Hang Seng raised 3.8%
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This week, the Hong Kong stock market experienced volatile trading in the first four days but rallied strongly on Friday. The Hang Seng Index rose by 3.8% for the week, and the Hang Seng Tech Index surged by 6.0%. The market continued to be led by tech stocks this week, a trend that was underscored at the central government’s private enterprise roundtable meeting on Monday. The first row was occupied by leaders from major companies in communication, internet, smart ecology, power batteries, semiconductors, robotics, and new energy vehicles— all technology-related sectors. Additionally, DeepSeek continued to stir up the market. After Tencent and Baidu integrated the full version of DeepSeek, their stock prices continued to rise. Following that, Alibaba and Bilibili released their earnings reports, and the highlights of their performance sparked a surge in their stock prices, which also drove a collective rally in the tech stock sector. Furthermore, on the policy front, Pan Gongsheng, the governor of the People’s Bank of China, stated that the Chinese government will implement a more proactive fiscal policy and a moderately loose monetary policy. The State Council forwarded the ‘2025 Stabilizing Foreign Investment Action Plan’ published by the Ministry of Commerce and the National Development and Reform Commission, which encourages foreign investment in China through equity investments. These favorable policies have injected new vitality into the market.
Regarding the US stock market, as of this Thursday, the S&P 500 index rose slightly by 0.1%, reaching an all-time high; the Nasdaq index fell slightly by 0.3%; the Dow Jones index fell by 0.8%, falling below its 21-DMA. Recently, according to the minutes of the January meeting released by the Federal Reserve, Fed officials reached a consensus during the January meeting that, before further rate cuts, they need to see inflation continue to decline, and they expressed concerns about the potential impact of President Trump’s tariff policy on inflation. At the same time, the officials believe that it may be appropriate to consider suspending or slowing down the reduction of the balance sheet until the debt ceiling issue is resolved. According to the CME Interest Rate Monitor, as of February 21, 2025, the market expects a 97.5% probability that the Fed will keep interest rates unchanged in March. The first rate cut of the year might occur in June, with a 45.2% probability of a 25 basis point cut. On the employment front, data from the U.S. Department of Labor show that, for the week of February 15, initial claims for unemployment benefits were 219,000, higher than both expectations and the previous value, which was revised from 213,000 to 214,000. For the week ending February 8, continuing claims for unemployment benefits were 1,869,000, higher than both expectations and the previous value, which was revised from 1,850,000 to 1,845,000. In other news, there have been new developments in the Russia-Ukraine conflict recently. The United States and Russia held peace talks in Saudi Arabia and reached a four-point consensus, including establishing a consultation mechanism and appointing a team to end the conflict in Ukraine, among other measures. They also proposed a “three-stage” peace plan. The U.S. side stated that the European Union and Ukraine would not be excluded. Ukrainian President Zelensky said that they should participate in the negotiations. European countries remain divided on how to address the Ukraine issue.
In the A-share market, the CSI 300 Index rose 1.0% this week, exhibiting a choppy upward trend. Except for Thursday, daily trading volume exceeded the 50-day average volume on all other trading days, indicating that the market remains in a rally attempt. The 50-DMA serves as the key support level, with secondary support at the January 13, 2025, low of 3,704.11. Resistance stands at the psychological threshold of 4,000. Over the weekend, a major announcement was made: China Cinda, China Orient, Great Wall Asset, and China Securities Finance Corporation disclosed that, in accordance with the Party and state institutional reform plans, a portion of their equity stakes would be transferred to Central Huijin Investment at no cost. This move aims to streamline regulatory responsibilities and role delineation, enhance financial supervision efficiency, improve the operational effectiveness of financial institutions, strengthen their risk resilience, and support their sustainable development. According to data released by the People’s Bank of China (PBOC), new RMB loans increased by RMB 5.13 trillion in January 2025, while RMB deposits rose by RMB 4.32 trillion. Aggregate social financing expanded by RMB 7.06 trillion, exceeding the year-ago level by RMB 583.3 billion. Regarding money supply, M2 (broad money) grew 7% y/y to RMB 318.52 trillion, while M1 (narrow money) edged up 0.4% YoY to RMB 112.45 trillion. Meanwhile, M0 (cash in circulation) surged 17.2% YoY to RMB 14.23 trillion, with a net cash injection of RMB 1.41 trillion for the month. The M2-M1 gap continued to narrow, shrinking by 2.1 percentage points from December 2024. The PBOC, via the National Interbank Funding Center, announced that the Loan Prime Rate (LPR) for February 20, 2025, remained unchanged at 3.1% for the one-year tenor and 3.6% for loans over five years.
Leading stocks raised this week. The average stock in the MarketSmith Hong Kong 33 rose by 7.6% for this week. Our Hong Kong Model Portfolio rose by 5.0% for this week (see details in the Model Portfolio section). Since June 20, 2013, the Hong Kong 33 is up 700.2% vs. a 17.0% up for the Hang Seng.
The best performer in our Hong Kong 33 was SUNEVISION(01686), it’s a leading technology investment enterprise specializing in smart city and data center businesses. The stock gained 47.3% this week. EPS rating stands at 71, RS rating of 98, and A/D rating of A+.
Our Hong Kong Market Status are in a Confirmed Uptrend.
From a technical perspective, the Hang Seng Index not only successfully reclaimed the 23,000-point milestone but also decisively surpassed the high recorded during the 2024 National Day period, reaching its highest level since December 17, 2021. In terms of trading volume, the daily turnover of the Hang Seng Index across all five trading days this week noticeably exceeded the 50-day average volume, while the total weekly volume was also significantly higher than the previous week’s. Regarding the Southbound inflow via the HK-China Stock Connect, this week continued the trend of net inflows, marking 26 consecutive weeks of net buying. Moreover, the net inflow amount this week hit a new high since February 5, 2021, totaling 51.212 billion HKD—a figure more than double the net inflow of the prior week. Overall, driven by the technology sector, the Hong Kong stock market exhibited strong momentum this week, with the market firmly in an upward trend. Nevertheless, investors should remain vigilant of potential short-term technical pullback risks and adopt a cautious stance. It is recommended that investors stay calm and rational, avoid chasing rallies blindly, and prioritize stocks with better-than-expected earnings and robust technical patterns, employing a prudent strategy to navigate market fluctuations flexibly.
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published on February 21, 2025