The Hang Seng Index has risen 28 per cent this year, putting the 89-member benchmark on track for its best yearly performance since 2017, when it gained 36 per cent. The CSI 300 Index of the mainland’s yuan-denominated stocks has climbed 18 per cent, heading for the biggest gain since 2020.
The blistering gains caught most market participants flat-footed, with many global money managers and investment banks calling for caution about Chinese stocks at the start of the year. Investors turned more enthusiastic after Chinese start-up DeepSeek surprised the world with its artificial intelligence advances and the world’s two largest economies came to terms on the tariff issue.
The resilience of China’s growth also helped buoy sentiment. The mainland economy expanded by 5.2 per cent in the first three quarters of the year as exports defied the trade strife with the US and emerged as a bright spot. That put the annual growth target of around 5 per cent within reach. China’s yuan appreciated to its strongest level against the US dollar in two and a half years this week.
Optimism has been rising that the blistering run on stocks will extend into 2026 after a high-level economic policy conference chaired by President Xi Jinping this month pledged to continue fiscal expansion and monetary easing in the new year. Investors also bet that the Federal Reserve will make at least two interest-rate cuts next year to support the US labour market, a move that will prompt inflows to Asian markets and boost the appetite for risk assets.
Hong Kong and mainland Chinese markets “are expected to trend up going forward”, said Cheng Qiang, an analyst at Topsperity Securities. “Policy support could be ramped up to support growth and the new emerging industries, such as commercial aviation, AI and new energy.”
