The Hong Kong stock market ended lower on Monday, June 30, marking the final trading day of the first half of 2025. Despite a broad retreat, major indices posted strong six-month gains, reflecting resilience amid global economic uncertainty. The Hang Seng Index dropped 0.87%, or 211 points, closing at 24,072.28. The Hang Seng Tech Index fell 0.72%, while the Hang Seng China Enterprises Index declined 0.96%.
Even with the day’s pullback, the Hang Seng Index achieved a robust 20% gain for the first half of 2025—outpacing many global peers. The tech-heavy Hang Seng Tech Index rose 18.68%, and the国企指数 (HSCEI) climbed 19.05%, signaling sustained investor confidence in Chinese equities despite macroeconomic headwinds.
Market Performance: Tech Stocks Mixed, Crypto-Linked Names Soar
Equity performance was mixed across sectors. Large-cap tech stocks took a hit, with Meituan sliding over 3%, Alibaba and Tencent each down more than 2%. However, Xiaomi Group bucked the trend, rising over 1% on positive sentiment around its latest smart device launches and overseas expansion.
In contrast, crypto-related stocks delivered standout performance. New Fortress Technology Holdings surged more than 30%, driven by anticipation of Hong Kong’s upcoming stablecoin regulatory framework, set to take effect on August 1. The move is seen as a pivotal step in legitimizing digital assets within the region’s financial ecosystem.
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This rally reflects growing institutional and retail interest in blockchain-integrated businesses. Analysts suggest that Hong Kong’s clear regulatory direction could position it as a leading hub for crypto innovation in Asia, attracting capital from both domestic and international investors.
Other outperforming sectors included pharma outsourcing and new consumer economy plays. Drug development services provider Chia Tai Pharmaceutical surged over 12%, benefiting from increased R&D outsourcing by global biotechs. Meanwhile, Laopu Gold jumped nearly 15%, underscoring persistent demand for luxury and inflation-hedge assets among affluent Chinese consumers.
Economic Data: Manufacturing Activity Remains Weak
On the macro front, China's June manufacturing Purchasing Managers’ Index (PMI) remained in contraction territory for the third consecutive month. Although slightly better than expected, the reading underscores that the temporary boost from the U.S.-China tariff truce has largely faded.
Nomura Securities cautioned that the impact of trade de-escalation should not be overstated. The firm highlighted several factors likely to weigh on growth in the second half of 2025: a rebound effect following early release of export and consumer demand, high base effects from last year’s recovery, and ongoing weakness in the property sector.
Still, Nomura expects policymakers to ramp up support measures in the coming months. While the People’s Bank of China (PBOC) recently removed language about “timely reserve requirement ratio (RRR) cuts and interest rate reductions” from its quarterly policy statement—a move that sparked market speculation—analysts believe this signals flexibility rather than a tightening bias.
In fact, many economists maintain that a dual-cut scenario (both RRR and interest rates) remains possible before year-end if growth momentum continues to slow.
Outlook: Cautious Optimism for H2 2025
Looking ahead, global asset managers are expressing cautious optimism about Hong Kong equities. Standard Chartered Wealth Solutions’ Chief Investment Office has upgraded its stance on Asia ex-Japan equities to “overweight,” citing favorable valuations and improving liquidity conditions.
The firm forecasts the Hang Seng Index to trade between 24,000 and 26,000 points over the next 12 months. Should mainland China introduce additional fiscal or monetary stimulus—such as infrastructure spending or targeted tax cuts—the upper end of the range could extend to 28,000 points, according to Zhen Zifeng, Head of Investment for North Asia at Standard Chartered.
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A weaker U.S. dollar trend is also expected to support risk assets outside America. With inflation pressures moderating in major economies and the Federal Reserve pausing further rate hikes, capital is increasingly rotating into higher-growth markets—including those in Southeast Asia and Greater China.
However, risks remain. Standard Chartered warns of potential downside triggers for Hong Kong stocks, including unresolved geopolitical tensions in the Middle East and renewed concerns over U.S. fiscal sustainability, inflation volatility, and trade policy shifts.
Key Market Themes & Keywords
- Hong Kong stocks
- Hang Seng Index
- crypto-related stocks
- stablecoin regulation
- China PMI data
- Asia ex-Japan equities
- market outlook 2025
- digital asset investment
These themes reflect current investor priorities: regulatory clarity in digital finance, macroeconomic resilience, and regional allocation trends amid shifting global monetary policy.
Frequently Asked Questions (FAQ)
Q: Why did crypto-related stocks rise despite a broader market decline?
A: Anticipation of Hong Kong’s new stablecoin regulations—effective August 1—is fueling investor optimism. Clear rules signal a maturing digital asset environment, boosting confidence in blockchain-based companies listed in Hong Kong.
Q: Is the Hang Seng Index still a good investment after a 20% gain?
A: Yes, many analysts believe valuations remain attractive relative to earnings growth potential. With expected policy support from Beijing and improving global liquidity, further upside is possible in late 2025.
Q: What are the main risks facing Hong Kong’s stock market?
A: Key risks include persistent weakness in China’s property sector, geopolitical uncertainty in the Middle East, and potential shifts in U.S. monetary or trade policy that could affect global investor sentiment.
Q: How might PBOC policy evolve in the second half of 2025?
A: Although recent statements removed explicit references to rate cuts, economists expect the central bank to remain responsive to economic conditions. A rate or reserve ratio cut remains feasible if growth indicators weaken further.
Q: Why is Standard Chartered bullish on Asia ex-Japan equities?
A: The region offers compelling valuations, improving corporate earnings, and tailwinds from technological adoption and regulatory progress—especially in fintech and digital assets.
Q: What role does the U.S. dollar play in Hong Kong market performance?
A: A weaker dollar typically benefits emerging markets by reducing funding costs and encouraging capital inflows. As U.S. rates stabilize, investors are reallocating to higher-yielding assets in Asia.
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Final Thoughts
While short-term volatility persists, Hong Kong’s equity market has demonstrated strength through the first half of 2025. Regulatory advancements in digital assets, resilient consumer spending in premium segments, and supportive macro policies point to sustained momentum.
Investors should watch closely for policy signals from Beijing and regulatory milestones like the August stablecoin rollout—both of which could catalyze further gains in targeted sectors. As global capital rebalances toward Asia, Hong Kong may continue to serve as a strategic gateway for exposure to China’s innovation-driven economy.