Improved Risk Appetite and Manufacturing Data Revitalize China and Hong Kong Stocks After Downturn

Hong Kong | EcoPulse24

Chinese stock markets returned to positive territory at the start of Tuesday’s session, driven by a clear improvement in global risk appetite and easing volatility in the metals markets witnessed in previous sessions. This recovery attracted selective buying in both Hong Kong and mainland Chinese exchanges after a period of declines and profit-taking.

In Hong Kong, the Hang Seng Index ended a two-session losing streak, gaining approximately 111 points to reach 26,887 during morning trading. This positive performance followed strong gains on Wall Street, supported by encouraging signs of U.S. economic strength and corporate earnings expectations, which directly boosted sentiment in Asian markets.

Another supporting factor was renewed buying on dips after local stocks recently retreated from their highest levels in about four and a half years. Investors viewed this pullback as an opportunity to rebuild positions, especially in leading sectors with strong fundamentals.

Caution remained in Hong Kong, however, as investors awaited December retail sales data due later in the day, as well as the impact of China’s decision to raise the value-added tax on telecommunications services to 9% from 6%. These factors limited broader gains despite the overall improvement in sentiment.

Almost all sectors posted positive performance, led by real estate and financials. Mining stocks gained from higher metals prices, with Zijin Gold International rising 3.3% and Zhaojin Mining up 1.9%. Other notable gainers included CK Hutchison (+3.7%), Wuxi Biologics (+3.2%), and MTR Corp (+3.0%).

On the mainland, Chinese markets continued to recover from the previous session’s losses. The Shanghai Composite moved higher to remain above 4,030, while the Shenzhen Composite improved to 13,935. This recovery was supported by the easing of volatility in global metals markets, fostering a more stable investment climate and enabling opportunistic buying.

Regional stocks followed U.S. gains after data showed a surprise expansion in U.S. manufacturing activity, indicating a more supportive environment for global growth and corporate profits. This external factor further boosted investor confidence in Chinese markets, which remain highly sensitive to global economic signals.

The mining sector led mainland gains, benefiting from the rebound in gold, silver, and other metals. Zijin Mining rose 2.2%, CMOC Group gained 1.7%, and Hunan Gold Corp jumped 4.8%. Technology and AI stocks also rebounded after previous declines, with strong gains for Suzhou TFC Optical, Shenzhen Sunway, and Montage Technology.

Earlier data showed an acceleration in China’s manufacturing activity in January, as companies ramped up production and shipments ahead of the extended Lunar New Year holiday, providing additional support for industrial and tech stocks.

EcoPulse24 Analysis:
The gains in Chinese and Hong Kong equities reflect a return to balance in sentiment after a period of sharp volatility. Reduced pressure from metals markets and supportive signals from the U.S. economy created a favorable environment for selective buying. Nevertheless, caution persists due to regulatory and tax factors, such as the VAT adjustment on certain sectors, and anticipation of local economic data. Overall, the market appears to be rebuilding momentum, supported by manufacturing fundamentals and improved global sentiment, though the outlook remains dependent on the resilience of these factors to potential external or internal shocks.