Hong Kong Stocks and China Stocks Rally amidst Rate Cuts and Expected Stimulus

Hong Kong Stocks soar after Rate Cut

Hong Kong stocks rose after the monetary authority cut its key rate for a second time this year, providing a boost to the economy. Traders are optimistic that Beijing will unveil a fiscal stimulus package soon to counteract trade fallout resulting from the recent political climate.

The Hang Seng Index's Performance

The Hang Seng Index advanced 1.1% to 21,180.93 at 9.54 am local time, signaling its first weekly gain in five. The Tech Index surged 2.6% during this period

CSI 300 and Shanghai Composite Indices

• The CSI 300 Index of onshore stocks climbed 0.6%.
• The Shanghai Composite Index appreciated 0.7%.

Noteworthy Stock Movements

Electric-vehicle makers, such as Geely Auto, showcased notable gains, surging 5% to HK$15.06. Similarly, BYD increased 3.1% to HK$289 and auto dealer Zhongsheng Group saw a 5.2% rise to HK$15.12. Major chipmaker SMIC rallied 4.1% to HK$29.40 after releasing positive guidance for its fourth-quarter sales.

China's Fiscal Policies and Economic Outlook

The Hong Kong Monetary Authority's recent base rate cut to 5%, mirroring a quarter-point reduction in the Federal Reserve's target rate, has instigated discussions about potential economic strategies. Fed officials hinted at a cautiously easing path in 2025.

“The return of Trump to the White House introduces complex challenges for China's policymaking,” remarked Jing Sima, a consultant at BCA Research. This signals that Beijing may require intensified supportive measures in response to a potential renewed trade war.

Economists anticipate announcements following today's meeting by the Standing Committee of the National People's Congress, potentially unveiling a sizable fiscal spending plan to hedge against new US tariffs on Chinese exports.

“There could be heightened expectations for a more substantial budget from the Chinese government given Trump's return and impending tariffs,” stated Eva Lee, head of Greater China equities at UBS Global Wealth Management.

Broader Market Performance

Meanwhile, the surge in regional Asian markets maintains a positive outlook, with Japan's Nikkei 225 up 0.4%, South Korea's Kospi increasing 0.8%, and Australia's S&P/ASX 200 moving up 1%.

APT Electronics, a Chinese car lighting supplier, debuted strongly with a 16% rise to HK$4.20 after its IPO, which saw incredible demand at 5,678 times subscription from retail investors—an unprecedented level since Kwai Chung’s deal in 2018.