The Hang Seng Index in Hong Kong continues its recent rally, rising 4% and approaching historic highs around 8,400-8,450. The Chinese stock market is not only reacting positively to any easing of the U.S. president’s protectionist policies, but also benefiting from gains in the technology, industrial, and retail sectors.
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Open account Try demo Download mobile app Download mobile appThe Hang Seng China Enterprises Index (HSCEI), represented by the CNH.cash contract, has surged nearly 23% over the past month. Source: xStation5
Are Tariffs Less of a Threat?
China’s economic future seemed uncertain when Donald Trump campaigned on 60% tariffs for all imports from China. The HSCEI spent a few months 2024 in decline, fearing Trump's return to the White House. However, reports of amiable diplomatic relations between U.S. and Chinese leaders and a lack of concrete tariff announcements helped improve market sentiment in Hong Kong.
The new tariffs on China officially took effect on Monday, February 4, but the initial 60% threat was reduced to just 10%. Given Trump’s history of extreme trade policies, any concession is seen as a pro-market signal, reflected again in today’s HSCEI rally, as investors believe further tariff increases will be delayed until at least April.
Beyond AI: New Hope For Luxury
China’s market optimism is also supported by Hermès' strong earnings (RMS.FR: +2.4%), which help restore faith in the luxury sector after LVMH’s disappointing performance. The French fashion giant reported a 17.6% year-on-year increase in revenue, surpassing analysts' expectations by nearly €300 million. The best-performing segments were leather goods and saddlery, accounting for nearly half of Q4 2024 revenues.
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