China Monetary Stimulus Hopes Keep 5-Week Rally Alive

Li Chen
21 May, 2025
Hong Kong

Stock market indexes in China and Hong Kong advanced amid growing confidence about China's economy's ability to withstand the unilateral surge in U.S. tariffs.

The Hang Seng Index advanced 0.5%, and the mainland-focused CSI 300 index gained 0.7%; both indexes extended their gains after the People's Bank of China lowered rates for the first time in seven months. 

The People's Bank of China is likely to carry out at least one more rate cut of 15 basis points and trim the reserve requirement ratio by 50 basis points. 

Market participants are holding out for additional monetary stimulus measures to support consumer spending and the residential property market over the next six months.  

So far, foreign investors have been net purchasers of Hong Kong stocks, supporting the market surge over the last five weeks. 

April's mixed economic data also raised hopes that policymakers are willing to roll out additional measures if consumer demand remains weak in the months ahead. 

China's retail sales and fixed-asset investment rose at a slower than expected pace, but exports and industrial production surpassed market expectations in April. 

 

China Indexes and Stocks 

The Hang Seng index added 0.5% to 23,800.38, and the mainland-focused CSI 300 index gained 0.7% to 3,924.65. 

Trip.com Group declined 1.2% to HK $499.40, despite the online travel platform operator reporting a 16% rise in annual revenue. 

Net revenue jumped to 13.83 billion yuan from 11.90 billion yuan, net income decreased to 4.28 billion yuan from 4.31 billion yuan, and diluted earnings per share eased to 6.09 yuan from 6.38 yuan a year ago.

Accommodation reservation revenue increased 23%, transportation ticketing sales edged up 8%, packaged-tour sales climbed 7%, and corporate travel revenue jumped 12% from a year ago, respectively.

Electric vehicle makers led the broader market amid hopes of sustained domestic demand. 

Li Auto added 3.4% to $114.80, BYD added 2.7% to HK $457.20, and Xpeng decreased 0.1% to HK $77.45.