Stocks in Hong Kong could potentially remain stationary on Friday
Hong Kong Stock Market Surges Amid Trade Deals and Chinese Economic Stimulus
The Hong Kong stock market is experiencing a surge in growth, with the Hang Seng Index reaching close to multi-year highs. This positive momentum is driven by recent trade deals and economic stimuli in China, as well as strong investor confidence in the technology sector.
Hang Seng Tech Index Shows Robust Gains
The Hang Seng Tech Index, which includes major Hong Kong tech giants like Alibaba and Baidu, has shown significant gains this year. As of mid-July 2025, the Index has surged over 53% year-to-date, outpacing the broader Hang Seng Index. This rally is supported by strong capital inflows from mainland China, with net southbound fund inflows reaching HK$800 billion this year, close to the record seen in 2024.
Hang Seng Index Volatility Amid Global Factors
While the Hang Seng Index and the Hang Seng Tech Index have shown positive trends, global factors such as US interest rate expectations continue to introduce volatility, particularly affecting tech stocks. On July 25, 2025, both indices experienced a pullback due to strong US labor market data, which reduced expectations for near-term US interest rate cuts, causing jitters in the tech and China-linked stocks.
China's Technology Sector Resilience
Despite these fluctuations, the technology sector in Hong Kong remains resilient, benefiting from strong mainland investment inflows and Chinese government policies aimed at tech innovation and domestic consumption growth. China’s expanding technology sector is playing a critical role in helping the market weather ongoing global trade tensions, including US tariffs. The sector’s growth is supported by China’s steady GDP growth of 5.2% in Q2 2025, sustained exports, and government stimulus policies.
Trade Deals and Infrastructure Investments
Trade deals and infrastructure investments under the Belt and Road Initiatives remain significant, with Chinese contracts totaling US$124 billion in the first half of 2025, surpassing the 2024 full-year total. This investment supports sectors such as technology, manufacturing, and construction, further underpinning market optimism.
In the broader context, the U.S. could sign up more deals with its remaining trading partners before President Donald Trump's Aug. 1 deadline. The UK, China, Vietnam, Indonesia, Canada, India, South Korea, and the EU are ramping up their efforts to make deals with the U.S., with U.S. Secretary of the Treasury Scott Bessent stating that talks are "going better than they had been," and that progress is being made.
In conclusion, the latest trade deals and economic stimuli in China are positively impacting Hong Kong’s stock markets, with the Hang Seng Tech Index showing robust gains and the broader Hang Seng Index near multi-year highs. However, global factors like US interest rate expectations continue to introduce volatility, particularly affecting tech stocks. The technology sector in Hong Kong benefits from strong mainland investment inflows and Chinese government policies aimed at tech innovation and domestic consumption growth, helping it stay resilient amidst trade challenges.
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Strong Capital Inflows Fuel Tech Sector's Growth
As stated earlier, the Hang Seng Tech Index has surged over 53% year-to-date due to strong capital inflows from mainland China, with net southbound fund inflows reaching HK$800 billion this year, a figure close to the record seen in 2024.
Anticipation for Future Tech Innovations
The resilience of the technology sector in Hong Kong is further bolstered by anticipation for future tech innovations, driven by Chinese government policies aimed at tech innovation and domestic consumption growth.
