Hong Kong stocks extended their winning streak to the third straight session on Tuesday, as investors scrambled to join a broader rally across Asia sparked by a reported ceasefire between Iran and Israel. But experts point to a renewed market focus on fundamentals as the geopolitical uncertainties subside.
The benchmark Hang Seng Index surged 2.06 percent, or 487.94 points, to close at 24,177.07 points. The Hang Seng Tech Index rose 2.14 percent, while the China Enterprises Index climbed 1.90 percent.
US President Donald Trump announced on Monday evening that Israel and Iran had agreed to a US-brokered ceasefire, heralding a possible end to almost two weeks of conflict between the regional rivals.
READ MORE: Stocks tumble, oil prices jump after Israel attacks Iran
“As geopolitical tensions in the Middle East show signs of cooling off, the global risks appetite improves and capital markets get a lift,” said Yang Delong, chief economist at Shenzhen-based First Seafront Fund.
On the Chinese mainland, A-shares ended on a strong note, with the Shanghai Composite Index, the Shenzhen Component Index and the tech-heavy ChiNext Index up 1.15 percent, 1.68 percent and 2.30 percent, respectively, on Tuesday.
Regionally, South Korea’s KOSPI Composite Index soared 2.96 percent to an all-time high since September 2021, while Japan’s Nikkei 225 snapped up a three-session losing streak to rebound by 1.14 percent.
While geopolitical conflicts may continue to affect the market sentiment in the short run, they will not be the major market driving force. Investors will shrug off geopolitical uncertainties to bet on markets with strong fundamentals, asset manager PGIM Fixed Income wrote in its latest report.
More key US central bank officials joined the rate-cut chorus, adding to the positive momentum, with markets pricing in the benefits of the US easing monetary policy.
Markets will be keeping a close eye on US Federal Reserve Chair Jerome Powell’s scheduled testimony before Congress on Tuesday evening, during which he will likely face questions about interest rates.
READ MORE: Stocks rattled, Treasuries rally after Israel attacks Iran
If the ceasefire is a done deal, the markets may turn to non-Middle East considerations, said Eddie Cheung, senior emerging markets strategist at Credit Agricole CIB in Hong Kong, adding that Powell’s testimony could be a key variable in determining the next phase of risk asset movements.
Robotics and tech stocks led the gains in both A-shares and Hong Kong markets on Tuesday, with Xiaomi, Tencent, Meituan and Alibaba ranked as the most actively traded Hong Kong-listed companies.
According to Yang, the newfound tech prowess, represented by artificial intelligence (AI), robotics and autonomous driving, is answering the call from the world’s second-largest economy for technological self-reliance and strength, and has helped extend the bull run. “The momentum is here to stay,” he said.
Contact the writer at sophialuo@chinadailyhk.com
