A key gauge of Chinese mainland stocks traded in the Hong Kong Special Administrative Region rose to its highest close since October 2021, boosted by easing Sino-American trade tensions and gains in heavyweight tech shares.
The Hang Seng China Enterprises Index jumped 1.8 percent on Wednesday, topping a previous year-to-date high hit on March 18. Kuaishou Technology, Baidu Inc and Tencent Holdings Ltd were among the top performers in the gauge. HKSAR’s benchmark Hang Seng Index advanced 1.6 percent.
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The move cements a rapid rebound following the April turmoil triggered by US President Donald Trump’s tariff threats. Treasury Secretary Scott Bessent said he will meet his Chinese counterparts in Stockholm next week for discussion aimed at extending a tariff truce, suggesting a continued stabilization in ties after the US recently eased chip curbs and China resumed rare earths exports.
The Hang Seng China gauge has gained roughly 27 percent so far this year, beating the S&P 500’s 7 percent advance and the MSCI Asia Pacific Index’s 15 percent advance. HSCEI is trading at about 10 times its forward earnings estimates, below the Asian benchmark’s ratio of nearly 15. On the mainland, the CSI 300 Index has climbed about 5 percent for the period.
Strategists at UBS said Hong Kong stocks will have limited upside for the rest of this year, citing potential earnings downgrades driven by intensifying competition in food delivery and other sectors.
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Wednesday’s equity moves track broad gains across Asia, aided by Trump’s announcement of a deal with Japan that puts levies at 15 percent — down from a threatened 25 percent tariff. MSCI’s China Index, which includes both onshore and offshore stocks, gained nearly 2 percent on Wednesday, headed for its highest close since February 2022.
Stocks in HKSAR have been supported in 2025 by a surge in inflows from mainland investors. Southbound net inflows expanded by another HK$2.7 billion ($344 million) Tuesday, taking this year’s total to HK$800 billion, a whisker away from 2024’s previous record of HK$808 billion.
“The market had rallied to some degree but it’s not expensive still compared to some other markets,” said Keiko Kondo, head of multi-asset investments for Asia at Schroder Investment Management. “So from the valuation point, it doesn’t stretch, therefore I think there is definitely room to go.”
