Hong Kong Stocks Rally for Third Day, Reclaim 18,000 as Tech Leads, Turnover Tops HK$100B

Hong Kong stocks showed strong performance this week, with the Hang Seng Index rising for three consecutive sessions and reclaiming the 18,000-point mark. The tech sector was the main driver of this rebound, with heavyweight stocks such as Tencent and Alibaba rallying, boosting market turnover significantly to surpass HK$100 billion. Market sentiment has notably improved, and investors' risk appetite has picked up.

Hang Seng Reclaims 18,000; Tech Leads Gains

After a prior correction, the Hang Seng Index posted three consecutive gains this week, with a substantial cumulative advance, reclaiming the key psychological level of 18,000. Market data shows that after breaking above this level, buying momentum strengthened, with clear capital inflows in the late session. The tech sector outperformed, with the Hang Seng Tech Index leading the broader market, serving as the core engine for the index's rise.

Large-cap tech names like Tencent and Alibaba rallied, with Tencent hitting a recent high and Alibaba also posting significant gains. Analysts attribute the tech rebound to valuation repair after overselling and a wave of favorable industry policy signals. Additionally, second-tier tech stocks such as Meituan, JD.com, and Kuaishou also rose, reflecting a broad-based rally.

Turnover Tops HK$100 Billion; Liquidity Improves

Alongside the index's rise, market turnover expanded significantly, surpassing HK$100 billion, a notable increase from previous sessions. According to HKEX data, average daily turnover for the three sessions remained above HK$100 billion, indicating a substantial rise in market participation. Improved liquidity is a key factor behind this rebound.

In terms of fund flows, southbound capital continued to flow into Hong Kong stocks. Wind data shows that cumulative net buying by southbound funds this week was substantial, with tech stocks receiving significant additions. Analysts believe that mainland investors' demand for Hong Kong tech leaders remains strong, especially amid expectations of looser global liquidity, as Hong Kong's valuation discount attracts continued southbound allocation.

Sentiment Warms; Multiple Tailwinds Converge

This rebound is not driven by a single factor but by a confluence of tailwinds. First, expectations that the Fed's rate-hike cycle is nearing its end have grown, with U.S. Treasury yields falling, easing valuation pressure on global risk assets. Second, domestic economic data is showing marginal improvement, and pro-growth policies continue to support earnings expectations for Hong Kong stocks. Additionally, the RMB exchange rate has stabilized and strengthened, boosting foreign investors' confidence in RMB assets.

Technically, the Hang Seng Index found strong support around 18,000, with short-term moving averages in a bullish alignment and the MACD indicator showing a golden cross, suggesting continued short-term momentum. However, some market participants caution that after a rapid rise, the index may face profit-taking pressure, and heavy overhead supply above 18,000 means that whether it can hold will depend on volume confirmation.

Institutional Views: Sustainability Depends on Fundamentals

Several institutions hold a cautiously optimistic view on Hong Kong stocks. Some brokerage strategy teams believe that valuations remain at historically low levels, and with gradual earnings recovery, the market offers medium-to-long-term value. Others point out that this rebound is more sentiment- and liquidity-driven, and its sustainability depends on actual improvements in economic fundamentals and corporate earnings.

From a sector allocation perspective, tech, consumer, and healthcare are key focus areas. Among them, internet platform companies, through cost-cutting, efficiency gains, buybacks, and dividends, are expected to improve shareholder returns, making them favored by funds. Meanwhile, high-dividend sectors such as energy and telecom offer defensive value and can serve as core portfolio holdings.

Outlook: Watch Volume and Overseas Risks

Looking ahead, whether Hong Kong stocks can extend the rally hinges on several key variables: first, whether turnover can sustain above HK$100 billion; if volume shrinks, the rebound may be limited. Second, overseas market volatility, particularly Fed policy path and geopolitical risks. Third, confirmation from domestic economic data and corporate earnings.

Overall, driven by improved liquidity and valuation repair, Hong Kong stocks are likely to maintain a volatile upward trend in the short term. However, investors should remain rational, avoid chasing highs, and consider accumulating quality names with strong earnings visibility on dips. Market analysts suggest that if volume supports and fundamentals continue to validate, the Hang Seng Index could push higher, but the process may be bumpy.