Hang Seng fell 1.5%
Editor’s Note: As always, we would appreciate any feedback you have. It will help us make this app more useful to you.
This week, the Hang Seng Index(HSI) declined 1.5%, while the Hang Seng Tech Index(HSTECH) fell 2.0%, with the Hong Kong stock market overall presenting a consolidation phase marked by choppy trading.
Tensions in the Middle East were the primary source of market volatility in the first half of the week. Escalating geopolitical conflict drove up tanker charter rates, making shipping stocks a new safe-haven target for capital rotation. However, as the conflict did not escalate into the Strait of Hormuz, the marginal impact of geopolitical risk on the market began to fade in the latter half of the week, with capital rotating toward policy beneficiaries.
Signals of financial sector opening released during the Lujiazui Forum and the resumption of STAR Market listings for unprofitable companies significantly boosted sentiment in financial stocks. In addition, rising expectations for a Hong Kong stablecoin policy supported a strong counter-trend rally in cross-border payment concept stocks.
In the U.S. stock market, due to the Juneteenth holiday on Thursday, markets were closed for one day. As of Wednesday, the S & P 500 Index(0S&P5) edged up 0.1%, the Nasdaq Composite(0NDQC) rose 0.7%, while the Dow Jones Indus Actual(0DJIA) dipped 0.1%.
On the macro front, data from the U.S. Department of Commerce showed that retail sales in May declined 0.9% m/m — the largest drop since March 2023 — dragged down by auto sales. April’s figure was revised down to a 0.1% decline, marking the first back-to-back monthly decrease since late 2023. Industrial production in May fell 0.2% m/m, the second decline in three months, reflecting weaker output in utilities and a soft manufacturing sector. Manufacturing output rose slightly by 0.1% in May, while April’s figure was revised down to a 0.5% decline.
On interest rates, the Federal Reserve kept its benchmark rate unchanged at the June FOMC meeting, marking the fourth consecutive meeting with no change — in line with market expectations. The Fed noted that uncertainty around the economic outlook has eased, though it remains elevated. The 2025 GDP growth forecast was revised down to 1.4%, while inflation expectations were raised to 3%. The dot plot indicates two rate cuts totaling 50 basis points in 2025, unchanged from March projections. However, for 2026, the projected rate cuts were trimmed to 25 basis points from the previously expected 50 basis points. Following the announcement, U.S. President Donald Trump repeatedly called for the Fed to cut rates by 250 basis points, accusing “Mr. Too Late” Powell of costing the U.S. “hundreds of billions of dollars” by failing to act. According to the CME FedWatch Tool, as of June 19, the probability of holding rates steady in July rose to 91.7% from 75.6% a week earlier, while the probability of a 25 bps rate cut in September remained unchanged at 58.8%.
On the geopolitical front, tensions in the Middle East continued to escalate. President Trump has approved a strike plan targeting Iran’s Fordow nuclear facility, though no execution order has been issued yet, leaving room for diplomatic efforts. The White House stated that Trump will make a final decision on whether to proceed within the next two weeks. In the meantime, U.S. forces have begun accelerating naval deployments toward the Strait of Hormuz to counter potential Iranian blockades. The USS Nimitz carrier strike group canceled its planned visit to Vietnam and was redirected to the Middle East. U.S. Defense Secretary Hegseth declared that “all scenarios are prepared for — including post-strike contingencies against Iran.”
In employment data, the U.S. Department of Labor reported that initial jobless claims for the week ending June 14 fell slightly by 5,000 to 245,000, remaining near an eight-month high. Continuing claims for the week ending June 7 also edged down to 1.945 million.
In the A-share market, the CSI 300(000300) declined 0.3% this week. After breaking below its 100-DMA, the index found support at the 50-DMA, with the overall trend reflecting a consolidation phase. Trading volume remained subdued, with daily turnover consistently below the 50-day average. The market remains in a rally attempt, with the 50-DMA serving as near-term technical support, while the May 14 high of 3,960.52 points represents the key resistance level above.
