Hang Seng raised 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 Monday, the market was closed for one day due to the Labor Day and Buddha’s Birthday holidays. During the remaining four trading days, the Hang Seng Index(HSI)rose each day, recording a cumulative gain of 1.5%, while the Hang Seng Tech Index(HSTECH) fell by 1.3% over the same period.
During the May Day holiday, the onshore RMB exchange rate against the U.S. dollar rose to its highest level since last November, and Asian currencies collectively rebounded, effectively easing the pressure of foreign capital outflows. At the same time, market sentiment was continuously boosted by favorable policies such as the PBOC’s reserve requirement ratio and interest rate cuts, as well as support for capital market development. In addition, former President Trump’s announcement of a “mini trade deal” with the UK somewhat eased concerns over global trade tensions. Coupled with the positive spillover effect from the U.S. stock market rally, these factors supported sentiment in the Hong Kong market.
However, due to escalating geopolitical conflicts and growing fears of a global recession, capital rotated out of high-volatility tech stocks and into defensive sectors such as gold and utilities, leading to the relatively weaker performance of the Hang Seng Tech Index.
In the U.S. stock market, as of this Thursday, the S & P 500 Index(0S&P5) fell 0.4%, the Nasdaq Composite(0NDQC) declined 0.3%, and the Dow Jones Indus Actual(0DJIA) rose 0.1%.
On the macroeconomic front, data from the U.S. Bureau of Economic Analysis showed that in the first quarter of this year, the preliminary annualized q/q growth of the GDP deflator was 3.7%, exceeding market expectations and the previous value. The inflation-adjusted preliminary annualized q/q growth of real GDP in the first quarter declined by 0.3%, which was below expectations and marked a sharp drop from the previous value of 2.4%, far lower than the approximately 3% average growth rate over the past two years. The inflation-adjusted preliminary annualized q/q growth of the core Personal Consumption Expenditures (PCE) price index in the first quarter was 3.5%, exceeding both expectations and the previous figure. According to data from the U.S. Department of Commerce, the March PCE price index rose 2.3% y/y, the lowest level since last fall, higher than expectations but lower than the previous figure; it was flat m/m, the first time in nearly a year, in line with expectations and lower than the previous value. The March core PCE price index increased 2.6% y/y, in line with expectations and lower than the previous figure; it was flat m/m, marking the mildest increase in nearly five years, and below both expectations and the previous value. ISM data showed that the U.S. ISM Manufacturing Index for April came in at 48.7, missing expectations and the previous value, marking the largest contraction in five months. Sparse orders and the impact of tariffs led to the most severe output decline since 2020. In contrast, the ISM Services PMI for April rose to 51.6, above market expectations and the previous value, with the price index up 4.2 points to 65.1, the highest since January 2023. Nearly 40% of purchasing managers reported price increases, the highest proportion since November 2022.
On the trade front, data from the U.S. Department of Commerce showed that the goods and services trade deficit widened to $140.5 billion in March, far exceeding expectations and up 14% m/m. Specifically, imports surged by 4.4% to a record high of $419 billion, with consumer goods imports hitting an all-time high. Imports of capital equipment and motor vehicles also increased, while exports rose only 0.2%. These figures are not adjusted for inflation. The goods trade deficit in March increased 9.6% from the previous month to $162 billion, while the services trade surplus fell to its lowest level since April 2023.
On interest rates, the Federal Reserve announced after the FOMC meeting that it would keep the federal funds rate target range unchanged at 4.25%–4.5%, marking the third consecutive pause in rate hikes. According to the CME FedWatch Tool, as of May 8, 2025, the probability of keeping rates unchanged in June is 83.5%, while the probability of a 25-basis-point rate cut in July is 60.1%, and the probability of no change is 29.1%.
On employment, data from ADP Research showed that April ADP employment increased by 62,000, the slowest pace in nearly nine months, below both expectations and the previous figure. Data from the U.S. Bureau of Labor Statistics showed that non-farm payrolls increased by 177,000 in April, higher than market expectations, but the data for the previous two months were revised downward. The unemployment rate in April remained at 4.2%, consistent with both expectations and the previous figure. Average hourly earnings rose 3.8% y/y and 0.2% m/m, both below expectations. The “New Fed Whisperer” commented that the non-farm data reduced the likelihood of a rate cut in June. For the week ending May 3, initial jobless claims in the U.S. fell by 13,000 to 228,000, lower than expectations, ending the temporary surge in claims during New York’s spring break. Meanwhile, for the week ending April 26, continuing jobless claims decreased by 29,000 to 1.879 million, better than market expectations.
