Hong Kong Stocks Fall for Second Day as Japanese Stocks Gain

The Hong Kong stock market continued its downward trend for the second consecutive day, with the Hang Seng Index (HK50) dropping 1.8% to 19,695 on the first trading day of 2025. This decline comes amidst a muted activity in the prior session and pressured by extended falls in mainland markets. The Hang Seng retreated to its lowest level in four weeks, with steep losses across all sectors. Investors reacted to private survey data showing factory activity in China growing less than expected in December, mirroring an official figure due earlier this week. Additionally, market participants are navigating ongoing headwinds such as China's growth outlook, the Fed's policy path, and US President-elect Trump's agenda.

In contrast, the Japanese stock market, represented by the Nikkei 225 Index (JP225), jumped 0.68% to close at 38,211 on Thursday, hitting its highest levels in three weeks. This positive performance can be attributed to strong earnings from major US retailers, a significant downward revision in US payrolls data, and dovish Federal Reserve minutes, which lifted market sentiment. Domestically, investors reacted to data showing private sector growth in Japan reaching a 15-month high in August on robust services activity, while manufacturing activity contracted more than expected. Notable gains were seen from index heavyweights such as Fast Retailing (2.5%), Shin-Etsu Chemical (2.8%), Keyence (1.1%), Advantest (1.2%), and Mercari (7.6%).

The main stock market index in Hong Kong (HK50) has decreased 486 points or 2.42% since the beginning of 2025, according to trading on a contract for difference (CFD) that tracks this benchmark index from Hong Kong. Historically, the Hong Kong Stock Market Index (HK50) reached an all-time high of 33484.08 in January of 2018. The Hong Kong Stock Market Index (HK50) is expected to trade at 19217.43 points by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate it to trade at 16896.50 in 12 months time.

On the other hand, the main stock market index in Japan (JP225) increased 4770 points or 14.25% since the beginning of 2024, according to trading on a contract for difference (CFD) that tracks this benchmark index from Japan. Historically, the Japan Stock Market Index (JP225) reached an all-time high of 42438 in July of 2024. Japan Stock Market Index (JP225) - data, forecasts, historical chart - was last updated on August 23 of 2024. The Japan Stock Market Index (JP225) is expected to trade at 31660.22 points by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate it to trade at 29871.91 in 12 months time.

In conclusion, the contrasting performance of the Hong Kong and Japanese stock markets can be attributed to various factors, including geopolitical risks, global market trends, and domestic economic fundamentals. Investors should remain vigilant and adapt their strategies accordingly to navigate the volatile market conditions.