Stocks in Hong Kong surge due to Trump's positive outlook on China and a surge on Wall Street

The Hang Seng Index concludes positively for a consecutive week, with Sunny Optical, Xiaomi and Trip.com taking the lead.

The Hang Seng Index saw a 1.9 per cent rise to 20,066.19 this past Friday, marking a second consecutive week of growth with a 1.3 per cent increase over the five-day span. The Hang Seng Tech Index also experienced a significant surge of 3.2 per cent. In mainland China, the CSI 300 Index grew by 0.8 per cent, and the Shanghai Composite Index also saw a slight uptick of 0.7 per cent.

Sunny Optical, a supplier for Apple, was at the forefront with an increase of 8 per cent, reaching HK$73.00. Smartphone manufacturer, Xiaomi, saw a leap of 6.8 per cent to HK$36.85, while travel service provider, Trip.com, moved up 5.3 per cent to HK$541.00.

"Ever since Donald Trump took office, his remarks have caused a fluctuating trend in the Hong Kong market," stated Louis Wong, the managing director at Phillip Capital Management.

Wong stated that Trump's remarks about wanting the Federal Reserve to lower interest rates could benefit Hong Kong's stock market. However, his statements about imposing tariffs on China might cause instability.

The prediction from American semiconductor manufacturer, Texas Instruments, indicates that the semiconductor industry's downturn is continuing. The firm has experienced a consistent decrease in sales over the last nine consecutive quarters, reflecting the ongoing sluggishness prevalent across the electronics sector.

The company announced on Thursday that earnings for the first quarter are expected to be between 94 cents and $1.16 per share. The average predicted by analysts was $1.17 per share, making the company's midpoint estimate of $1.05 per share considerably lower. Revenue is anticipated to fall between $3.74 billion and $4.06 billion, a range that includes the projected estimate of $3.86 billion.

A significant portion of the electronics sector continues to struggle, leading to a continuous decrease in sales for the company over nine consecutive quarters. Texas Instruments leaders also indicated that manufacturing costs have impacted the company's profits.

The company, which is based in Dallas, generates a significant amount of its revenue from industrial equipment and vehicle manufacturers. This makes its forecasts a reliable indicator for the overall global economy.

A quarter of a year earlier, executives from Texas Instruments indicated that certain sectors of the company's market were displaying signs of recovering from an excess supply issue. However, this recovery has not occurred as swiftly as some investors had hoped.

The firm's stocks declined roughly 3 per cent following the announcement in post-market trading. Prior to the close of usual trading hours, the stock had seen an increase of approximately 7 per cent this year.

Tianqi Lithium forewarns a loss of US$1 billion due to a decrease in price and cessation of growth in Australia. The company's reduced earnings at its Chilean branch, foreign exchange losses, and asset depreciations were significant factors in the unfavorable outcomes in 2024.

The business, headquartered in Chengdu, Sichuan province, informed the Hong Kong stock exchange via a document on Friday that it anticipates a net deficit of between 7.1 billion yuan (US$978.3 billion) and 8.2 billion yuan for the previous year. This is a significant change from 2023, when the company reported a profit of 7.29 billion yuan.

Shares of Tianqi experienced a drop of up to 3.5 per cent, but they managed to recover and actually ended with a gain of 1.3 per cent, closing at HK$23.20. Meanwhile, the Hang Seng Index saw an increase of 1.9 per cent.

"Despite the company's lithium compounds witnessing an increase in production and sales, the overall price faced a substantial decline due to market fluctuations," stated Tianqi.

Tianqi stated that a significant decrease in earnings from its foreign subsidiary, Sociedad Quimica y Minera de Chile, adverse currency exchange losses due to the robustness of the US dollar, and substantial asset devaluations primarily due to the cessation of a project's growth in Australia, all played a role in the yearly loss.

Shanghai releases additional spending coupons following unexpected drop in retail purchases

In 2024, the significant economic center in China experienced a downturn in retail sales, marking only the second occurrence in four decades.

Shanghai has declared its intention to release a new set of consumer coupons, in an effort to counteract a decline in consumer expenditure in the major Chinese city.

On Thursday, the metropolis housing 25 million residents revealed a 3.1 per cent drop in retail sales for 2024. This is only the second instance of a decrease in consumer spending in over four decades.

Shanghai's retail sales experienced a decrease, falling to 1.79 trillion yuan (equivalent to US$246 billion) in the previous year. This significant drop was largely caused by a steep decline in the sales of common household items and food services, as per the data disclosed by the Shanghai Statistics Bureau.

Shanghai has only seen a yearly drop in retail sales once before since 1978, and that was in 2022. This decrease, a significant 9.1 per cent, happened due to the city experiencing a two-month lockdown because of Covid, as per information from Wind.

The findings indicate a persistent absence of trust among consumers during a time of economic instability in China, as families concentrate on reducing their spending and increasing their savings.

The rate of household savings in China soared to 55% in the previous year, marking an 11.2 percentage point rise from 2023 and the highest rate seen since 1952, according to a Monday report from Chinese news source, Caixin.

