Hong Kong shares surge following encouraging discussions between Trump and Xi

Leading tech firms JD.com, Alibaba, and Baidu spearhead the winners, as investors express relief over potential easing of US-China tensions.

Shares in Hong Kong surged due to hopeful sentiments regarding US-China ties, after an encouraging conversation between Chinese President Xi Jinping and US President-elect Donald Trump.

On Monday, the Hang Seng Index ended the day with a 1.8 per cent increase, settling at 19,925.81, after experiencing a 2.6 per cent surge during the day. In mainland China, the CSI 300 Index experienced a 0.5 per cent growth, and the Shanghai Composite Index also saw a slight increase.

Technology shares experienced a significant rise, with the Hang Seng Tech Index increasing by 2.6 per cent. Standing at the forefront was the e-commerce titan JD.com, which saw a striking 7.3 per cent surge to HK$157.40. Concurrently, its counterpart Alibaba Group Holding climbed 4.7 per cent to HK$84.55, and the technology behemoth Baidu made a 2.7 per cent gain to HK$80.80.

Significant increases were also seen in the pharmaceutical firm, WuXi AppTec, which jumped 7.2 per cent to HK$55.65, whilst food delivery service, Meituan, rose 5.2 per cent to HK$155.50. Athletic company Anta Sports experienced a growth of 3.8 per cent to HK$81.05, and the electric car manufacturer BYD saw a rise of 4.3 per cent to HK$275.00.

During their Friday phone conversation, Xi and Trump discussed several key topics including the Ukraine crisis, the dispute between Israel and Palestine, and the US Supreme Court's ban on TikTok. Following Trump's intention to momentarily halt a countrywide prohibition on the short-video application, TikTok was operational again in the US by Sunday. This came after the app had been previously shut down to adhere to a federal law intended to compel it to cut off its connection with its Chinese parent company, ByteDance.

The Hong Kong judiciary has postponed the Country Garden insolvency plea hearing until May 26. Previously in this month, the developer had put forth its initial plan to reorganize up to US$11.6 billion in debts.

Judge Linda Chan postponed the case to May 26 following a plea from Ever Credit, a subsidiary of Kingboard Holdings, a Hong Kong-based company that manufactures laminates and chemicals.

During the court proceedings, Ever Credit appealed to the judge for an immediate order to liquidate, while a different creditor asked for a postponement of four weeks. The legal representative of Country Garden, Jose-Antonio Maurellet, informed the court that the company required an additional four months, but it should be capable of reaching an agreement on a term sheet with the creditors by the end of February.

Last week, Country Garden announced its anticipation to finalize a deal on a debt reshuffling strategy with foreign lenders within the first six months of 2025.

Earlier this month, the developer based in Foshan unveiled its inaugural plan to reorganize nearly US$11.6 billion in debt, offering several routes, such as transforming the debt into cash or agreeing to lengthened repayment terms.

The company, which was previously the biggest developer in mainland China based on sales, plunged into a financial crisis in August 2023 after failing to meet the repayment deadline for two bonds denominated in US dollars. This set off a wave of selling in the sector. The shares of Country Garden, listed in Hong Kong, have been on hold since April 2 due to a delay in the release of its full-year report for 2023 and the mid-year report for 2024.

Dayao, a Chinese company that produces soda, intends to go public in Hong Kong with the aim of raising as much as US$500 million. The firm, based in Inner Mongolia and known for its carbonated drinks, juices and protein beverages, is currently collaborating with consultants to determine the scale and schedule of the transaction.

Chinese soft drink manufacturer, Dayao, is preparing for an Initial Public Offering (IPO) in Hong Kong, possibly as soon as the latter half of this year, according to those with knowledge of the situation. This is a reflection of the city's growing resurgence in new stock market entries.

The firm, located in the autonomous region of Inner Mongolia in China, is collaborating with consultants in an attempt to secure up to US$500 million, according to sources who requested anonymity because they were not permitted to make public comments. Discussions are still in progress, and the details and schedule of the potential deal may vary, the sources indicated.

Dayao didn't reply to an inquiry for a statement.

