Hong Kong Stocks Rebound on Easing Middle East Tensions

The Hang Seng Index dipped 197 points, or 0.8%, to close at 25,899 on Tuesday, trimming earlier gains as expectations for progress in Washington-Tehran talks continued to fade. Sentiment turned more cautious after a fresh escalation in Middle East tensions, with reports of renewed strikes on maritime targets near the Strait of Hormuz and damage to port facilities across parts of the Gulf, marking the most serious flare-up since a fragile ceasefire was reached several weeks ago. At the same time, oil markets prices held firm triggered by the renewed tensions, with traders reacting to reports of disrupted shipping activity and heightened risks to energy facilities in the Middle East. In Hong Kong, the renewed escalation revived fears that the fragile truce could break down and potentially push the region back into a prolonged period of instability. Among major decliners included Tencent Holdings (-0.2%), Xiaomi Corporation (-1.7%), SMIC (-1.9%), AIA Group (-0.1%), and Trip.com (-1.5%).

The Hang Seng Index jumped about 319 points, or 1.2%, to close at 26,096 on Monday, rebounding from last week’s losses as improving geopolitical developments boosted market sentiment. Investor confidence strengthened after Donald Trump indicated that the US would help ensure safe passage for neutral vessels through the Strait of Hormuz. The development eased fears of prolonged disruption to global oil shipping routes, helping to cool energy prices and reduce inflation concerns. Further support came from signs of progress in negotiations with Iran to end the ongoing conflict, entering its 10th week. Hopes for de-escalation improved overall risk appetite, encouraging investors to return to equities. Locally, Hong Kong property stocks led gains alongside tech shares after Morgan Stanley raised its outlook for home prices. Top performers included Tencent Holdings (1.1%), Xiaomi Corporation (6.8%), SMIC (1.8%), Shanghai Xizhi (15.2%), and AIA Group (2.4%).

The Hang Seng Index slipped 335 points, or 1.3%, to close at 25,777 on Thursday, as cautious sentiment prevailed despite support from gains in tech heavyweights and insurers in the previous session. Investor confidence remained restrained by a continued rise in oil prices, which extended their rally for a fourth consecutive session amid escalating tensions in the Middle East and ongoing disruptions in the Strait of Hormuz. The surge in energy costs heightened concerns over inflation and its potential impact on global growth, weighing on risk appetite. Confidence was further dampened after the Federal Reserve highlighted inflation risks despite not adjusting interest rates. Across the region, tech stocks declined as early optimism over artificial intelligence faded, with selling pressure increasing due to higher oil prices and geopolitical concerns. Major decliners included Tencent Holdings (-2.4%), Xiaomi (-3.7%), HKEX (-1.8%), China Hongqiao (-4.7%), and Kingboard Laminates (-7.5%).