Hong Kong's Hang Seng Index rises 1.7% to 25,508.21

Hong Kong's Hang Seng Index rises 1.7% to 25,508.21

The Hang Seng Index (HSI) in Hong Kong has shown a notable rise, increasing by 1.7% to reach 25,508.21 on July 2, 2025. This upward trend comes amidst a backdrop of global market optimism and positive policy shifts. Key drivers behind this rally include renewed expectations for a US interest rate cut and the relaxation of home-buying rules in China.

Investors have found reasons to cheer on both sides of the globe. Hints from the US Federal Reserve about a potential rate cut in September have boosted global market optimism, with hopes for cheaper borrowing ahead. Over in China, Shanghai's decision to loosen home-buying restrictions has made it easier for locals and non-locals to purchase property in selected districts, aiming to revive the city's sluggish housing market. These policy shifts have fueled a rally in Hong Kong's property sector, with shares of Longfor Group and China Vanke experiencing significant gains.

The Hang Seng Index and the Hang Seng China Enterprises Index posted 1.9% gains, signaling renewed optimism in Hong Kong stocks, especially in the real estate sector. The strong rally among developers like Longfor and Vanke suggests that investors are confident that fresh policy support could spur home sales and ease sector-wide cash woes. If the Federal Reserve does cut rates soon, extra global liquidity might give further lift to Asian markets, possibly sending even more capital into Hong Kong's shares.

Shanghai's move to relax homebuying rules shows policymakers are getting more aggressive about jumpstarting demand and stabilizing China's shaky property market. Even with Evergrande's high-profile exit highlighting ongoing pain, these reforms could lay the groundwork for a stronger recovery. Global support, combined with local action, may be key for reigniting growth and giving both businesses and investors something to hope for amid China's economic slowdown.

Despite the recent rally, there are still challenges in the Hong Kong stock market. The Hang Seng Tech Index has fallen more than 20% from its high in October this year, once again entering a "technical bear market." However, the continued capital inflow from the south, as seen on the day of the major drop in the Hong Kong stock market, shows a trend of "buying more as it falls." This trend indicates that investors remain bullish on the long-term potential of Hong Kong's tech sector.

In conclusion, the Hang Seng Index's recent rise reflects a combination of global market optimism, positive policy shifts, and investor confidence in the long-term prospects of Hong Kong's property sector. As the Federal Reserve and Chinese policymakers continue to influence market sentiment, investors will closely monitor the developments to gauge the potential impact on Hong Kong's stock market.

References:
[1] https://www.investing.com/indices/hang-sen-40
[2] https://finimize.com/content/hang-seng-rallies-on-policy-shifts-and-global-signals
[3] https://www.moomoo.com/news/post/76869221/record-tr4cking-news-what-to-expect-in-the-week-ahead-crm-avgo-earnings