Hang Seng fell 5.1%
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This week, the Hong Kong market extended its correction, with the Hang Seng Index(HSI) tumbling 5.1% and the Hang Seng Tech Index(HSTECH) plunging 7.2%.
The latest Fed meeting minutes revealed growing divergence among policymakers on rate decisions. As a result, market expectations for a December rate cut declined sharply, heightening concerns over tightening global liquidity and weighing on risk appetite in Hong Kong equities. In addition, investors expressed doubts about valuation sustainability in AI-related sectors. Several heavyweight stocks also came under pressure due to disappointing earnings or upcoming share lock-up expirations, further dragging sentiment and sector performance.
Sector rotation intensified during the week. Resource-related sectors such as gold and oil & gas outperformed, supported by stabilising or recovering commodity prices. Property developers and major financials saw a brief rebound midweek—property stocks on policy support expectations, and banks on interim dividend prospects. Conversely, technology stocks broadly declined, with semiconductors, EV battery names, biotech, and autos all experiencing notable pullbacks.
In the U.S. market, as of Thursday this week, all three major indices saw a sharp pullback. The S & P 500 Index(0S&P5) declined 2.9%, the Nasdaq Composite(0NDQC) fell 3.6%, and the Dow Jones Indus Actual(0DJIA) dropped 3.0%.
On the employment front, according to ADP Research, U.S. companies cut an average of 2,500 jobs per week over the four weeks ended November 1, compared with 11,250 per week in the previous period, indicating some improvement in labor market conditions. Data from the Bureau of Labor Statistics (BLS) showed nonfarm payrolls increased by 119,000 in September, more than double expectations, while the unemployment rate rose to 4.4%, above both forecasts and the prior reading, marking the highest level since October 2021. The increase in the jobless rate was mainly driven by higher unemployment among Black workers. Meanwhile, August payroll growth was revised down from +22,000 to –4,000, and combined revisions for July and August totaled –33,000, extending the downward revision trend seen throughout the year. In addition, the BLS announced it would not release the October nonfarm payrolls report, and the data will instead be incorporated into the November report, scheduled for December 16—more than a week later than initially planned and after the Federal Reserve’s final policy meeting of the year. Following the announcement, investors perceived a lower probability of a December rate cut, as the delayed data could increase divergence among policymakers. Bond traders have now largely abandoned bets on a December rate reduction. For the week ended November 15, initial jobless claims fell by 8,000 to 220,000, below expectations, while continuing claims rose modestly to 1.974 million, above the forecast of 1.95 million and the highest since October 2021.
Minutes from the Federal Reserve’s latest meeting indicated significant division on whether to cut rates in December. Although those opposing further cuts this year did not form a majority, they outnumbered those in favor, while several centrist members noted that future data would be decisive. Regarding quantitative tightening, nearly all participants agreed that balance sheet reduction should be halted. On financial stability, some members raised concerns about the risk of disorderly declines in equity markets.
In terms of rates, the CME FedWatch Tool showed that as of November 20, the probability of a 25 bps rate cut in December further declined to 35.6%.
In the A-share market, equities continued to retreat this week, with the CSI 300(000300) declining 3.8% on a cumulative basis. Trading volume further contracted compared to the previous week, with all five trading days’ daily turnover falling below the 50-day average, and total turnover across the Shanghai and Shenzhen markets consistently remaining below RMB 2 trillion.
From a sector perspective, leading gainers were concentrated in areas benefiting from both supportive policies and favorable business cycle dynamics, such as forestry, aquaculture, and shipbuilding, supported by carbon neutrality initiatives, consumption seasonality, and the recovery in maritime transport. In contrast, decliners were primarily those sectors with previously high valuations or under policy headwinds.
On the economic front, data from the National Bureau of Statistics showed that industrial value-added for enterprises above designated size increased by 6.1% YoY during January–October, 0.3 percentage points higher than the same period last year, indicating a continued solid growth trend. Fixed asset investment declined 1.7% YoY, including a 14.7% decline in real estate development investment, while new commercial housing sales volume fell 6.8%. In October, growth in industrial production, retail sales, investment, and property transactions all moderated to varying extents. Specifically, industrial value-added was up 4.9% YoY, and 0.17% MoM after seasonal adjustment; high-tech manufacturing rose 7.2% YoY; the services production index grew 4.6% YoY, and total retail sales of consumer goods increased 2.9% YoY.
From a fiscal perspective, data from the Ministry of Finance indicated that general public budget revenue increased 0.8% YoY in the first ten months, while expenditures rose 2%. Notably, securities transaction stamp duty revenue surged 88.1% YoY.
In terms of rates, according to the National Interbank Funding Center authorized by the People’s Bank of China, the Loan Prime Rate (LPR) as of 20 October 2025 remained unchanged for the sixth consecutive month, with the 1-year LPR at 3.0% and the 5-year LPR at 3.5%.
Leading stocks declined this week. The average stock in the MarketSmith Hong Kong 33 fell by 6.6% for this week. Our Hong Kong Model Portfolio fell by 5.1% for this week (see details in the Model Portfolio section). Since June 20, 2013, the Hong Kong 33 is up 953.5% vs. a 23.6% up for the Hang Seng.
The best performer in our Hong Kong 33 was HUISHANG BANK(03698), it’s the first regional joint-stock commercial bank in China to be jointly restructured by a city commercial bank and a city credit union. The stock gained 1.4% this week. EPS rating stands at 89, RS rating of 76, and A/D rating of A-.
Our Hong Kong Market Status are in an Uptrend Under Pressure.
From a technical perspective, the Hang Seng Index remained under pressure this week, registering downward gap declines on Monday, Tuesday, and Friday, successively breaking below both the 50-D and 100-D MA. Overall trading volume stayed muted, with only Friday’s turnover slightly exceeding the 50-day average. In terms of key levels, the 25,000-point threshold currently serves as a crucial near-term support, while the 50-DMA continues to act as a major resistance.
In the Southbound inflow via the HK-China Stock Connect, investors posted a weekly net inflow of HKD 38.602 billion, up 55.8% from last week and extending the net inflow streak to 27 consecutive weeks. YTD, Southbound capital flows have persistently reached record highs.
Overall, Hong Kong equities exhibited weakness amid shifting expectations on external liquidity conditions and pressure from adjustments in certain domestic sectors. Market leadership tilted towards defensive positioning, with high-dividend names and policy beneficiaries appearing relatively resilient, while growth-oriented technology stocks came under notable pressure. In the near term, the market may still need to digest external policy uncertainties and await new catalysts. However, current valuations are becoming increasingly attractive, and Hong Kong equities may see tactical opportunities in 2026, supported by the potential policy boost under the upcoming 15th Five-Year Plan, an improving liquidity backdrop externally, and corporate earnings recovery.
At this stage, investors are advised to remain disciplined and avoid aggressive chasing of strength. Priority should be given to stocks that deliver earnings upside surprises and display technically robust patterns, adopting a prudent yet flexible strategy to navigate market volatility.
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Notice: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities. It is for educational purposes only.
published on November 21, 2025