflows via the HK-China Stock Connect totaled HK$17.277 billion for the week, a notable decline from the previous week. However, the inflows have remained positive for 23 consecutive weeks, with the year-to-date total continuing to set new record highs, reflecting mainland investors’ sustained confidence in the Hong Kong market.
Overall, the Hong Kong stock market rebounded this week under the combined influence of policy expectations and improving external conditions. However, the lack of strong volume expansion suggests ongoing divergence in investor views and cautious sentiment. In the near term, the market is likely to remain range-bound. On one hand, the Southbound inflows via the HK-China Stock Connect and the strong policy sensitivity of growth sectors such as technology and semiconductors will continue to provide support and trading momentum. On the other hand, whether turnover can expand and whether large-cap stocks can perform will be key to determining if the index can break through its upper resistance zone.With the upcoming Federal Reserve meeting next week, growing expectations for a rate cut and a stronger Hong Kong dollar point to further improvement in liquidity conditions. Over the medium to long term, the Hong Kong market still holds strategic allocation value, particularly in the technology and innovation sectors.
At this stage, investors are advised to stay calm and rational, avoid chasing rallies, and focus on fundamentally strong stocks with sound technical setups, adopting a prudent strategy to navigate market volatility.
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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 October 24, 2025