Hong Kong stocks recorded significant gains on February 23, with the Hang Seng Index closing up 2.53%. The Hang Seng China Enterprises Index rose 2.65%, and the Hang Seng Tech Index advanced 3.34%. Most index constituents saw increases, with Zijin Mining Group, Meituan, and SMIC leading the gains, each climbing more than 5%. Tencent Holdings and Alibaba Group also rose over 3%, while only a few companies, such as China Mengniu Dairy and Midea Group, ended the day lower.
Over the three trading days of the Spring Festival holiday, Hong Kong stocks initially declined before rebounding, resulting in a cumulative gain of 1.94% for the Hang Seng Index. The Hang Seng China Enterprises Index increased by 1.82%, and the Hang Seng Tech Index edged up 0.47%. Influenced by the strength in Hong Kong shares, the AH Premium Index fell another 2.34% to close at 113.68 points, hitting its lowest level since July 2, 2018.
Notably, by the close on February 23, there were nine H-shares trading at a premium to their A-share counterparts. Among them, Contemporary Amperex Technology's H-shares were priced over 31% higher than its A-shares. China Merchants Bank, GigaDevice Semiconductor, and WuXi AppTec also saw H-share premiums exceeding 10%. Additionally, H-shares of Montage Technology, Hengrui Pharmaceuticals, Zijin Mining Group, Weichai Power, and Midea Group traded at higher valuations compared to their A-share listings.
Market observers suggest that the strong performance of Hong Kong stocks during the holiday period may positively influence the A-share market after the break. Several brokerage firms have expressed optimism regarding post-holiday A-share performance. CITIC Securities noted that, from a short-term perspective, A-shares are predominantly composed of manufacturing and financial sectors, which are less affected by the current AI-driven market fluctuations compared to U.S. and Hong Kong stocks. The firm emphasized that capital inflows and improving investor sentiment remain intact, supporting the continuation of a spring rally after the holiday.
China Galaxy Securities analyzed that following the Spring Festival, market conditions are likely to improve amid policy expectations, ample liquidity, and industry trends, though short-term sentiment may be influenced by overseas uncertainties. Around the time of the Two Sessions, A-shares are expected to be driven by policy catalysts, with capital rotating among policy-themed sectors and opportunities, leading to rapid shifts in market focus. By March, market logic is anticipated to transition from "policy expectations" to "earnings delivery," with the release of 2025 annual reports and subsequent 2026 first-quarter results serving as key benchmarks. Stocks with better-than-expected earnings may attract increased investor attention.
Industrial Securities highlighted that during the Spring Festival holiday, global assets generally rose amid adjustments in liquidity expectations, geopolitical developments, and tariff disputes. For A-shares, the pre-holiday correction in line with overseas markets has already priced in some risks. Post-holiday, A-shares are expected to enter a period of favorable conditions, supported by improved risk appetite due to overseas factors such as U.S. tariff rulings, along with domestic macroeconomic and industry-specific catalysts. The firm maintains a positive outlook on A-share performance after the holiday.
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