Hong Kong stocks rise on US-China tensions easing and sector gains

[WORLD] Hong Kong equities are on track for a sixth consecutive weekly gain, buoyed by growing optimism that easing tensions between the US and China could help lift the fog over China’s economic outlook. Investor sentiment has also been supported by recent data pointing to a modest but ongoing recovery. The Hang Seng Index climbed 0.7 per cent to 23,722.34 as of 11:20am local time, extending its weekly gain to 1.6 per cent—marking the longest winning streak in three months. The Hang Seng Tech Index also rose 0.9 per cent. On the mainland, the CSI 300 Index edged up 0.4 per cent, while the Shanghai Composite Index advanced 0.2 per cent.

Encouraging economic indicators from China have further lifted market confidence. Data on industrial output and retail sales have shown gradual improvement, reinforcing views that the world’s second-largest economy is demonstrating resilience in the face of global challenges. This has been a key point of focus for investors tracking China’s post-pandemic recovery trajectory.

Shares of Chinese pharmaceutical firms rallied following a strong market debut by Jiangsu Hengrui Pharmaceuticals in Hong Kong on Friday. The country's largest drug maker by market value surged as much as 37 per cent. CSPC Pharmaceutical Group jumped 6 per cent to HK$6.87, while Wuxi AppTec rose 2.8 per cent to HK$69. Meanwhile, BYD soared 4 per cent to a record HK$474.40 after its electric vehicle sales in Europe overtook Tesla’s for the first time in April. Peer Li Auto also gained 4.3 per cent to HK$117.20.

The robust performance of pharmaceutical stocks underscores a broader growth narrative within the sector. Chinese drugmakers have ramped up investments in research and development, striving to bolster global competitiveness. This innovation drive is seen as a positive long-term catalyst for the sector and the wider market.

In the automotive space, electric vehicle (EV) makers continue to shine. BYD’s recent breakthrough in the European market highlights surging international demand for Chinese EVs, reflecting a broader trend of rising global market share for the nation’s manufacturers. Advances in technology and growing consumer acceptance are fuelling this momentum.

Investors are also closely monitoring the geopolitical backdrop. Developments in US-China relations remain a critical factor influencing market sentiment. Recent diplomatic engagements between the two powers have been received favorably, contributing to the prevailing bullish tone. This cautious optimism is likely to continue in the absence of major disruptions in bilateral ties.

Additionally, Hong Kong’s market is drawing steady capital inflows from mainland China, as investors seek exposure to the city’s more liberalized financial environment. This cross-border investment is adding liquidity and lending further support to the upward trend in local equities.