Hang Seng surges 3.3% to a three-year high on budget optimism
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The Hang Seng Index staged a sharp recovery on Wednesday, soaring 3.3% to close at 23,788—its highest level in over three years. The rally, which added 754 points, was fueled by positive market reaction to Hong Kong’s 2024-25 budget, alongside renewed optimism in the tech sector and bullish calls on Chinese banks.
Hong Kong’s Financial Secretary Paul Chan announced a fiscal strategy aimed at reducing the budget deficit by curbing public spending and increasing revenue. Among the key measures was a full waiver of salaries tax and corporate profit tax, subject to a cap, a move that investors welcomed as a potential boost for business activity and consumer confidence. Additionally, reports that Chinese lawmakers are reviewing a draft bill to prevent arbitrary fees, fines, and forced donations further supported sentiment.
The rally was broad-based, with the technology sector leading gains as artificial intelligence optimism resurfaced. Alibaba jumped 3.8% after unveiling plans to release a new AI model for video and image generation. Meituan surged 10.2%, while electric vehicle maker Li Auto climbed 9.0%. Semiconductor Manufacturing International Corporation (SMIC) also posted a strong session, rising 7.5%.
Financial stocks performed well following Morgan Stanley’s upward revisions on price targets for major Chinese banks, reflecting improving investor confidence in the sector.
The Hang Seng’s strong performance signals renewed momentum for Chinese and Hong Kong equities after a period of volatility. With fiscal support measures in place and AI-driven enthusiasm fueling the tech sector, investors will be watching closely to see if the rally can sustain its strength in the coming sessions.
Hong Kong’s Financial Secretary Paul Chan announced a fiscal strategy aimed at reducing the budget deficit by curbing public spending and increasing revenue. Among the key measures was a full waiver of salaries tax and corporate profit tax, subject to a cap, a move that investors welcomed as a potential boost for business activity and consumer confidence. Additionally, reports that Chinese lawmakers are reviewing a draft bill to prevent arbitrary fees, fines, and forced donations further supported sentiment.
The rally was broad-based, with the technology sector leading gains as artificial intelligence optimism resurfaced. Alibaba jumped 3.8% after unveiling plans to release a new AI model for video and image generation. Meituan surged 10.2%, while electric vehicle maker Li Auto climbed 9.0%. Semiconductor Manufacturing International Corporation (SMIC) also posted a strong session, rising 7.5%.
Financial stocks performed well following Morgan Stanley’s upward revisions on price targets for major Chinese banks, reflecting improving investor confidence in the sector.
The Hang Seng’s strong performance signals renewed momentum for Chinese and Hong Kong equities after a period of volatility. With fiscal support measures in place and AI-driven enthusiasm fueling the tech sector, investors will be watching closely to see if the rally can sustain its strength in the coming sessions.