Hang Seng Index News: Tariffs, Stimulus Silence, and Weak PMIs Sink Stocks – Weekly Recap

Hang Seng Index Snaps Winning Streak as US Tariffs Stay

The Hang Seng Index snapped its three-week winning streak as a third round of high-level US-China trade talks ended without a deal.

A 90-day extension to the trade war truce left existing tariffs in effect, potentially impacting the economy. Beijing’s stimulus pledges failed to ease investor concerns about the demand outlook. Economic data from China signaled a cooling economy, adding to the market angst. Meanwhile, US inflation data sank bets on a September Fed rate cut, pressuring rate-sensitive stocks.

Mainland China markets ended their five-week winning streaks as manufacturing sector PMIs raised doubts on Beijing achieving its 5% GDP growth target. The Politburo meeting failed to yield fresh stimulus despite the weakening economy.

Hong Kong and Mainland Markets

The Hang Seng Index slid 3.47% in the week ending August 1, reversing the previous week’s 2.27% gain, closing at 24,508. Mainland China’s CSI 300 and Shanghai Composite Index posted weekly losses of 1.75 % and 0.94%, respectively.

US equities also ended the week in negative territory as investors reacted to corporate earnings, US economic data, and President Trump’s tariff hikes. The Nasdaq Composite Index and the S&P 500 fell 2.17% and 2.36%, respectively, while the Dow slid 2.92%.

Hong Kong Real Estate and Tech Stocks Tumble

Real estate came under heavy selling pressure as investors reacted to the Politburo’s silence on fresh stimulus, and property sales data. US inflation indicators lowered Fed rate cut bets on July 31, adding further selling pressure on real estate stocks.

The Hang Seng Mainland Properties Index plunged 5.87% in the week. Longfor Group (0960) and Shimao Group (0813) tumbled 8.48% and 10.34%, respectively, contributing to the losses.

Economist Hao Hong remarked on Mainland China’s property sales trends, stating:

“July, China property sales decline accelerated. Top 50 developers reporting 1/4 to 1/2 sales plunge. The speed of deterioration is staggering.”

Hao Hong also remarked on the Politburo’s silence on the property market, stating:

“For the first time ever, the statement from the Politburo Meeting did NOT mention ‘property’—at all.”

Electric vehicle (EV) and tech stocks also posted heavy losses. Tech heavyweights Baidu (9888) and JD.com (9618) dropped 3.5% and 5.98%, respectively. In the EV sector, BYD (1211) and Li Auto (2015) slumped 10.34% and 14.03%, respectively.

Manufacturing PMI data revealed a weakening demand environment, weighing on auto stocks as US tariffs remain in effect.

China Manufacturing PMIs Flash Red

China’s NBS Manufacturing PMI fell from 49.7 in June to 49.3 in July. Notably, the new order index declined from 50.2 to 49.8, while the new export order index fell 1.2 percentage points to 47.1

Meanwhile, the more influential S&P Global China General Manufacturing Index declined to 49.5 in July, down from June’s 50.4. Crucially, the PMI dropped below the neutral 50 level. New order growth softened in July, while new export orders contracted for the fourth month as US tariffs weighed on external demand. The July survey also revealed lower employment and intensifying price pressures.

July’s data signaled a potentially sharp fall in exports and slower economic growth. China’s economy expanded by 5.2% year-on-year in Q2, marginally softer than Q1’s 5.4% growth. Exports rose 5.8% year-on-year in June, up from 4.8% in May, bolstering the economy.

Natixis Asia Pacific Chief Economist Alicia Garcia Herrero recently warned of a potential slump in external demand for Chinese goods, stating:

“Export growth might slow to 2-3% year-on-year in the third quarter of this year, and perhaps just 1% in the last quarter. Shipments of low value goods, which can easily be manufactured elsewhere—such as furniture, clothes, shoes, and toys—to be most affected. Bicycles originally intended for export to America are already on sale at low prices on Chinese e-commerce sites.”

Hang Seng Faces Key Test Between 24,000 Support and 25,000 Resistance

Disappointment over the outcome of US-China trade talks and the Politburo Meeting’s silence on stimulus sent the Hang Seng Index to a weekly low of 24,508. The Index had briefly climbed to a high of 25,667 on hopes that the third round of trade talks would yield a deal.

Despite the week’s sell-off, the Index held above the crucial 24,500 support level and the 50-day Exponential Moving Average (EMA), indicating a bullish bias.

Progress toward a US-China trade deal and meaningful stimulus measures from Beijing could lift sentiment. A breakout above 25,000 could enable the bulls to target the July 24 high of 25,736 and potentially 26,000. Conversely, rising US-China trade tensions and a lack of stimulus could send the Index toward the 50-day EMA. Increased selling pressure may bring the 24,000 level into sight.

Hang Seng Technical Forecast

• Resistance: 25,000, 25,736, and then 26,000.
• Support: 24,500, the 50-day EMA at 24,246, and 24,000.
• Short-term Bias: Bullish, contingent on US-China trade developments, upcoming Chinese economic data, and fresh stimulus from Beijing.

Forecast Summary

The Hang Seng fell back to its July congestion zone but held above the 50-day EMA, indicating a bullish bias. In the week ahead, geopolitics, trade developments, China’s Services PMI, trade data, and any new policy measures from Beijing could influence risk appetite. Trade headlines and Beijing’s response to softer economic data could be crucial.

For real-time updates on US-China trade talks, global stimulus efforts, and central bank signals, follow our live coverage and consult our economic calendar.