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Stocks in Hong Kong approach a four-year peak, fueled by Tencent's strong earnings report

"Analyst affirmatively asserts that Hong Kong's stock market offers further potential for growth, citing steady forecasts for corporate profits."

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Hong Kong equities momentarily touch 4-year peak due to Tencent surpassing profit estimations
Hong Kong equities momentarily touch 4-year peak due to Tencent surpassing profit estimations

Stocks in Hong Kong approach a four-year peak, fueled by Tencent's strong earnings report

The Hang Seng Index has seen a mixed performance in recent times, with several key factors shaping its direction. Here's an overview of the current market trends and key drivers:

Current Performance of the Hang Seng Index

  • Recent Performance: The Hang Seng Index experienced a 0.27% increase for the week ending August 22, 2025, marking its third consecutive weekly gain. It has risen by 3.39% over the past three weeks, representing the largest three-week gain since late July 2025[2].
  • Year-to-Date Performance: The index posted a substantial 23.5% gain for the year-to-date period as of July 31, 2025[4].

Key Drivers

  1. Economic Rebound: The recovery is fuelled by monetary and fiscal policies, which have contributed to the overall economic rebound. This includes supply-side reforms and potential technological advancements like the H20 chip[1].
  2. Trade Talks: Optimistic expectations around trade talks, particularly between the U.S. and other countries, have boosted market sentiment. China's participation in trade discussions also adds to the positive outlook[1].
  3. Supply Chain Improvements: The revival of industries that faced drawdowns and production losses has contributed to the dynamic market environment. This includes the success of supply-side reforms similar to those seen in 2017[1].
  4. Technological Advancements: The upcoming H20 chip is expected to further stimulate the technology industry, which has been a significant contributor to market volatility and growth[1].
  5. Global Market Comparisons: Non-U.S. stocks, including those in Hong Kong, have outperformed this year, making international equities attractive for investment[2].

Analyst Predictions and Technical Analysis

  • Technical Trends: Following a minor corrective decline, there is a potential start of a new short-term bullish trend for the Hang Seng Index. Key technical levels include a short-term pivotal support at 24,915 and resistances at 25,520, 25,750, and 25,890[3].
  • Economic Outlook: Analysts are optimistic about the economic outlook due to trade talks and the recovery in key industries, which supports the upward trend in Hong Kong stocks[1][2].

In summary, the Hang Seng Index is driven by economic recovery, trade optimism, technological advancements, and positive technical trends. Analysts foresee a continued upward trend, with caution due to market volatility and external factors like global economic policies.

Notable Stock Movements

  • JD.com's stock price declined 1.8% to HK$125.10 following a filing showing that Bridgewater Associates liquidated its holdings of Chinese companies in the second quarter.
  • Power Assets Holdings' stock price decreased by 2.7% to HK$51.45.
  • The Hang Seng Index closed at 25,519.32, down 0.4%.
  • CK Infrastructure Holdings' stock price dropped by 1.5% to HK$54.30.
  • Alibaba Group Holding's stock price retreated 1.5% to HK$121.80.
  • Tencent Holdings gained 0.7% to HK$590, with its quarterly profit topping estimates.

Upcoming Events

Traders will be busy going through interim reports throughout August, with more of the biggest companies trading in Hong Kong, including Alibaba and Meituan, due to report in August. A pickup in earnings performance will add fuel to the rally that has driven the Hang Seng Index up by almost 30% this year.

Earnings Revisions

Earnings for the upstream industries are expected to be revised upwards due to China's move to cut excessive capacity in the anti-involution campaign. This could potentially boost the performance of companies in these sectors.

[1] Source: Bloomberg [2] Source: Reuters [3] Source: CNBC [4] Source: Financial Times

  • The economic rebound, which is being supported by monetary and fiscal policies, is one factor contributing to the Hang Seng Index's current uptrend in business.
  • Optimistic expectations about trade talks, particularly between the U.S. and other countries, have positively affected the stock market, including the Hang Seng Index, boosting investor sentiment.
  • The potential technological advancements like the H20 chip are expected to stimulate the technology industry, contributing to market volatility and growth in the finance sector.

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