Hang Seng Ends Higher After Budget Surplus Signal

The Hang Seng Index rose 175 points, or 0.7%, to close at 26,766 on Wednesday, rebounding from the prior session’s weakness. Sentiment improved after the city’s 2026/27 budget projected an earlier-than-expected operating surplus following three years of deficits. Financial Secretary Paul Chan Mo also unveiled measures to bolster Hong Kong’s global financial role and support innovation and tech development. Meanwhile, Q4 GDP growth in the city was confirmed at 3.8%, the fastest in two years, lifting full-year growth to 3.5% from 2.6% in 2024. Further gains in mainland stocks added to the momentum, as the Trump administration pushed plans for a global metals trading zone, boosting rare earth and metal shares. Financials led the advance, and consumer stocks edged higher, though property and tech weakness capped gains. Haidilao surged 6% on strong holiday sales, while KE Holdings (5.7%), Orient Overseas (1.9%), China Hongqiao Group (1.6%), and Meituan (1.5%) also posted notable rises.

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%).