China and Hong Kong Stocks Advanced Amid Prospects of Easing Trade Tensions with the U.S.

Li Chen
20 Jan, 2025
Hong Kong

Stock market indexes in China and Hong Kong advanced in Monday's trading amid optimism that the two largest economies in the world could avoid trade confrontation in the weeks and months ahead. 

The Hang Seng index jumped 18%, and the mainland-focused CSI 300 index gained 0.5% following a call between the U.S. President-elect Donald Trump and China's leader Xi Jinping. 

Both leaders expressed optimism about future trade relationships and military rivalry in the Indo-Pacific and Asia, and China's Vice President Han Zheng is scheduled to attend the inauguration of the next U.S. presidential administration. 

Tech stocks advanced in Hong Kong amid expectations that the incoming U.S. presidential administration may find a solution for access to TikTok. 

Despite the market enthusiasm, caution prevailed in mainland China trading amid a lack of clarity of implementation of fiscal stimulus measures and persistent weakness in consumer demand growth. 

Moreover, China's growth in 2025 is expected to decelerate to closer to 4%, putting additional pressure on corporate earnings growth. 

The People's Bank of China held its loan prime rate steady for the third month in a row, as the central bank struggled to arrest the weakening of the yuan.

The one-year loan prime rate, the reference rate for corporate and residential loans, was held steady at 3.1%, and the five-year loan prime rate, the reference rate for mortgage loans, was left unrevised at 3.6%. 

 

China Stock Movers 

The Hang Seng index increased 1.8% to 19,931.77, and the mainland-focused CSI 300 index advanced 0.5% to 3,829.68. 

Alibaba Group Holding rose 4.8% to HK $84.60, JD.com Inc. advanced 7.2% to HK $157.40, and Baidu.com increased 2.7% to HK $80.80. 

Li Auto advanced 3% to HK $89.35, BYD advanced 4.3% to HK $275.0, and Xpeng Inc increased 4.5% to HK $56.35.