Hang Seng bounces back but logs worst week since 2022

The Hang Seng climbed 233 points, or 1.1%, to close at 20,915 on Friday, rebounding from morning losses as US futures rose sharply after President Biden stated that the first phase of trade talks was “very close,” fueling optimism that China may return to the negotiating table.

Hang Seng bounces back but logs worst week since 2022

This development provided a glimmer of hope to investors, who had been concerned about the ongoing tensions between the US and China, and sparked a late-session rally. The index closed in the green for the fourth consecutive day, mirroring the positive sentiment in mainland markets, which were buoyed by Beijing’s concerted efforts to stabilize financial markets this week. These measures included stock purchases by a state fund and state-owned firms, aimed at calming market nerves and preventing further declines. Several listed companies in Hong Kong also launched share buybacks, signaling confidence in their stocks despite the broader market uncertainty. The gains in the Hang Seng were broad-based, with strong performances in the tech, financials, and consumer sectors. Chipmakers, in particular, outperformed, with Hua Hong Semiconductor surging 14%, while other semiconductor giants like SMIC and Horizon Robotics saw their shares soar by over 7% and 12.8%, respectively. These rallies were driven by optimism around the potential stabilization of trade tensions and positive sentiment in the tech sector, as investors speculated that any resolution in trade talks could benefit Chinese tech companies heavily reliant on exports.

HK stock exchange plunged for the week

However, despite the positive movement on Friday, the Hang Seng index plunged 8.5% for the week, marking its fifth consecutive weekly loss and the steepest decline since October 2022. This sharp drop reflects the broader concerns over the escalating US-China trade dispute, which has weighed heavily on investor sentiment, particularly in sectors most exposed to global trade. The continued uncertainty surrounding the trade war, combined with growing caution ahead of China’s March trade data due this weekend, has created a challenging environment for investors. While there was some optimism sparked by Biden’s comments, the longer-term outlook remains clouded by the possibility of further tariffs, export restrictions, and other trade barriers. As investors await the latest economic data from China, the volatility in the Hang Seng is likely to persist, with sentiment swinging between hope for a resolution and fear of further escalation.