Hang Seng Rises 0.87%
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This week, the Hang Seng Index(HSI)rose by 0.87%, while the Hang Seng Tech Index(HSTECH) posted a slightly stronger gain of 1.13%.
The market broadly exhibited a “bottoming-out and rebounding” pattern, particularly on December 5, when it was notably lifted by gains in mainland China’s A-share tech sector. Trading volume in Hong Kong equities contracted compared to last week, with Friday’s turnover falling nearly 16% below the 50-day average—indicating growing investor caution.
Key drivers behind the Hong Kong market rebound include: strengthening expectations of a Federal Reserve rate cut, a stronger renminbi (RMB), and sustained inflows from southbound capital via the Stock Connect programs. Offshore RMB breached the 7.06 level, reaching its highest point in nearly 14 months, which bolstered foreign investors’ confidence in Chinese assets. Domestically, supportive policy measures also provided a tailwind: the State Council announced targeted initiatives to advance new-type urbanization, while the Ministry of Industry and Information Technology encouraged leading new-energy firms to “go global,” reinforcing market expectations for dual domestic-demand and export-driven growth.
By sector, Mining-Metal Ores(G1099IG.HK) emerged as the strongest-performing segment in Hong Kong this week, ranking second in industry strength ratings. Resource stocks surged collectively, buoyed by record-high LME copper prices, cobalt prices on the London Metal Exchange surpassing $50,000 per tonne, and tightening global supply expectations. MMG(01208) jumped 22.58% for the week, CMOC(03993) rose 17.57%, and CHINAGOLDINTL(02099) gained 13.46%—all belonging to this outperforming sector. In contrast, new energy vehicles and certain consumer electronics segments underperformed, reflecting a continued market rotation toward cyclical and hard-tech themes.
In the U.S., the three major indices closed slightly higher but showed divergent performance. The S & P 500 Index(0S&P5) edged up 0.12%, the Nasdaq Composite(0NDQC) gained 0.6%, and the Dow Jones Indus Actual(0DJIA) rose just 0.28%. Despite consecutive days of gains, internal market structure remained uneven.
U.S. ADP private-sector employment unexpectedly declined by 32,000 in November (versus an expected increase of 10,000), while initial jobless claims fell to 191,000—below the forecast of 220,000—further solidifying market expectations for a 25-basis-point Fed rate cut in December (now priced in at 87% probability). Investors are betting the Fed will announce the cut at its December 9–10 policy meeting. Goldman Sachs reinforced this dovish narrative by forecasting that U.S. interest rates will fall to 3.00%–3.25% by 2026. However, persistent manufacturing weakness remains a concern: the ISM Manufacturing PMI stood at 48.2 in November, remaining below the 50-point expansion/contraction threshold for multiple consecutive months. Additionally, the EIA reported an unexpected crude oil inventory build of 574,000 barrels (versus an expected draw of 821,000 barrels), signaling softening demand. Rotation within the tech sector intensified, with growing caution over AI infrastructure investment bubbles; IBM’s CEO warned that building AI data centers “is not profitable” under current cost structures.
Mainland China’s A-share market showed relative strength this week, with the CSI 300(000300) rising 1.28%, and the ChiNext Index surging 1.01% on December 5 alone. Weekly trading volume remained above RMB 1.5 trillion, reflecting robust market participation.
Leading sectors included humanoid robots, commercial spaceflight, and semiconductors, while big-consumer segments (such as baijiu, tourism, and e-commerce) continued to retreat. Policy support came thick and fast: on December 5, the People’s Bank of China conducted RMB 1 trillion in outright reverse repos, fully offsetting maturing liquidity and continuing its “short-end absorption, long-end provision” strategy to stabilize year-end funding conditions. The State Council emphasized people-centered new-type urbanization and formally integrated commercial spaceflight into the national space development framework. Moreover, during the China-France summit, leaders deepened cooperation in nuclear energy and green technologies—positive for high-end manufacturing. JPMorgan also upgraded its recommendation on Chinese equities to “overweight,” projecting 19% upside potential for the MSCI China Index, further boosting foreign investor sentiment. That said, China’s November Manufacturing PMI came in at 49.2—slightly improved but still in contractionary territory—highlighting that the economic recovery remains fragile.
The HK33 portfolio rose an average of 2.97% this week, significantly outperforming the HSI, with 23 constituents gaining and 10 declining. MMG(01208) was the top performer, surging 22.58%, underscoring the strength of the resource sector. Since inception, HK33 has consistently delivered superior cumulative returns versus the Hang Seng Index, validating its strategy of focusing on high-scoring stocks in high-strength industries. Meanwhile, the broader model portfolio gained 1.67% on average this week, led by China Foods(00506) with a 4.25% increase—though its beverage sector carries a modest industry rating of 117, indicating opportunities outside core thematic trends.
Technically, the Hang Seng Index is now trading firmly above both its 20-day and 50-day moving averages, and stands 6.28% above its 200-day moving average—signaling a moderately bullish medium-term trend. However, trading volume has declined for two consecutive weeks, with Friday’s turnover nearly 27% below the 50-day average, suggesting limited upside momentum. Near-term support is seen around 25,800 (near the 10-day moving average), with resistance at 26,500—just below the year-to-date high of 27,381. A breakout on higher volume could pave the way for a test of the previous peak.
Southbound capital recorded net inflows of HK$11.349 billion this week—down from last week’s HK$19.84 billion but marking another week of consistent net buying. Key additions included internet giants like Alibaba, reflecting mainland investors’ confidence in the valuation recovery of Hong Kong’s core assets. Expectations of further RMB appreciation—Huatai Securities forecasts an accelerated appreciation driven by pre-Chinese New Year FX settlement flows—also provide ongoing support for southbound activity.
Overall, global markets are navigating a delicate “weak data, loose policy” window. While Fed rate-cut expectations continue to underpin risk assets, concerns over U.S. manufacturing weakness and AI investment bubbles cap upside potential. Both A- and H-shares benefit from domestic policy support, RMB strength, and breakthroughs in strategic sectors (e.g., commercial spaceflight and domestic GPU development), positioning technology and resources as twin investment themes. Looking ahead to next week, all eyes will be on the Fed’s December 9–10 policy decision and the November nonfarm payrolls report. A confirmed rate cut could further lift growth stock valuations, but surprisingly strong jobs data may trigger short-term volatility.
At this stage, investors are advised to remain calm and rational, avoid chasing rallies, and prioritize fundamentally strong stocks with earnings surprises and solid technical setups—adopting a disciplined yet flexible approach to navigate ongoing market fluctuations.
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published on December 5, 2025