Hang Lung Properties' earnings have plummeted by 46% due to reduced profits from leasing and increased financial expenses. The corporation acknowledges facing challenges in both China and Hong Kong.

The firm's net earnings credited to shareholders dropped to HK$2.1 billion (US$269.7 million), down from HK$3.97 billion the previous year. The decrease includes a net loss in value on certain properties, as reported in a statement released to the Hong Kong stock exchange on Friday.

Total income from rentals declined by 6 per cent, amounting to HK$9.52 billion. The rent income from properties in the mainland saw a 4 per cent decrease, while in Hong Kong, it fell by 9 per cent.

The company stated that on the mainland, consumer trust has suffered due to mediocre economic circumstances, political conflicts, and a faltering worldwide economy.

"The company stated that although the latest economic stimulus actions initiated by China's central government aim to enhance the financial forecast, it's unclear how much they will uplift the entire economy."

Income from rent and sales from its mainland shopping center collection saw a decrease of 3 per cent and 14 per cent, respectively.

The value of occupied residential properties in Hong Kong has decreased for the third consecutive year, marking the most significant downturn since 2003. The cost of previously owned homes experienced a decrease in December, ending a short-lived recovery of two months. Over the past three years, these prices have fallen by 27 per cent.

Residential property prices in Hong Kong dropped in December, marking a continuous three-year decline, amid uncertainties over global politics and inflation that make further interest-rate reductions by worldwide central banks unlikely.

The value in the secondary market saw a decrease of 0.65% in the previous month, a reversal from the increases observed in October and November, as per the information released by the Rating and Valuation Department. The yearly reduction in prices was 7.13%, continuing the downward trend with a 15% fall in 2023 and a 7% shrinkage in 2022.

The aggregate decrease of 27% over the previous three years marks the second most prolonged downturn since the initiation of official monthly records in 1993. The most severe crash in Hong Kong's housing market history occurred from 1997 to 2003, amid the Asian financial turbulence and the dot-com bubble burst, plummeting by 58%.

Derek Chan, the research head at Ricacorp Properties, stated that Donald Trump's victory in the November presidential elections created uncertainty around interest rate predictions. This led to a calming effect on the market and consequently compelled owners of used properties to reduce their prices.

Trump resumed his duties at the White House on January 20, sparking fears that his strategies might fuel inflation and disrupt international commerce. Although the Federal Reserve initiated its cycle of reducing rates in September, economists are now more wary about the extent and pace of these reductions for this year.

One hour and fifty

Trump announces contemplation of a 10% duty on Chinese imports, beginning February 1.

"Trump's decisions can affect the future of interest rates," stated Raymond Cheng, the managing director at CGS International Securities, located in Hong Kong. In addition, he remarked that China's economic forecasts and the performance of its stock market are significant factors influencing the real estate market mood.

ByteDance board member William Ford is hopeful that TikTok can find alternatives to selling in the U.S., according to a report. Ford states that looking into options other than selling is crucial in the company's negotiations with the Trump administration.

TikTok is exploring different options rather than selling its US operations, as ByteDance, its parent company, persists in its efforts to retain its 170 million American users following a respite from the Trump administration, according to a statement by a ByteDance board member cited by Chinese publication Caixin.

William Ford, a board member of ByteDance, expressed confidence in the company's ability to resolve the US government's national security worries without needing to sell off TikTok's US operations, as per a Caixin report on Thursday. Ford shared these views while attending the 2025 World Economic Forum in Davos, Switzerland.

This marks the inaugural occasion where a ByteDance board member has openly discussed the future of TikTok since the commencement of Trump's second term in office.

The chairman of General Atlantic, a ByteDance stakeholder, Ford, has reportedly stated that investigating alternatives to sale is crucial in the firm's discussions with the Trump administration. However, interaction with the Biden administration has been limited.

In a different conversation with Bloomberg TV, Ford suggested that potential solutions might involve "some sort of shift in local control" to adhere to US laws.

Ford conveyed strong optimism for conversations between US President Donald Trump and Chinese President Xi Jinping. He suggested to Bloomberg TV that such discussions could promote a more cooperative atmosphere and a heightened sense of involvement, potentially resulting in a favorable resolution.

Land sales in Hong Kong are projected to bring in approximately US$76 million, despite developers' reservations. The sole residential site available in the New Territories during the last quarter has drawn interest from six developers.

Six property developers from Hong Kong are competing for the sole residential land parcel offered by the government in the previous quarter. However, surveyors anticipate that the bids will be conservative due to economic instability and elevated interest rates.

Among those who placed bids were CK Asset Holdings, Sun Hung Kai Properties, Sino Land, K&K Property Holdings, and China Overseas Land & Investment.

The bidding process for the 3,580-square-meter property located on Mei Tin Road in Tai Wai, Sha Tin, concluded on Friday at midday. The property, capable of accommodating 360 apartments, is roughly a 15-minute walk from the Tai Wai MTR station and is also accessible via a mini-bus route, according to property assessors.

