Hang Seng raised 5.6%
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This week, the Hong Kong stock market first subdued then rebounded, with the Hang Seng Index surging 5.6% and the Hang Seng Tech Index soaring 8.4%. Boosted by the March manufacturing PMI data released over the weekend—which exceeded expectations and returned to the expansion zone—the Hang Seng Index gapped up on Monday; however, due to the steep drop in the US Nasdaq Index overnight and expectations of adjustments to US–China tariff policies, the market experienced a slight pullback on Tuesday. Thereafter, driven by multiple positive factors, the market continued to strengthen: on one hand, the Two Sessions released positive policy signals such as “expanding high-level opening-up” and “strengthening support for technological innovation”; on the other hand, the AI company Manus announced the mass production of the world’s first brain–machine interface device, and in addition, news of the State Council pushing for the establishment of a 500 billion yuan “National Venture Capital Guiding Fund” significantly boosted bullish sentiment in tech stocks and the venture capital board. Ultimately, the Hang Seng Index not only forcefully reclaimed the milestone of 24,000 points but also reached a new high not seen since April 2022.
In terms of U.S. stocks, as of Thursday the S&P 500 index fell by 3.6% and the Nasdaq declined by 4.1%, breaking below its 200-DMA, while the Dow Jones index dropped by 2.9%, falling below its 50-DMA. On the macro front, data from the U.S. Bureau of Economic Analysis showed that the January PCE Price Index increased by 2.5% y/y—matching expectations and exceeding the previous reading; on an m/m basis, it rose by 0.3%, in line with both expectations and the prior value. The January core PCE Price Index climbed by 2.6% y/y—the smallest annual gain since early 2021—meeting expectations but lower than the previous figure; on an m/m basis, it also rose by 0.3%, aligning with expectations yet falling short of the previous value. ISM data indicated that the February ISM Manufacturing Index stood at 50.3, below both expectations and the prior figure. Although the expansion from January continued, its pace was minimal and trending toward stagnation, with both new orders and employment contracting, while the Materials Purchasing Price Index surged to its highest level since June 2022. The February ISM Services PMI was recorded at 53.5, exceeding both expectations and the previous reading. In the employment sector, data from ADP Research revealed that U.S. ADP employment in February unexpectedly fell to 77,000, significantly below both expectations and the previous figure—the smallest gain since July 2024—indicating a cooling labor market. Policy uncertainty and a slowdown in consumer spending may be the primary causes. Data from the U.S. Department of Labor showed that initial unemployment claims for the week ending March 1 were 221,000, lower than both expectations and the previous figure (which was revised from 242,000 to 210,000). As of the week ending February 22, continuing claims stood at 1.897 million, with the previous figure revised from 1.862 million to 1.855 million. In other news, President Trump signed an amendment to the tariffs on Mexico and Canada, temporarily suspending them until April 2, with the Canadian Finance Minister indicating a simultaneous suspension. Additionally, U.S. government funding is set to expire at 12:01 AM on March 15; if Congress and the Trump administration fail to reach an agreement by then, the government will shut down. The market widely considers this outcome highly likely.
In the A-share market, the CSI 300 Index rose 1.4% this week, finding support at the 50-DMA, but weekly trading volume declined compared to the previous week. The market remains in a rally attempt. The support level is at the 50-DMA, with secondary support at the January 13, 2025 low of 3,704.11; resistance is at the 4,000-point psychological level. On the macroeconomic front, according to data from the National Bureau of Statistics, China’s official Manufacturing PMI stood at 50.2 in February, higher than the previous reading; the official Non-Manufacturing PMI was 50.4, above the prior figure; and the official Composite PMI reached 51.1, also higher than the previous level. Caixin data showed that the Caixin China Manufacturing PMI was 50.8 in February, higher than the previous reading and the highest in three months, indicating an acceleration in manufacturing expansion. The Caixin Services PMI came in at 51.4, above the previous figure, showing a slight pickup in the pace of expansion in the services sector. Meanwhile, the National Bureau of Statistics released the 2024 Statistical Communiqué on National Economic and Social Development of the People’s Republic of China, which reported that China’s GDP was RMB 134.91 trillion in 2024, a 5.0% y/y increase. The added value of the primary industry was RMB 9.14 trillion, up 3.5% y/y; the secondary industry RMB 49.21 trillion, up 5.3% y/y; and the tertiary industry RMB 76.56 trillion, up 5.0% y/y. Additionally, the Two Sessions were held this week. In the government work report, Premier Li Qiang proposed the main development targets for 2025: GDP growth of around 5%; an urban surveyed unemployment rate of around 5.5%; over 12 million new urban jobs; and consumer price inflation of around 2%. The deficit-to-GDP ratio is set at around 4%, an increase of 1 percentage point from the previous year, with the total fiscal deficit reaching ¥5.66 trillion, an increase of ¥1.6 trillion from the prior year. Regarding imports and exports, data from the General Administration of Customs indicated that for the first two months of 2025, China’s total import and export value amounted to USD 909.37 billion, a y/y decrease of 2.4%, when valued in US dollars. Of this total, exports were worth USD 539.94 billion, representing a y/y increase of 2.3%, while imports totaled USD 369.43 billion, marking a y/y decline of 8.4%.
Leading stocks raised this week. The average stock in the MarketSmith Hong Kong 33 rose by 6.7% for this week. Our Hong Kong Model Portfolio rose by 5.5% for this week (see details in the Model Portfolio section). Since June 20, 2013, the Hong Kong 33 is up 704.5% vs. a 20.7% up for the Hang Seng.
The best performer in our Hong Kong 33 was INSPUR DIGI ENT(00596), it’s a leading digital transformation service provider in the industry. The stock gained 21.5% this week. EPS rating stands at 86, RS rating of 95, and A/D rating of A-.
Our Hong Kong Market Status are in a Confirmed Uptrend.
From a technical perspective, the Hang Seng Index has shown strong performance, not only reclaiming the 24,000-point psychological level but also remaining above the 5-day moving average. Both Wednesday’s and Thursday’s gains were accompanied by a notable increase in trading volume. If the index can continue to hold above 24,000 while maintaining robust volume, it could potentially move higher and test new territory. In terms of southbound capital flows, this week continued the net inflow trend, with a total net inflow of HKD 35.554 billion. Although this figure is lower than last week, it marks the 28th consecutive week of net inflows. Overall, buoyed by supportive policies and ample liquidity, the market has broken through to new highs with strong upward momentum. Nevertheless, the pullback on Friday signals a need for caution regarding short-term risks: on one hand, there is a possibility of profit-taking pressure following the index’s move above 24,000; on the other hand, external uncertainties—such as the upcoming Federal Reserve policy meeting and the Trump administration’s China-related policies—could dampen foreign investors’ risk appetite and cause market volatility. Therefore, investors are advised to remain calm and rational, avoid blindly chasing gains, and prioritize stocks with better-than-expected earnings and solid technical patterns. Adopting a prudent strategy will help navigate potential market fluctuations more flexibly.
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published on March 7, 2025