Hong Kong stocks rise on rate cuts and pharma boost

[WORLD] Hong Kong stocks advanced on Tuesday, with the benchmark index nearing a two-month high after China trimmed key interest rates for the first time in seven months. The Hang Seng Index rose 1 per cent to 23,572.22 as of 11:06am local time, while the Hang Seng Tech Index added 0.9 per cent. On the mainland, the CSI 300 Index edged up 0.3 per cent, and the Shanghai Composite Index gained 0.2 per cent.

The rally followed a move by the People’s Bank of China to lower its loan prime rates, a decision that signaled a push for more stimulus amid mounting economic headwinds. The central bank cut the one-year loan prime rate—used as a benchmark for new and outstanding floating rate loans—from 3.1 per cent to 3.00 per cent. The five-year rate was also reduced, from 3.6 per cent to 3.5 per cent.

Investors welcomed the policy shift, viewing it as a response to rising pressure on the world’s second-largest economy, which continues to grapple with elevated U.S. tariffs under President Donald Trump’s administration. Analysts had widely anticipated the rate cuts, citing weakening domestic demand and escalating trade tensions.

Shares in pharmaceutical firms led gains after Morgan Stanley issued a bullish outlook on the sector. CSPC Pharmaceutical Group surged 6.1 per cent to HK$6.30, Hansoh Pharmaceutical Group rose 5.1 per cent to HK$24.70, and Sino Biopharmaceutical climbed 3.5 per cent to HK$4.20.

Morgan Stanley’s positive stance comes amid ongoing reforms in China’s healthcare system, as the government works to enhance service quality and access while keeping costs in check. While the changes have heightened competition and regulatory oversight, they are also opening doors for innovation and expansion for adaptable players.

In other market action, Contemporary Amperex Technology Ltd (CATL), the world’s largest battery maker, jumped more than 11 per cent in its Hong Kong trading debut. Shares were priced at HK$292 each in premarket trading, well above the IPO price of HK$263.

The rate cuts come on the heels of economic data released Monday showing signs of a slowdown, with retail sales and industrial production weakening, and property investment continuing to decline. Policymakers are betting that lower borrowing costs will help reinvigorate activity in core sectors like manufacturing and services.