Established in the 1980s, Dayao produces a variety of products including fizzy drinks, juices, and protein beverages. According to their website, they have seven key manufacturing facilities, some of which are in China. Dayao also ships its products to various markets such as Russia and Southeast Asia.

Business negotiators anticipate an improved year for Initial Public Offerings (IPOs) in Hong Kong, primarily due to the secondary listings of firms that are already trading shares in China.

In 2024, companies listed in Hong Kong, inclusive of firms listed in China, generated over US$11 billion, almost twice the amount raised in the previous year, as per figures gathered by Bloomberg. In the decade leading up to 2020, before the Covid-19 pandemic struck, the average IPO amounts were close to US$30 billion.

Steel producers in China are preparing for further reductions in production as demand decreases. The Chinese research company, Mysteel, predicts that production will drop to under 900 million tons by 2030, a significant decrease from over 1 billion tons in 2024.

China continues to overproduce steel, leading the sector towards further hardships as internal demand decreases and loss-making mills approach a critical juncture.

Production slightly dipped in 2024, but it still maintained over 1 billion tons for the fifth year in a row. More significant reductions will be required to match the flailing demand, which is due to the prolonged turbulence in China's real estate sector and the ongoing transformation of its economic structure.

Years of growth fueled by building projects and public investment have come to a halt, with emerging sectors in the industry falling short of taking over these roles. The government is now turning its attention towards more sustainable, advanced technology growth and consumerism, thereby reducing the significance of steel in the economic landscape.

"The situation is far from improved," stated John Chen, the regional commodities sales director of Standard Chartered in Singapore. "Nearly every steel mill is suffering significant losses."

Mysteel, a research company based in China, predicts that production will decline to under 900 million tons by 2030. Bloomberg Intelligence's base case forecast indicates that Chinese steel usage, which exceeded 1 billion tons in 2020, might drop to less than 800 million tons by 2030. The worst-case scenario could see a dramatic decrease to 525 million tons.

Such forecasts have sparked a push to merge businesses within the industry, a trend that could intensify this year as factories grapple with sustaining cash flow and profit margins. The industry has been in the red for the majority of the year, with its cumulative debt soaring to an unprecedented 5.1 trillion yuan (US$696 billion) by November, as per the data from the statistics bureau.

An unprecedented number of Chinese and international businesses, marking a 41% increase, have established their presence in Hong Kong, making significant investments, according to InvestHK. Last year saw a surge in companies initiating their operations in the city, leading to a record-breaking number of registrations for companies outside of Hong Kong.

InvestHK reports that Hong Kong saw a 41% increase in the number of overseas and mainland companies setting up there last year, bringing in a record-breaking investment of HK$67.7 billion (US$8.7 billion). This surge can be attributed to various incentives aimed at rejuvenating the economy.

The investment promotion agency reported on Monday that a total of 539 domestic and international companies have established their operations in the city, a rise from 382 in 2023. Over half of these new companies originated from mainland China, with others hailing from the US, France, the UK, and Singapore.

"This showcases the tenacity and versatility of Hong Kong, and the robust trust businesses have in the city as their favored hub for regional expansion," stated Alpha Lau Hai-suen, the director general. She further mentioned that these companies are anticipated to generate 6,864 new employment opportunities.

The agency reported that in 2024, the overall investment surged by 10 per cent, reaching an all-time high of HK$67.7 billion.

Hong Kong has introduced a range of measures aimed at attracting overseas investors to help jump-start the economy following its downturn due to the pandemic. These measures include tax breaks and an improved residency-by-investment program to appeal to worldwide family businesses. The government has assigned InvestHK with the responsibility of attracting 1,130 companies between the years 2023 to 2025.

Tech conflict: Nvidia's CEO Huang expresses gratitude to Chinese employees for their commitment amidst intensifying US semiconductor restrictions

The US business leader praised Nvidia's role in China's modernization during a visit to Beijing.

Nvidia, headquartered in Santa Clara, California, didn't reveal the specifics of Huang's travel plans. However, video footage and local news coverage depicted the American businessperson, originally from Taiwan, interacting with clients and staff in Shenzhen and Beijing.

