Hong Kong Stocks Rally Following Positive Dialogue Between Trump and Xi

Tech Leaders JD.com, Alibaba, and Baidu Drive Gains Amid Hopes of Improved US-China Relations

Hong Kong stocks surged on Monday after a constructive phone conversation between Chinese President Xi Jinping and U.S. president-elect Donald Trump, fueling optimism about a potential easing of tensions between the two economic powerhouses.

The Hang Seng Index advanced by 1.7%, reaching 19,917.20 as of 2:45 p.m. local trading time, although it had earlier climbed as high as 2.6%. On the mainland, the CSI 300 Index rose 0.4%, while the Shanghai Composite Index remained flat.

Technology stocks led the charge, with the Hang Seng Tech Index gaining 3.2%. JD.com emerged as the standout performer, surging 6.5% to HK$156.30. E-commerce titan Alibaba Group Holding followed closely, rising 4.8% to HK$84.60, while Baidu climbed 3% to HK$81.

Other notable gainers included WuXi AppTec, a pharmaceutical firm that jumped 7% to HK$55.55, and food delivery platform Meituan, which gained 5.7% to HK$156.20. Athletic apparel maker Anta Sports rose 3.3% to HK$80.65, and electric vehicle manufacturer BYD saw a 4.2% increase, closing at HK$275.00.

The optimism stemmed from Xi and Trump’s phone call on Friday, during which the two leaders discussed pressing global issues such as the Ukraine crisis, the Israel-Palestine conflict, and the U.S. Supreme Court's recent TikTok ban.

Trump described the exchange on his social media as a “very good one,” while China’s state-run Xinhua news agency quoted Xi expressing optimism about the relationship between the two nations, stating that the U.S. and China could be “good friends and partners.”

Adding to the positive sentiment, China’s Vice President Han Zheng is set to attend Trump’s inauguration, where he will be sworn in as the 47th president of the United States later on Monday.

“Some potential thawing of US-China relations, for example, reports of China’s vice-president attending the inauguration, brought some relief to Asia ex-Japan equities this past week,” analysts from Nomura, including Chetan Seth and Anshuman Agarwal, noted in a report released Monday.

However, the report cautioned that upcoming trade tariffs proposed by Trump could reintroduce volatility and encourage investors to remain vigilant.

Elsewhere, China maintained its benchmark lending rates during its monthly review on Monday. The one-year loan prime rate was kept steady at 3.1%, while the five-year rate, which impacts mortgage pricing, remained unchanged at 3.6%.

Regional markets in Asia also saw gains. Japan’s Nikkei 225 climbed 1.2%, Australia’s S&P/ASX 200 added 0.4%, and South Korea’s Kospi edged up by 0.1%. 

By fLEXI tEAM