Hong Kong Shares Regain Ground Ahead of Budget

Equities in Hong Kong rose 97 points or 0.4% to 26,690 in early deals on Wednesday, reversing from a sharp drop in the prior session after Wall Street closed notably higher overnight ahead of President Trump's State of the Union Speech. Locally, the city's 2026/27 budget will be introduced in the Legislative Council later today. In China, stocks extended gains on views that a U.S. tariff reset could benefit Beijing. On the policy front, the PBoC kept loan prime rates at record lows for a ninth straight month. However, gains were capped by caution, ahead of key data in the city, including Q4 final figures, January inflation, and trade readings. Meantime, fresh tensions between Beijing and Tokyo emerged after China barred sales of dual-use items to 20 Japanese firms with alleged military ties. Most sectors in the city rose, led by property, consumers, and tech. Anta Sports jumped 4.5%, alongside China Resources Land (4.0%), China Overseas Land 93.0%), and Zijin Gold Intl. (2.0%).

The Hang Seng plunged 491 points, or 1.8%, to end at 26,590 on Tuesday, erasing most of the prior session’s gains following Wall Street’s sharp drop Monday on renewed tariff anxiety and geopolitical tensions. The benchmark index dipped from a near two-week top, with broad weakness across sectors, including consumer, tech, and financials. Traders shrugged off added liquidity in regional markets with China and Japan reopening from holidays, as their focus shifted to fresh friction between Beijing and Tokyo after China barred exports of dual-use items to 20 Japanese firms with alleged military ties. Still, losses were partly cushioned by notable gains in mainland stocks on bets that a U.S. tariff reset could benefit China. CK Hutchison slid 2.7% after Panama canceled the company's port contracts following a court ruling. Meantime, tech names tracked U.S. jitters over AI, with Kingdee Intl. plunging 8.0%, followed by SenseTime (-6.1%), Kuaishou Tech. (-2.6%), and Alibaba Hong Kong (-2.4%).

Hong Kong shares tumbled 489 points, or 1.8%, to 26,604 in Tuesday morning trade, reversing a 2.5% rally in the prior session after a plunge on Wall Street overnight due to renewed U.S. trade policy uncertainty following President Trump’s new global tariff in the wake of a Supreme Court ruling. Markets pulled back from a two-week top, with broad sector falls. Tech slid over 2% ahead of Nvidia’s earnings, while consumer and financials fell after local data showed the city's jobless rate hit an over three-year high of 3.9% in the three months to January. Investors also awaited key releases this week, including Hong Kong's Q4 GDP, January inflation, and trade figures. Still, a rebound in the Shanghai Composite helped limit losses as Chinese markets reopened post-Lunar New Year, while the PBoC left its loan prime rates unchanged at record lows for the ninth straight month. Notable decliners included Tencent Music Ent. (-4.3%), Laopu Gold (-3.9%), Pop Mart Intl. (-3.4%), and SMIC (-1.8%).