The Hang Seng Index jumped by over 1% on Monday morning as traders looked forward to the upcoming talks between China and the United States. The blue-chip index rose to H$24,135, a 6.4% increase from th lowest point last week and 25% above the lowest level in April.
China and the US trade talks
The Hang Seng Index, which tracks the biggest companies in Hong Kong and mainland China, rose on Monday and is eying the highest point this year.
This surge mirrored the performance across Asian countries, with the Nikkei 225 and Nifty 50 being in the green.
The rally is mostly because of the rising hopes that the US and China will lower temperatures again during a meeting with the US officials, like Scott Bessent and Howard Lutnick.
This meeting follows the 90-minute phone call between President Trump and Xi Jinping last week.
It comes at a time when market participants are watching the developments between the US and China. The US has accused China of violating the terms of the previous agreement by restructuring rare earth metal shipments.
China has been aggrieved by the US, which has made some unilateral decisions targeting its businesses and individuals. The US has restricted the shipping of some aircraft software and semiconductors, a move NVIDIA has warned will hit it by about $8 billion a quarter.
Therefore, the hope is that the meeting will lower the temperatures, make progress on a deal, and lead to a meeting between Trump and Xi Jinping. Such a deal will benefit the stock market by lowering tensions between the two countries.
Technology stocks leads gains
The Hang Seng Index rally was broad-based, with most companies being in the green.
Technology companies were some of the best performers in the Hang Seng Index. Kuaishou Technology, a company that offers video social media solutions, was the best gainer on Monday, soaring by over 6%.
This surge came after the company said that its AI video-generation solution, Kling A, will generate an annual revenue of $100 million by February. This will make it one of the best video generators globally, a notable thing as investors assess how companies are monetizing AI services.
Meituan share price jumped by over 5% as the company continued expanding its delivery business. For example, the firm plans to expand its drone services in Dubai, an area it sees a lot of potential in. Its recent results showed that its sales rose by 18% in the last quarter.
The other top gainers in Hong Kong were companies like JD.com, Alibaba Health, Trip.com, and NetEase.
On the other hand, the top laggards were companies like Zijin Mining, China Petroleum, China Hongquao Group, BYD, Geely, and China Resources were some of the top laggards.
Hang Seng Index analysis
The daily chart shows that the Hang Seng Index has been in a bull run since January 2024, when it bottomed at H$14,785. It then jumped to over H$24,000 on Monday as most companies recovered.
The Hang Seng Index moved above the key resistance level at H$23,893, its highest point on May 20, invalidating the double-top pattern.
Most oscillators have all pointed upwards, a sign that it is gaining momentum. Therefore, it is likely that the index will keep soaring, as investors target the year-to-date high of H$24,868. A move above that level will signal more gains, potentially to the psychological point at H$25,000.
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