During a yearly celebration at Nvidia's Beijing headquarters on Sunday, Huang highlighted the company's significant role in advancing China's technological progress.

Huang reported that approximately 1.5 million developers in China have been utilizing CUDA, a proprietary platform from Nvidia designed for creating applications that operate on graphics processing units. Moreover, he mentioned that the company has been collaborating with over 3,000 start-ups to aid in the formation of the technology sector in China.

"For the past twenty years, we've played a significant role in the advancement of one of the world's most prominent markets and nations. We take immense pride in being a part of this ecosystem," stated Huang.

He also boasted about the minimal staff turnover in the local team.

Ahead of Trump's swearing-in, Chinese authorities have shown their backing for capital markets. Some observers interpret this action as an attempt to strengthen investor trust during periods of instability.

Recently, China's central bank and securities regulator convened a meeting to discuss a relending program aimed at stock buybacks and shareholder increases. This initiative is intended as a strategic measure to bring stability to the capital markets, as per the announcement made by the regulators on Sunday evening.

The scheme, designed to allow Chinese companies and primary stakeholders to request low-interest loans to finance share repurchases and equity hikes, kicked off in mid-October. Since its inception, over 300 public companies have revealed their intentions to utilize this facility, as per the report. They have collectively borrowed in excess of 57 billion yuan (US$7.8 billion), which is roughly 20% of the initial quota of 300 billion yuan. This quota may be raised later, as per the state-run media agency Securities Daily, which cites data gathered from Wind.

The beneficial impacts of the policy instrument are progressively surfacing, playing a crucial part in upholding the steady function of the capital market and enhancing market assurance, as per the statement.

Shares in China experienced a significant rise after the government of Beijing implemented several strategies to stimulate the slow-moving economy in the latter part of September. The CSI 300 Index saw an increase of 21 per cent in September, marking the highest monthly growth in almost ten years. However, the upward trend began to slow down in October as following policies failed to meet the expectations of investors. Moreover, Trump's victory in the US presidential election – with his threats of imposing 60 per cent tariffs on goods imported from China – added to this slowdown.

In the midst of increased US trade regulations, China has set up a $8.2 billion AI investment fund. This move comes just a few days after the US introduced fresh limitations on chip exports and added more Chinese companies to its trading embargo list.

The newly established AI fund's business range encompasses typical equity investment and asset management, as per the registry service. However, no further details were provided.

The establishment mirrors Beijing's resolve to enhance the country's AI competencies, despite the increased technology limitations set by Washington.

One hour and thirty

The US government has instructed an AI chip manufacturer to cease exports to China.

Hong Kong is set to become part of the LME warehouse network to cater to China's demand for metals. This significant development strengthens Hong Kong's position as a key link to China, the largest global consumer of metals.

The London Metal Exchange (LME) has included Hong Kong in its list of worldwide warehouse locations this Monday. This decision was made in response to the rising need for actual metal trading between mainland China and the rest of the world. Consequently, this move strengthens Hong Kong's position as an intermediary.

The inclusion of Hong Kong into our international warehousing system is a thrilling progression, offering storage amenities nearer to the metal centers of mainland China than previously possible," stated Matthew Chamberlain, the Chief Executive Officer of LME.

According to an official announcement, Hong Kong will house London Metal Exchange-registered aluminium alloy, primary aluminium, copper, lead, nickel, tin, and zinc. The city will transition into an operational hub three months following the endorsement of the initial warehouse company.

The action signifies a significant accomplishment that draws China – the globe's largest metals consumer – nearer to the most dynamic international metals trading community. This enhances the connection between China's physical metals markets and global pricing on LME, according to Bonnie Chan Yiting, the CEO of the stock exchange operator Hong Kong Exchanges and Clearing (HKEX).

The London Metal Exchange (LME) oversees over 465 storage facilities in 32 different global locations, although it doesn't own or manage these warehouses. Instead, it accredits warehouse companies and their facilities to store LME-certified brands of metal for certificate holders. The LME has shown interest in China as a potential location for storage since 2012, around the time when the Hong Kong Exchanges and Clearing (HKEX) purchased the LME for a sum of $2.2 billion.

