Hang Seng raised 1.7%
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This week, the Hong Kong stock market extended its “rise-then-pullback” pattern, with the Hang Seng Index(HSI) up 1.7% and the Hang Seng Tech Index(HSTECH) up 1.5%.
In the first half of the week, supported by a 90-day extension of China–U.S. tariff suspensions, lower-than-expected U.S. July CPI data, and domestic consumption stimulus policies, Hong Kong stocks posted three consecutive days of gains. On Wednesday, the HSI surged 2.6% in a single session, led by semiconductor, insurance, and GPU concept stocks.
In the latter half of the week, pressured by a pullback in A-shares after intraday highs, hotter-than-expected U.S. July PPI data cooled expectations for a Fed rate cut, and pre-“Trump–Putin summit” market caution. Adding to the volatility were tighter stablecoin regulations and corrections in high-valuation sectors such as XPeng Motors.
Regarding the U.S. stock market, as of Thursday this week, the S & P 500 Index(0S&P5) rose 1.2% and the Nasdaq Composite(0NDQC) gained 1.2%, both reaching all-time highs, while the Dow Jones Indus Actual(0DJIA) increased 1.7%.
On the macro front, data from the U.S. Bureau of Labor Statistics showed that the U.S. CPI in July rose 0.2% m/m, in line with market expectations and a moderation from June’s increase; y/y, CPI increased 2.7%, below market expectations and unchanged from June. The data indicate that inflationary pressure remains relatively moderate, and the previously feared sharp rise in inflation driven by tariffs has not materialized. Core CPI rose 0.3% m/m in July, in line with expectations, while y/y growth reached 3.1%, exceeding expectations and marking the highest level since February 2025, primarily driven by higher service sector prices. Meanwhile, July PPI y/y growth surged from 2.3% in the previous month to 3.3%, the highest since February 2025 and well above expectations; m/m, PPI rose 0.9%, the largest monthly increase since June 2022, exceeding both consensus and prior readings. Core PPI y/y rose 3.7%, also the highest since February 2025, above expectations and prior readings; m/m, core PPI increased 0.9%, the largest gain since April 2022, likewise exceeding expectations and prior readings.
On rates, the overall moderate CPI readings removed a major obstacle to a potential Fed rate cut. Traders had briefly raised expectations for a September rate cut, but following the PPI release, bets on a September cut eased. According to the CME FedWatch Tool, as of August 14, the market-implied probability of a 25 bp cut in September stands at 93.3%, slightly above 91.9% a week ago; the probability of a 25 bp cut in October fell from 58.9% to 53.8%, while the probability of a 25 bp cut in December dropped to around 40%. The market will still await another set of inflation and key employment data before September, which, if weaker than expected, could reduce the rationale for a rate cut.
On employment, the U.S. Department of Labor reported that initial jobless claims for the week ending August 9 fell to 224,000, below both market expectations and the prior week; continuing claims for the week ending August 2 were 1.953 million, also below market expectations and prior readings.
On policy, the U.S. government will discontinue tax credits for electric vehicles starting September 30 this year. This policy has prompted U.S. consumers to rush to purchase electric vehicles, potentially driving third-quarter EV sales to record highs, while fourth-quarter EV sales in the U.S. may experience a sharp decline.
In the A-share market, the CSI 300(000300) extended its upward momentum this week, gaining a total of 2.4% and successfully reclaiming the 4,200-point psychological level. Weekly trading volume expanded compared with the previous week, with only Tuesday’s turnover slightly below the 50-day average, while the other four trading days all posted volumes above the 50-day average. The market has shifted from a Rally Attempt to a Confirmed Uptrend. Technically, the 21-day moving average has become an important short-term support level, while the key resistance lies near the October 2024 high of 4,450.37 points.
On the macro front, data from the National Bureau of Statistics showed that in July, CPI rose 0.4% m/m, reversing from a 0.1% decline in the previous month, and was flat y/y; core CPI increased 0.8% y/y, with the growth rate expanding for the third consecutive month. July PPI fell 0.2% m/m, with the decline narrowing by 0.2 percentage points from the previous month; y/y, PPI dropped 3.6%, unchanged from the prior month. According to the NBS, the m/m increase in CPI was slightly above seasonal levels, and core CPI y/y continued to rise; the flat y/y CPI reading was mainly due to lower food prices. The narrowing of PPI’s m/m decline was attributed to: (1) seasonal factors combined with uncertainty in the international trade environment leading to price declines in certain industries, and (2) improved domestic market competition order narrowing price drops in related industries. The unchanged y/y PPI decline was due to: (1) industrial transformation and upgrading pushing up y/y prices in relevant sectors, and (2) the release of domestic demand potential lifting y/y prices in certain industries.