In the A-share market, trading was closed on Monday for Labor Day, while the CSI 300(000300) rose a total of 2.0% over the remaining four trading days. Turnover remained sluggish, with daily trading volume consistently below the 50-day average level. The market is currently in a rally attempt, with technical support at the 200-DMA and resistance at the 100-DMA.
On the macro front, data from Caixin showed that the Caixin China Manufacturing PMI stood at 50.4 in April, down 0.8 percentage points from March and marking a three-month low, indicating a slowdown in the pace of manufacturing expansion. The Caixin China General Services Business Activity Index (Services PMI) recorded 50.7 in April, down 1.2 percentage points from March, falling to the lowest level in seven months while still remaining in expansion territory. The Caixin China Composite PMI fell by 0.7 percentage points to 51.1 in April.
On the policy front, China is implementing a series of measures to stabilize the market and boost economic growth. The National Development and Reform Commission announced the issuance of a second batch of RMB 81 billion in ultra-long-term special treasury bonds to further support the “trade-in” program for consumer goods. In addition, the State Council held a press conference to introduce a “comprehensive package of financial policies to stabilize the market and expectations,” which includes key measures such as a 50 basis-point cut in the reserve requirement ratio (expected to release about RMB 1 trillion in long-term liquidity) and a 10 basis-point cut in the policy benchmark interest rate (expected to drive a similar reduction in the loan prime rate, or LPR).
In gold and foreign exchange, according to the State Administration of Foreign Exchange, China’s foreign exchange reserves stood at USD 3.2817 trillion at the end of April 2025, up USD 41 billion from the end of March, marking a 1.27% increase. The People’s Bank of China increased its gold holdings for a sixth consecutive month, with reserves reaching 73.77 million ounces at the end of April, up 0.095% from 73.70 million ounces at the end of March, though the pace slowed from March’s 0.15% increase.
During the May Day holiday, consumer data showed strong performance. According to the Ministry of Culture and Tourism, domestic tourist trips reached 314 million, up 6.4% y/y, with tourism revenue reaching RMB 180.3 billion, up 8.0% y/y. The Ministry of Transport reported a total of 1.47 billion cross-regional passenger trips, up 8.0% from a year earlier, surpassing official expectations.
Leading stocks raised this week. The average stock in the MarketSmith Hong Kong 33 rose by 0.4% for this week. Our Hong Kong Model Portfolio fell by 0.1% for this week (see details in the Model Portfolio section). Since June 20, 2013, the Hong Kong 33 is up 742.4% vs. a 13.9% up for the Hang Seng.
The best performer in our Hong Kong 33 was U-PRESID CHINA(00220), it’s a leading beverage and food production and sales company in China. The stock gained 10.6% this week. EPS rating stands at 92, RS rating of 84, and A/D rating of B+.
Our Hong Kong Market Status are in a Rally Attempt.
From a technical perspective, the Hang Seng Index trended upward this week, successfully reclaiming its 50-DMA. However, trading volume remained subdued, with daily turnover consistently below the 50-day average level, indicating a lack of strong market participation. In the short term, the 50-DMA serves as support, while the 23,000-point level above acts as a key resistance. Regarding the Southbound inflow via the HK-China Stock Connect, there was a total net inflow of HKD 7.27 billion this week, a significant increase compared to the previous week.
Overall, the Hong Kong market may maintain a choppy upward trend in the short term, though caution is warranted around the technical resistance near 23,000 points. If the China-U.S. tariff negotiations make meaningful progress, coupled with stronger domestic growth-stabilizing policies, the market could potentially break through this resistance. At the current stage, investors are advised to remain calm and rational, avoid chasing rallies blindly, and prioritize stocks with better-than-expected earnings and solid technical patterns, adopting a prudent and flexible approach in response to market fluctuations.
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 May 9, 2025