Hang Seng climbs by 1.5% as PBoC and banks deliver stimulus

The Hang Seng Index surged 349 points, or 1.5%, to close at 23,681 on Tuesday, rebounding sharply from a muted session the day before as all sectors posted broad-based gains.

Hang Seng climbs by 1.5% as PBoC and banks deliver stimulus

The rally was fueled by improved investor sentiment following the People’s Bank of China (PBoC) cutting key lending rates to new record lows — the first such move in seven months. The policy easing is aimed at stimulating economic growth and cushioning potential headwinds stemming from a worsening trade relationship with the United States. In a coordinated effort to reinforce monetary support, several major state-owned banks also lowered deposit rates, a move designed to alleviate the pressure of narrowing interest margins and improve credit conditions. The combined measures signaled Beijing’s renewed commitment to stabilizing the economy amid global uncertainties, including faltering external demand and rising geopolitical tensions. However, gains were somewhat capped by a slight pullback in U.S. equity futures, as global markets await a slate of speeches from Federal Reserve officials later today. Investors are watching closely for any signals about the future direction of U.S. monetary policy, especially in the context of persistent inflation and mixed economic indicators.

Stocks performance

On the corporate front, several high-profile stocks delivered standout performances. Alibaba Pictures soared 32% after reporting better-than-expected full-year revenue, driven by a robust post-pandemic recovery in cinema attendance and increased digital content production. Xiaomi Corp. rose 4.7% following the announcement that it had begun mass production of its proprietary mobile chip, marking a significant milestone in its long-term strategy to reduce reliance on foreign semiconductor suppliers. Battery giant CATL also made headlines, closing at HKD 296 — 12.5% above its IPO price of HKD 263 — on its first day of trading in Hong Kong. The company raised USD 4.6 billion in its listing, making it the largest initial public offering globally so far this year. The strong debut reflects investor confidence in the firm’s growth potential amid surging global demand for electric vehicle components and energy storage solutions. Overall, Tuesday’s rally underscored a return of risk appetite in Hong Kong equities, buoyed by supportive monetary policy and solid corporate results, though external factors — particularly developments in U.S. policy and global trade — remain key variables going forward.