Hong Kong Stocks Decline as Enthusiasm Over China-US Trade Progress Diminishes

13 May 2025

Flickr | John Lam

HONG KONG - Hong Kong's stock market experienced a downturn on Tuesday, retreating from the significant gains achieved the previous day. The Hang Seng Index fell by 1.9%, closing at 23,108.27, while the Hang Seng Tech Index declined by 3.3%. This pullback comes after a 3% surge on Monday, which was driven by optimism over a tentative agreement between China and the United States to reduce mutual tariffs.

Investors engaged in profit-taking, particularly in export-oriented sectors that had previously benefited from the trade deal news. Notable declines included Sunny Optical Technology Group, which dropped 7.6% to HK$68.30, and BYD Electronic International, down 7.1% to HK$35.25. E-commerce giants also saw losses, with JD.com decreasing by 2.1% to HK$137 ahead of its earnings report, Alibaba Group Holding falling 3.9% to HK$126.10, and Tencent Holdings slipping 2.2% to HK$506.

On the mainland, markets showed modest gains, with both the CSI 300 Index and the Shanghai Composite Index rising by 0.2%.

Analysts caution that while the initial trade agreement has alleviated some concerns, underlying tensions between the two largest global economies persist. Lu Ting, chief China economist at Nomura in Hong Kong, remarked, "It might be just the beginning of the inevitable collision of the two largest economies. After enjoying a rebound, markets perhaps need to ponder the medium to long-term risk. The US is still on the offensive, but China might learn much better how to dig itself in for the future attack."

The recent market movements underscore the fragile nature of investor sentiment amid ongoing geopolitical uncertainties.