Hong Kong stocks rallied to their highest levels in more than two months on Monday as China-US trade talks in London and steady export data from the Chinese mainland bolstered investor sentiment.
The benchmark Hang Seng Index surged 1.63 percent to close at 24,181.43, breaking above the 24,000-point threshold for the first time since March 20.
The Hang Seng China Enterprises Index, a gauge of mainland companies listed in Hong Kong, advanced 1.74 percent. Both the Hang Seng Index and Hang Seng China Enterprises Index have reached new heights since the US announced “reciprocal tariffs”.
READ MORE: Hong Kong’s stock market booms with Wall Street in turmoil
Trade-sensitive sectors led the gains, with biotech, semiconductors, and Apple-related supply-chain stocks posting strong performances. WuXi Biologics surged nearly 5.5 percent, while Semiconductor Manufacturing International Corp rose 5.1 percent. Sunny Optical Technology Group, an Apple supplier, added over 4.9 percent.
China Rare Earth Holdings surging 60 percent to its highest level in nearly three years. The gains followed the Ministry of Commerce (MOC) said it had approved a number of export license applications for rare-earth-related items, amid soaring global demand for medium and heavy rare-earth elements used in high-tech industries.
Hong Kong stocks’ rally came after Beijing and Washington announced over the weekend that the first meeting under the China-US economic and trade consultation mechanism would take place in London on Monday.
This marks the second negotiation since the Geneva meeting on May 12, when the two countries agreed to a reciprocal reduction in tariffs and a 90-day suspension of additional levies. This had lifted the Hang Seng Index by 2.98 percent to close at 23,549 points.
READ MORE: HSI continues rebound as the impact of tariffs’ turmoil wanes
A report released Monday by Dah Sing Bank said that developments in the London talks could drive market fluctuations. But at the same time, investors remain focused on the effectiveness of the mainland’s economic stimulus measures.
Nip Chun-pong, chief financial analyst at Blackwell Global Investments, holds a similar view, saying that sustaining levels above 24,000 will depend on domestic policies to stabilize employment and economic growth, or a larger reduction in US tariffs on Chinese goods.
The mainland’s trade demonstrated resilience despite external pressure, as data from the General Administration of Customs (GAC) on Monday showed that total goods trade in the first five months of the year reached 17.94 trillion yuan ($2.5 trillion), a year-on-year increase of 2.5 percent. Export growth accelerated to 7.2 percent, while imports fell 3.8 percent. In May alone, trade rose 2.7 percent, with exports up 6.3 percent and imports down 2.1 percent.
Contact the writer at irisli@chinadailyhk.com