On credit and liquidity, PBoC data showed that in the first seven months of this year, total social financing (TSF) increased by RMB 23.99 trillion, RMB 5.12 trillion more than the same period last year; RMB loans increased by RMB 12.87 trillion. In July, TSF increased by RMB 1.16 trillion, RMB loans fell by RMB 50 billion, new RMB deposits increased by RMB 500 billion, while household deposits decreased by RMB 1.11 trillion. At the end of July, M2 grew 8.8% y/y, M1 grew 5.6% y/y, and outstanding TSF rose 9% y/y; the M2-M1 spread was 3.2 percentage points, narrowing by 0.5 percentage points from the prior month.
On tariffs, China and the United States issued the “China-U.S. Stockholm Economic and Trade Talks Joint Statement.” The U.S. side committed to continue adjusting tariff measures on Chinese goods (including those from Hong Kong and Macao SARs) and to extend the suspension of the 24% reciprocal tariff for another 90 days starting August 12. In parallel, China will extend the suspension of the 24% tariff and related non-tariff countermeasures against the U.S. for another 90 days starting August 12. Regarding the Unreliable Entity List, China will continue to suspend for 90 days the measures announced on April 4 and will halt enforcement of the measures announced on April 9.
On policy, the Ministry of Finance, the People’s Bank of China, and the National Financial Regulatory Administration jointly issued the “Implementation Plan for Fiscal Interest Subsidy Policy on Personal Consumption Loans,” aiming to boost consumption and expand domestic demand. Priority sectors for subsidized personal consumption loans include household automobiles, elderly care and childbirth, education and training, cultural tourism, home decoration, electronic products, and healthcare services.
Leading stocks raised this week. The average stock in the MarketSmith Hong Kong 33 rose by 3.0% for this week. Our Hong Kong Model Portfolio rose by 1.8% for this week (see details in the Model Portfolio section). Since June 20, 2013, the Hong Kong 33 is up 1003.6% vs. a 25.9% up for the Hang Seng.
The best performer in our Hong Kong 33 was SISRAM MED(01696), it’s an Israel-based enterprise primarily engaged in the medical aesthetics industry. The stock gained 21.3% this week. EPS rating stands at 76, RS rating of 87, 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 its “rise-then-pullback” consolidation pattern this week. On Wednesday, the index staged a strong upside breakout above the key psychological level of 25,000 points via an upward gap. Although the following two sessions saw a retracement, the HSI held firmly above 25,000. Notably, on Thursday, the index hit the highest level since November 2021 despite intraday pullbacks, and on Friday it closed successfully above the 5-day moving average. The technical setup remains robust, with the 5-day, 21-day, 50-day, 100-day, and 200-day moving averages maintaining a bullish alignment, keeping the medium-term uptrend intact. On the downside, the 21-day MA serves as a key near-term support level; on the upside, major resistance is concentrated in the gap zone at 25,356.5–25,449.8 points formed by Friday’s downside gap.
On the flows side, the Southbound inflow via the HK-China Stock Connect continued its strong net inflow trend this week, totaling HKD 38.121 billion — the 13th consecutive week of net inflows. Even on Friday, when the HSI gapped lower, the Southbound inflow via the HK-China Stock Connect went on an aggressive buying spree, recording a single-day net buy of HKD 35.875 billion — the largest daily net inflow since the launch of Stock Connect.
Overall, the Hong Kong market displayed a “rise-then-pullback” consolidation this week amid mixed drivers, but the medium-term uptrend remains intact. Sustained southbound inflows, with Friday’s record-high single-day net buy, underscore capital’s confidence in Hong Kong stocks over the medium to long term. Going forward, key watchpoints include: policy signals from the Trump–Putin meeting, shifts in Fed rate-cut expectations, and the implementation impact of domestic consumption stimulus policies. Investors should also monitor the U.S. August CPI data, interim earnings catalysts for Hong Kong tech names, and the activity level of financial stocks as a sentiment gauge for the bulls.
At this stage, investors are advised to remain calm and rational, avoid blindly chasing rallies, and prioritize stocks with earnings beats and solid technical structures, adopting a prudent yet flexible strategy to navigate market volatility.
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published on August 15, 2025