Hang Seng TECH Index Surges to Three-Year High; US-listed Chinese Stocks Extend Gains

The Hang Seng TECH Index has hit a three-year high, driven by a rally in US-listed Chinese stocks that extended gains on Tuesday. The index, which tracks the performance of technology stocks listed on the Hong Kong Stock Exchange, surged 4.7% to close at its highest level since March 2021. Meanwhile, US-listed Chinese stocks, including Alibaba (BABA), Tencent (TCEHY), and PDD Holdings (PDD), also rallied, up 4.7%, 4.1%, and 8.8%, respectively.

The recent rally in Chinese tech stocks can be attributed to several factors, including China's strong trade results, a potential easing of US-China trade tensions, and the Chinese government's stimulus measures. China's foreign trade results, which set a new record in 2024 and retained the title of leading trader in goods, boosted investor confidence in Chinese stocks. The country's imports and exports grew by 5% in 2024, with total exports growing 7.1% and imports growing 2.3% (Source: Global Times, cited by Benzinga).

Reports that the US President-elect Donald Trump administration is exploring a gradual approach to raising tariffs on Chinese goods have also contributed to the rally. This suggests a potential easing of trade tensions between the two countries (Source: Bloomberg). Additionally, the Chinese government's stimulus measures, including a 50 basis-point cut to the mandatory reserve ratio and a reduction in the benchmark policy rate, have helped to support the economy and boost investor sentiment (Source: CNBC).

However, investors should remain cautious, as geopolitical risks and regulatory uncertainties could still impact the performance of Chinese tech stocks. The ongoing US-China trade war and potential delistings of Chinese companies from US stock exchanges pose significant risks to the sector. Moreover, the sustainability of the rally will depend on the release of positive economic data from China and the evolution of geopolitical tensions.

In conclusion, the recent rally in the Hang Seng TECH Index and US-listed Chinese stocks has been driven by a combination of positive factors, including China's strong trade results, a potential easing of US-China trade tensions, and the Chinese government's stimulus measures. However, investors should remain vigilant to geopolitical risks and regulatory uncertainties that could impact the performance of Chinese tech stocks in the coming months.