The Hang Seng Index surged 417 points, or 2.1%, to close at 20,682 on Thursday, marking its third consecutive session of gains as investors looked past Washington’s latest tariff escalation on Chinese goods — from 104% to 125% — and placed growing bets that Beijing would step up efforts to cushion the domestic economy. The sharp move higher underscored growing market confidence that Chinese policymakers will act decisively to mitigate the fallout from the escalating trade dispute with the U.S., especially as pressure mounts on growth and capital markets.
Hang Seng surges by 2.0% at close
Boosting sentiment further, China released a new White Paper reiterating its willingness to engage in constructive dialogue with Washington to resolve trade tensions, while simultaneously emphasizing its commitment to safeguard national economic interests. The document was widely seen as a diplomatic balancing act — extending an olive branch while drawing red lines — which reassured markets that Beijing remains focused on maintaining economic stability amid global uncertainty.
Reports that top Chinese officials were convening to discuss a comprehensive package of new economic support measures added to the optimism. Sources indicated that regulators were exploring fresh steps to bolster financial markets, including potential liquidity injections, incentives for long-term institutional investment, and further easing of lending rules for key sectors such as real estate and green technology. These signals of impending policy action helped buoy investor expectations for a more proactive stimulus approach in the second quarter.
Economic data also supported the mood
Economic data also lent support to the upbeat mood. March consumer prices fell just 0.1% year-on-year, significantly softer than February’s 0.7% contraction and defying market forecasts of a slight increase. The surprise moderation in deflationary pressure suggested that domestic demand may be showing early signs of stabilization, reinforcing hopes that the worst of the post-pandemic consumption slump might be behind China.
All sectors on the Hang Seng posted gains, as momentum was further fueled by record northbound inflows through the Stock Connect program. Mainland investors snapped up HKD 35.5 billion worth of Hong Kong-listed stocks on Wednesday, the highest single-day total on record. The surge in cross-border interest was interpreted as a strong vote of confidence in Hong Kong equities, particularly as valuations remain attractive relative to historical averages and global peers.
Tech stocks outperformed
Technology and electric vehicle shares led the rally, reflecting renewed investor enthusiasm for growth sectors amid expectations of targeted stimulus and favorable policy tailwinds. Among standout performers were Kuaishou, up 4.7%, Trip.com rising 4.0%, Li Auto surging 5.6%, and Geely advancing 4.9%. The strong performance in these sectors underscored the growing view that China will prioritize innovation, consumption, and strategic industries in its next round of economic support.
