[ET Net News Agency, 09 June 2025] US non-farm payroll data was better than expected, and the market now sees very little chance of a US Federal Reserve rate cut this month. However, hopes for positive news from the upcoming China-US trade talks in London boosted the Hong Kong stock market. The Hang Seng Index opened at 23,977, up 185 points, and soon surpassed the 24,000 mark for the first time in two and a half months. Despite Mainland China's CPI remaining in deflationary territory and import/export data released before midday falling short of expectations, market sentiment was undampened. The Hang Seng Index rose 240 points, or 1%, to 24,033 by midday. From its April low of 19,260, the HSI has now risen by over 25%. The Hang Seng China Enterprises Index stood at 8,724, up 95 points or 1.1%. The Hang Seng Tech Index rose by 121 points, or 2.3%, to 5,408.
"Lee Wai Kit: China-US negotiations are expected to be positive, HSI may test 24,800"
China and the US are scheduled to hold talks in London later today, and the market is hopeful for positive outcomes. Coupled with slightly lower-than-expected deflation in Mainland China in May, the Hong Kong stock market saw a breakout this morning, rising by more than 300 points at one stage and climbing above 24,000 for the first time since the start of the tariff war. Lee Wai Kit, a director of the Brokerage Department of TF International Securities, told ET Net News Agency that hopes for the talks finally enabled the market to break through the 24,000 level. He attributes this mainly to a large number of US Treasuries maturing this month, which may prompt Washington to avoid a repeat of last month's simultaneous declines in stocks, currencies, and bonds. Market expectations are that this will favour the talks between the two countries. Based on the current sentiment, Lee expects the Hong Kong market to be positive in June, with potential to test the 24,500 to 24,800 range.
Regarding the China-US talks, Lee added that the market expects the discussions to focus on rare earths, semiconductors and even student visas. More importantly, the talks will address what happens after the 90-day tariff grace period. If these areas show signs of positivity, the market will likely respond well and negative interpretations are unlikely. However, he also noted that China-US negotiations during Trump's previous presidency took a year to a year and a half, so further rounds of talks may still be needed after tonight. He expects the HIS's downside to be supported at the 20-day moving average, currently around 23,500.
"Weak CPI boosts hopes for policy support, but benefits remain focused on home appliances and automobiles"
Mainland China's CPI fell by 0.1% year-on-year last month, matching the decline in April and slightly better than the expected 0.2% drop. Consumer stocks generally performed well, and A-shares were steady, helping to support the Hong Kong market. Lee Wai Kit believes that although the overall economy remains in deflation, the slightly smaller-than-expected decline was enough to satisfy the A-share market. He also believes that with the CPI decline relatively small, a return to positive figures will not be difficult, and the current CPI performance indirectly increases expectations for further stimulus policies from the central government, supporting today's market.
Recently, Mainland China has mainly used indirect methods to stimulate consumption, such as interest rate cuts, reserve requirement ratio reductions, and expanding credit quotas. Lee expects any new measures will likely be similar in nature, and that direct cash handouts, such as consumption vouchers, are unlikely. The main beneficiaries will continue to be sectors such as automobiles and home appliances, rather than retail categories like catering and clothing, which are expected to see little emphasis. Medium-term stock selection should take this into consideration.
"Lee Wai Kit: China-US negotiations are expected to be positive, HSI may test 24,800"
China and the US are scheduled to hold talks in London later today, and the market is hopeful for positive outcomes. Coupled with slightly lower-than-expected deflation in Mainland China in May, the Hong Kong stock market saw a breakout this morning, rising by more than 300 points at one stage and climbing above 24,000 for the first time since the start of the tariff war. Lee Wai Kit, a director of the Brokerage Department of TF International Securities, told ET Net News Agency that hopes for the talks finally enabled the market to break through the 24,000 level. He attributes this mainly to a large number of US Treasuries maturing this month, which may prompt Washington to avoid a repeat of last month's simultaneous declines in stocks, currencies, and bonds. Market expectations are that this will favour the talks between the two countries. Based on the current sentiment, Lee expects the Hong Kong market to be positive in June, with potential to test the 24,500 to 24,800 range.
Regarding the China-US talks, Lee added that the market expects the discussions to focus on rare earths, semiconductors and even student visas. More importantly, the talks will address what happens after the 90-day tariff grace period. If these areas show signs of positivity, the market will likely respond well and negative interpretations are unlikely. However, he also noted that China-US negotiations during Trump's previous presidency took a year to a year and a half, so further rounds of talks may still be needed after tonight. He expects the HIS's downside to be supported at the 20-day moving average, currently around 23,500.
"Weak CPI boosts hopes for policy support, but benefits remain focused on home appliances and automobiles"
Mainland China's CPI fell by 0.1% year-on-year last month, matching the decline in April and slightly better than the expected 0.2% drop. Consumer stocks generally performed well, and A-shares were steady, helping to support the Hong Kong market. Lee Wai Kit believes that although the overall economy remains in deflation, the slightly smaller-than-expected decline was enough to satisfy the A-share market. He also believes that with the CPI decline relatively small, a return to positive figures will not be difficult, and the current CPI performance indirectly increases expectations for further stimulus policies from the central government, supporting today's market.
Recently, Mainland China has mainly used indirect methods to stimulate consumption, such as interest rate cuts, reserve requirement ratio reductions, and expanding credit quotas. Lee expects any new measures will likely be similar in nature, and that direct cash handouts, such as consumption vouchers, are unlikely. The main beneficiaries will continue to be sectors such as automobiles and home appliances, rather than retail categories like catering and clothing, which are expected to see little emphasis. Medium-term stock selection should take this into consideration.