"Mainland China is globally recognized as the biggest user of metals. Thanks to its excellent business framework, Hong Kong serves as a crucial link to the Chinese market, which plays a vital role for those involved in market activities and the broader metals sector," stated Chamberlain.

Analysts claim that TikTok's closure is a smart strategy to gain favor before Trump's swearing-in. They believe TikTok's dramatic transformation is designed to charm Trump as the company attempts to enhance its public image and market worth.

TikTok, Lemon8, CapCut, among other platforms, experienced a temporary shutdown for several hours on Sunday due to a new law necessitating US companies to stop hosting ByteDance services unless the Beijing-based company divests specific apps. President-elect Donald Trump vowed to provide some relief once he resumes the presidency at midday on Monday.

"Alex Capri, a lecturer at the National University of Singapore’s Business School and author of Techno-Nationalism: How it’s Reshaping Trade, Geopolitics and Society, indicated that TikTok US had foreseen the public uproar when the service went offline. They were aware that Trump would take advantage of this situation to position himself as the ultimate problem-solver and negotiator," he said. Capri also suggested that this was a smart anticipatory action taken before Trump's inauguration.

"Market and valuation are of utmost importance to TikTok. The incident could be a chance to enhance its image and broaden its market reach," stated Zhao Zhijiang, a scholar from the Beijing-based research institution Anbound. "The Chinese population who aren't TikTok users will respect the app and its parent company ByteDance."

Alejandro Reyes, a resident scholar at the Hong Kong Centre of the Asia Society, dubbed the move as highly dramatic and theatrical—something that appeals to the performative nature of Trump. Thus, he's now committed to proving that he can successfully broker a deal.

"One could speculate that Trump might consider this a delightful, headline-catching move during his inauguration, as though he requires more of the spotlight than he's already been receiving this week," he further commented.

What do AI and feng shui experts predict for Hong Kong's stock market in the Year of the Snake?

An examination of forecasts for the Hang Seng Index, digital currencies, and the real estate market.

An artificial intelligence program focused on feng shui, created by Poe, a chatbot compiler from the Q&A platform Quora, offers a different perspective. It predicts that the Hang Seng Index, associated with the rooster in the zodiac, will experience a rise in fortunes during the initial four months of the Snake Year. However, May is expected to bring an intense fire, causing individuals to make irrational choices, but this will be followed by a resurgence in luck and a more stable path for the rest of the year.

"The snake stands for versatility and resilience," stated Forest Chan, who is this year's "staff-holder" for CLSA's Feng Shui Index and also serves as an equities analyst at the company. "We predict a more stable journey with fewer unexpected events for the Hang Seng Index," he further mentioned, contrasting it to the tumultuous Year of the Dragon.

The Snake Year commences on January 29 and concludes on February 16 of the following year, as per the Chinese zodiac calendar. The Feng Shui Index isn't a research document, as stated by CLSA, and investors should base their decisions on fundamental analysis.

Greater Bay Area collaboration assists AI-powered pharmaceutical research, asserts Hong Kong public company

XtalPi claims AI has halved the timeline for drug discovery from four to two years

XtalPi claims AI has halved the timeline for drug discovery from four to two years

"Numerous promising prospects exist in specialized sectors for artificial general intelligence," Zhang mentioned to the Post during its China Conference: Greater Bay Area 2025 in Guangzhou. "We've noticed immense possibilities to utilize LLMs within specific fields such as the pharmaceutical industry."

Zhang predicts that the combination of robotics and AI could shorten the drug discovery process from four years to just one or two.

XtalPi was established in 2014 by three quantum physicists from the Massachusetts Institute of Technology. A year later, they set up their research and development hub in Shenzhen. The company, situated in the Hong Kong-Shenzhen Cooperation Zone, which borders the two cities, has leveraged local industrial strategies to become a significant AI contributor in the field of drug development. It now caters to almost 80% of major global pharmaceutical companies.

Zhang stated that the company's growth has been propelled by regional collaborations in the bay area plan, especially in areas such as talent recruitment, supply chain alliances, and capital raising across various cities.