Hang Seng Index Advanced to Multi-Year Highs Amid Trade-Talk Hopes

Li Chen
28 Jul, 2025
Hong Kong

Stocks in China and Hong Kong diverged as investors reviewed and prepared for a busy week of earnings and rate decisions.

The Hang Seng index edged up 0.4%, and the mainland-focused CSI 300 index declined 0.2% amid rising hopes that a U.S.-China trade deal could avert excessive tariffs. 

Trade negotiators are scheduled to meet in Sweden later today amid a weak outlook for an agreement ahead of the U.S.-imposed August 12 deadline. 

Investors are hoping that the U.S. will extend the deadline for an agreement by another 90 days, as both sides struggle to agree on tariff rates, exclusion lists, and timetables. 

For now, the current average tariff rate on the U.S. goods is just above 50%, sharply higher than 25% in 2024, and significantly above 10% only a decade ago. 

Despite the rise in U.S. tariffs, China's exports continue to climb at a steady pace, as U.S. consumers rely on Chinese consumer and electrical goods, apparel and accessories, toys, and solar panels. 

The U.S. and the European Union agreed on a trade framework deal that will limit the U.S. import tax to 15%, according to the Trump administration. 

The announcement lacked a specific timetable and critical details but reflected a tone similar to a broad agreement between the U.S. and Japan.

The trade agreement increases U.S. import tariffs to 15% from the current average of less than 3%, but it is lower than the threatened 25% tariffs by the U.S. president. 

Trump's tariffs are expected to increase U.S. inflation and alter supply chains but not achieve the reshoring of manufacturing to the U.S. and increase foreign direct investments. 

Meanwhile, tariff-related uncertainty and higher goods prices are likely to force the Federal Reserve to keep higher rates for longer. 

The Federal Reserve is set to announce its rate decisions this week, and investors are anticipating the central bank to hold rates steady. 

The Bank of Japan is expected to leave its benchmark rates steady but signal higher rates amid rising inflationary pressures in the economy.

 

China Indexes and Stocks 

The Hang Seng index increased 0.4% to 25,480.53, and the mainland-focused CI 300 index decreased 0.2% to 4,119.24. 

Insurance companies advanced after Morgan Stanley issued positive comments on AIA Group. 

AIA Group rose 4.4% to HK $73.70, Ping An Insurance advanced 2.4% to HK ¥51.30, and China Life Insurance edged up 3.5% to HK $23.55.