On the economic data front, according to the National Bureau of Statistics, industrial value-added for large-scale enterprises grew 5.8% y/y in May, with notable increases in the output of new energy vehicles and industrial robots. Retail sales of consumer goods rose 6.4% y/y, marking the fastest pace since December 2023. Fixed asset investment grew 3.7% y/y in the January–May period. New growth drivers such as high-end manufacturing and the digital economy continued to expand. In May, value-added in the high-tech manufacturing sector rose 8.6% y/y, while value-added in the digital product manufacturing sector rose 9.1% y/y.
On the financial data front, the People’s Bank of China reported that as of the end of May, broad money supply (M2) stood at RMB 325.78 trillion, up 7.9% y/y; narrow money supply (M1) was RMB 108.91 trillion, up 2.3% y/y; and currency in circulation (M0) totaled RMB 13.13 trillion, up 12.1% y/y. The M2–M1 spread narrowed by 0.9 percentage points to 5.6%. In the first five months of the year, total social financing increased by RMB 18.63 trillion, RMB 3.83 trillion higher than the same period last year. New RMB loans totaled RMB 10.68 trillion. The PBOC, via the National Interbank Funding Center, kept both the 1-year and 5-year+ Loan Prime Rates (LPR) unchanged — in line with expectations — signaling limited urgency for further monetary policy easing in the near term.
On the policy front, the China Securities Regulatory Commission (CSRC) resumed the use of the fifth set of listing standards on the STAR Market for unprofitable companies, aiming to support sectors such as artificial intelligence, commercial aerospace, and the low-altitude economy. It also initiated pilot programs for a professional institutional investor system and IPO pre-review mechanisms. Meanwhile, a third set of listing standards was launched on the ChiNext Board to support high-quality, unprofitable innovative companies. The Hong Kong Stock Exchange is preparing to launch RMB-denominated government bond futures, aiming to improve the offshore RMB product ecosystem and enhance the international appeal of the Hong Kong market.
Leading stocks failed this week. The average stock in the MarketSmith Hong Kong 33 fell by 3.2% for this week. Our Hong Kong Model Portfolio fell by 0.6% for this week (see details in the Model Portfolio section). Since June 20, 2013, the Hong Kong 33 is up 808.9% vs. a 17.2% up for the Hang Seng.
The best performer in our Hong Kong 33 was XD INC(02400), it’s a global game developer and publisher. The stock gained 8.1% this week. EPS rating stands at 80, RS rating of 93, and A/D rating of A.
Our Hong Kong Market Status are in a Confirmed Uptrend.
From a technical perspective, the Hang Seng Index showed weakness this week. On Wednesday, it formed a minor downward gap and subsequently broke below the 21-DMA support. The index continued to decline on Thursday, finding interim support near the upward gap formed on June 3, but Friday’s rebound failed to reclaim the 21-DMA. In terms of trading volume, all five sessions this week saw consistently shrinking turnover, with daily volumes remaining below the 50-day average. Weekly trading levels were broadly in line with the previous week, indicating continued lack of volume confirmation. On the technical support side, the 50-DMA serves as a key short-term defensive level, while the June 11 high of 24,439.4 points forms a critical resistance above.
As for the Southbound inflow via the HK-China Stock Connect, this week saw continued net buying, with a total net inflow of HKD 16.266 billion, marking the fifth consecutive week of net inflows. Year-to-date, cumulative net inflows have reached HKD 697.592 billion.
Overall, the Hong Kong stock market exhibited a choppy consolidation pattern this week amid a confluence of factors, with the continued net inflow via the Southbound leg of the HK-China Stock Connect providing a resilient layer of support. Looking ahead, market direction will hinge on the interplay between evolving geopolitical risks and the pace of domestic policy implementation. At this stage, investors are advised to remain calm and rational, avoid blindly chasing rallies, and prioritize stocks with earnings beats and resilient technical setups, adopting a steady and flexible strategy to navigate market volatility.
What do you think? Please email us any questions or comments.
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 June 20, 2025