"Anticipations are that the property could fetch a price ranging from US$76 million to HK$620 million, which corresponds to a housing value of HK$3,050 to HK$3,200 per square foot," stated Alex Leung, CHFT Advisory and Appraisal's senior director. He further indicated that the projected apartment price might be approximately HK$16,500 per square foot.

The project's moderate size leads to a relatively low investment sum and risk, stated Alvin Lam, a board member at Midland Surveyors. He added that due to the successful sale of two residential properties in Sha Tin by tender in 2024, the location will likely attract attention as future new supply in the area is anticipated to be limited.

ByteDance from China is competing with American counterparts in advancing artificial general intelligence. The ambitious investment approach of this Chinese tech giant is embodied in its Seed Edge program, while other significant tech companies are also expanding their AI plans.

"Seed Edge promotes the investigation of ambitious, unpredictable, and audacious AI research areas," stated ByteDance on Thursday. "We aim to offer a flexible research environment to address groundbreaking AI research subjects."

The initiation of ByteDance's AGI initiative has reportedly been personally endorsed by the company's founder Zhang. Since retiring from all his business positions, Zhang has been largely out of the public eye, as stated by a report from the Chinese news platform, LatePost.

The downturn in China's real estate market has yet to reach its conclusion, with housing sales and rental rates still feeling the strain, according to Fitch. Fitch predicts a 10% drop in total floor space, coupled with a 5% decrease in the average selling price by 2025.

The decline in China's real estate sector is expected to continue this year due to sluggish home sales and construction operations. Fitch Ratings attributes this to "structural issues" such as excessive supply and decreased affordability.

The rating agency announced on Wednesday that the worth of new home sales is anticipated to decline by 15 per cent, amounting to approximately 7.3 trillion yuan (US$1 trillion). This decrease mirrors a 5 per cent reduction in the average sales price and a 10 per cent decrease in total floor area.

The discrepancy between rental income and mortgage rates in prominent mainland cities implies a potential decrease in property values. In an attempt to revive the housing and stock markets, Beijing initiated a financial boost in September. This was aimed at regaining trust from property investors, however, the initial excitement seems to be diminishing.

"Government policies that are favorable have managed to steady the market outlook for the near future," stated Tyran Kam, the senior director and chief of China property. "However, the continuity of this progress is incredibly unpredictable due to large stockpile quantities, unstable job conditions, and the low affordability of homes."

The property market in China is experiencing its fourth consecutive year of struggle. Prior to the introduction of the "three red lines" policy in August 2020 and the impact of the Covid-19 pandemic, the real estate industry accounted for approximately 25% of China's total economic output.

China's multifunctional application, WeChat, has strengthened its online retail reputation through a feature that enables gift-giving. According to domestic news, this function was responsible for over 80% of recent sales generated by the live-streaming online retail company, East Buy, on WeChat.

This function allows customers to look for items on WeChat using specific words. Once the payment is finalized by the person sending the gift, the individual receiving it has to approve the gift and provide a shipping address within a day. If not, the order gets voided and the funds are refunded to the person who made the payment. Each order on WeChat only allows for one gift to be sent to a single friend.

WeChat's official rules state that the maximum price for products offered through this feature is 10,000 yuan, and it does not include items such as jewellery and tutoring services.

China directs pension and insurance funds to the country's A shares to stabilize the stock market

From this year onwards, regulator Wu Qing stated that 30% of the yearly insurance premium from new policies would be invested in A shares, which are valued in yuan.

Financial authorities in China are directing funds from pensions, insurances, and mutual funds into the country's stocks to secure and balance the biggest capital market in Asia. This move has resulted in the largest single-day increase in a key stock index in over a week.

From this year onwards, 30% of the yearly insurance premium from new plans will be allocated to A shares denominated in yuan, according to Wu Qing, the head of the China Securities Regulatory Commission, who made the announcement at a press briefing in Beijing. He also stated that mutual funds would be encouraged to increase their investments, with the allocation percentage growing by 10% annually for the next three years.

Xiao Yuanqi, the Vice-Chairman of the National Financial Regulatory Administration, has announced that a pilot program will reserve a minimum of 100 billion yuan (equivalent to US$13.8 billion) for the stock market within the first half of the year. He further added that half of this amount would be sanctioned prior to the start of the Lunar New Year, which begins on January 29.

The Finance Ministry is currently revamping the investment management process for retirement funds, with the goal of improving investment proportions and increasing flexibility, as per the Deputy Finance Minister Liao Min's statement.

The guidelines have the potential to provide a crucial boost to the capital market, which has been suffering from a sluggish economy, an extended downturn in the property sector, and weak corporate profits. The CSI 300 Index has seen a decline of roughly 30 per cent from its 2021 high point, while global funds' investment in Chinese stocks is at a five-year low, as per Goldman Sachs.

"Wang Qi, the chief investment officer of UOB Kay Hian, believes that the government is making a wise decision by attempting to bring long-term capital into the market. He thinks this could restore trust and stimulate additional capital influx by fostering a profitable environment."