Hang Seng pulls back from 3-year high amid tech weakness
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The Hang Seng Index closed 0.3% lower on Thursday, shedding 70 points to end at 23,718, as weakness in tech and consumer stocks weighed on sentiment. The retreat comes after a strong rally in the prior session, with the AI-driven surge—fueled by Chinese startup DeepSeek—losing momentum following Nvidia’s earnings report.
Investors also faced renewed geopolitical concerns as China launched military drills near Taiwan, adding uncertainty to regional markets. Additionally, traders remained cautious ahead of February’s official Purchasing Managers’ Index (PMI) data from the mainland, with expectations that the Lunar New Year holiday may have dampened economic activity.
Despite the early weakness, the index pared losses following reports that China is planning to inject at least CNY 400 billion into its largest banks in the coming months to support economic recovery. This news provided some relief, though broader concerns about the sustainability of Hong Kong’s recent rally remain.
The Hong Kong government’s 2024-25 budget reinforced its commitment to fiscal consolidation, emphasizing spending cuts with minimal impact on public services. However, AI investment remains a key priority, highlighting the city’s push to position itself as a technology hub.
Among major decliners, Xiaomi Corp. tumbled 6.1%, while China Unicom, Trip.com, and Kuaishou Tech fell 5.5%, 5.0%, and 3.8%, respectively. The pullback in tech stocks reflects investor hesitancy following a rapid run-up, with traders now looking for fresh catalysts to sustain upward momentum.
Looking ahead, market sentiment will likely be shaped by China’s upcoming economic data and any further developments in trade and geopolitical tensions. While liquidity injections and AI investment remain supportive themes, investors remain wary of external risks that could weigh on further gains.
Investors also faced renewed geopolitical concerns as China launched military drills near Taiwan, adding uncertainty to regional markets. Additionally, traders remained cautious ahead of February’s official Purchasing Managers’ Index (PMI) data from the mainland, with expectations that the Lunar New Year holiday may have dampened economic activity.
Despite the early weakness, the index pared losses following reports that China is planning to inject at least CNY 400 billion into its largest banks in the coming months to support economic recovery. This news provided some relief, though broader concerns about the sustainability of Hong Kong’s recent rally remain.
The Hong Kong government’s 2024-25 budget reinforced its commitment to fiscal consolidation, emphasizing spending cuts with minimal impact on public services. However, AI investment remains a key priority, highlighting the city’s push to position itself as a technology hub.
Among major decliners, Xiaomi Corp. tumbled 6.1%, while China Unicom, Trip.com, and Kuaishou Tech fell 5.5%, 5.0%, and 3.8%, respectively. The pullback in tech stocks reflects investor hesitancy following a rapid run-up, with traders now looking for fresh catalysts to sustain upward momentum.
Looking ahead, market sentiment will likely be shaped by China’s upcoming economic data and any further developments in trade and geopolitical tensions. While liquidity injections and AI investment remain supportive themes, investors remain wary of external risks that could weigh on further gains.