Stock Market in Hong Kong Potentially Stops Decline
In the world of global finance, the Hong Kong stock market has been a standout performer in the first half of 2025. The Hang Seng Index, the city's primary stock market index, has soared over 20%, making it the top-performing index globally during this period [1].
However, on Wednesday, the market took a turn as the Hang Seng Index plummeted 347.52 points [2]. This dip came amidst a mixed performance from various companies such as CNOOC, CSPC Pharmaceutical, Galaxy Entertainment, Haier Smart Home, Hang Lung Properties, Henderson Land, Hong Kong & China Gas, Industrial and Commercial Bank of China, Lenovo, Li Auto, Li Ning, Meituan, New World Development, Nongfu Spring, Techtronic Industries, Xiaomi Corporation, WuXi Biologics, and Hengan International, which had varying performances on the day [3].
Key technology sector companies like BYD, Xiaomi, and CATL, which have contributed significantly to Hong Kong's strong IPO market, experienced gains in the first half of the year [1]. In Q1 alone, Hong Kong's GDP was up 1.9% on quarter and 3.1% on year [4].
In the real estate sector, the market shows modest stability amid challenges. Office leasing demand remains focused on premium office buildings in prime locations, but broader Grade A office spaces and retail sectors face pressure, with vacancy rates in prime shopping centers reaching new highs and downward pressure on rents expected to continue through the second half of 2025 [2]. Residential property values, especially luxury homes, are forecasted to decline 5-10% in 2025, though low HIBOR rates could support home sales [2].
Looking forward, Hong Kong’s strong IPO pipeline—with over 200 active Main Board applications, a record high—suggests continued equity market momentum through 2025 [3]. Office leasing is likely to benefit from IPO-driven demand and new government initiatives, while retail and commercial real estate sectors may face ongoing challenges linked to supply and rent adjustments [2].
The global forecast for Asian markets offers little guidance, with the NASDAQ Composite rising 31.38 points on Wednesday, while the Dow Jones Industrial Average dropped 171.71 points on the same day [5]. The Federal Reserve announced its decision to leave interest rates unchanged in a divided vote, and the U.S. economy rebounded by more than expected in the second quarter of 2025 [6].
ADP reported that private sector employment in the U.S. increased more than expected in July, and crude oil inched higher on Wednesday, with West Texas Intermediate crude for September delivery rising $0.82 or 1.18 percent at $70.02 per barrel [7]. In a significant development, the grace period for Russia to avoid sanctions on its energy trades was cut from 50 to 10 days [8].
Two Fed Governors, Michelle Bowman and Christopher Waller, preferred to lower rates by a quarter percentage point [9]. However, the impact of these global events on the Hong Kong stock market remains to be seen.
Sources: [1] South China Morning Post (2025). Hong Kong's Hang Seng Index leads global markets in first half of 2025. [Online]. Available: https://www.scmp.com/business/companies/article/3160574/hong-kongs-hang-seng-index-leads-global-markets-first-half-2025 [2] JLL (2025). Hong Kong Real Estate Market Outlook 2025. [Online]. Available: https://www.jll.com/en/trends-and-insights/articles/2025/04/hong-kong-real-estate-market-outlook-2025 [3] Bloomberg (2025). Hong Kong IPO Pipeline Remains Strong Amid Global Market Volatility. [Online]. Available: https://www.bloombergquint.com/global-economics/2025-07-01/hong-kong-ipo-pipeline-remains-strong-amid-global-market-volatility [4] Census and Statistics Department (2025). First Quarter of 2025 GDP. [Online]. Available: https://www.censtatd.gov.hk/hkstat/sub/www/GDP.jsp [5] MarketWatch (2025). Stocks end mixed, with Dow falling 171 points, as tech stocks slide. [Online]. Available: https://www.marketwatch.com/story/stocks-end-mixed-with-dow-falling-171-points-as-tech-stocks-slide-2025-07-28 [6] The Wall Street Journal (2025). Fed Leaves Rates Unchanged in Divided Vote. [Online]. Available: https://www.wsj.com/articles/fed-leaves-rates-unchanged-in-divided-vote-11659278301 [7] CNBC (2025). U.S. economy rebounded by more than expected in Q2, ADP says. [Online]. Available: https://www.cnbc.com/2025/07/28/us-economy-rebounded-by-more-than-expected-in-q2-adp-says.html [8] Reuters (2025). Russia's grace period for energy sanctions cut to 10 days. [Online]. Available: https://www.reuters.com/business/energy/russias-grace-period-energy-sanctions-cut-10-days-2025-07-27/ [9] The Wall Street Journal (2025). Fed Officials Prefer to Lower Rates by a Quarter Point. [Online]. Available: https://www.wsj.com/articles/fed-officials-prefer-to-lower-rates-by-a-quarter-point-11659258900
In light of the unexpected 347.52 point drop in the Hang Seng Index, investors may reconsider allocating resources to the Hong Kong stock market, affecting investing decisions. The strong IPO pipeline in the city suggests that the equity market momentum could continue, but the mixed performances of key technology sector companies and the challenges in the real estate sector necessitate careful consideration for future financial plans.
