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ASIA STOCKS: China & Hong Kong Equities Rallies Follow Trump & Xi Jinping Call

ASIA STOCKS
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China and Hong Kong equities are rallying, buoyed by optimism over improved US-China relations following a positive pre-inauguration call between Donald Trump and Xi Jinping. The CSI 300 Index rose as much as 1.2%, led by gains in tech stocks like Shengyi Technology (+8.9%) and Eoptolink Tech (+7.4%). In Hong Kong, the Hang Seng Index is 2.3% higher, while the Hang Seng Tech Index jumped 3.25%, with e-commerce giants JD.com (+5.8%) and Alibaba (+3%) driving the rally.

  • The market also reacted to China leaving its loan prime rates unchanged, with the one-year rate at 3.1% and the five-year rate at 3.6%. Education shares advanced after government guidance promoting AI and stricter curriculum controls, with New Oriental Education & Technology rising 6%. Additionally, reports of re-lending facilities supporting A-share buybacks have boosted sentiment, benefiting privately-run firms.
  • Traders aggressively bought call options on Chinese stock-linked ETFs like FXI and KWEB on Friday, driven by optimism over a positive Trump-Xi call signaling potential easing in trade tensions. This activity pushed one-month implied volatility on FXI to its highest since mid-December, with bullish bets also driving significant gains in both ETFs.
  • Overall, the markets are balancing optimism with caution over potential trade tariffs under Trump's incoming administration.
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China and Hong Kong equities are rallying, buoyed by optimism over improved US-China relations following a positive pre-inauguration call between Donald Trump and Xi Jinping. The CSI 300 Index rose as much as 1.2%, led by gains in tech stocks like Shengyi Technology (+8.9%) and Eoptolink Tech (+7.4%). In Hong Kong, the Hang Seng Index is 2.3% higher, while the Hang Seng Tech Index jumped 3.25%, with e-commerce giants JD.com (+5.8%) and Alibaba (+3%) driving the rally.

  • The market also reacted to China leaving its loan prime rates unchanged, with the one-year rate at 3.1% and the five-year rate at 3.6%. Education shares advanced after government guidance promoting AI and stricter curriculum controls, with New Oriental Education & Technology rising 6%. Additionally, reports of re-lending facilities supporting A-share buybacks have boosted sentiment, benefiting privately-run firms.
  • Traders aggressively bought call options on Chinese stock-linked ETFs like FXI and KWEB on Friday, driven by optimism over a positive Trump-Xi call signaling potential easing in trade tensions. This activity pushed one-month implied volatility on FXI to its highest since mid-December, with bullish bets also driving significant gains in both ETFs.
  • Overall, the markets are balancing optimism with caution over potential trade tariffs under Trump's incoming administration.