China Stocks Face High Valuation and Trade Uncertainty Worries

Li Chen
25 Jul, 2025
Hong Kong

China's benchmark indexes turned lower on Friday and extended weekly losses as investors awaited the start of the earnings season. 

The Hang Seng index declined 1%, and the mainland-focused CSI 300 index fell 0.6%, and China-U.S. trade negotiators are scheduled to start the next round of talks this weekend. 

The sharp increase in stock market valuation has left investors uncertain about the future trajectory of the market. 

Stocks in Hong Kong and China are trading at three-year highs, and stock market indexes have rebounded over the last three months.

Further upward movement in the broader market needs positive developments from China-U.S. trade negotiations, and investors are anticipating the two nations to extend the Aug 1 deadline by 90 days. 

In overseas trading, the European Central Bank held its key lending rates unrevised, marking the end of the current rate easing cycle.

Over the last twelve months, the central bank lowered rates eight times, and policymakers decided to take a wait-and-see approach amid the ongoing EU-U.S. trade negotiations.

 

China Indexes and Stocks 

The Hang Seng index decreased 1.1% to 25,383.07, and the mainland-focused CSI 300 index dropped 0.6% to 4,126.35. 

For the week, the Hang Seng index advanced 1.5% and the CSI 300 index added 1.4%. 

Internet-linked stocks led decliners amid valuation worries and ahead of quarterly results. 

Alibaba Group Holding Ltd. fell 2% to HK $117.70, Meituan fell 2.5% to HK $131.0, and Tencent Holdings Ltd dropped 1.5% to HK $548.0. 

Sands China Ltd. decreased 0.4% to HK $18.58 after the U.S. parent company reported second-quarter results. 

Sands China's total net revenue increased 2.5% to $1.79 billion, and net income eased to $214 million from $246 million from a year ago. 

Nanjing Leads Biolabs traded at HK $69.60 after the company listed its share on the Hong Kong Stock Exchange. 

The biotech company priced its stock at HK$35.0 per share, towards the upper end of its filing range between HK $31.50 and HK $35.0.

The company raised gross proceeds of HK $1.29 billion and sold 36.86 million shares.