Hong Kong's stock market experienced a rebound on Monday morning, with shares rising by 202 points, or 0.8%, to reach 25,590. This turnaround reversed losses from the prior session and was driven by recent developments in international trade agreements. The U.S. and the EU secured a new trade framework, which includes a 15% tariff on most European goods—down from the initially proposed rate—right after securing a similar deal with Japan regarding automobile tariffs. In addition, the market responded positively to reports from the South China Morning Post suggesting that the U.S. and China may extend their current tariff pause by an additional three months preceding the next round of trade talks scheduled for this week.
Investors are also looking forward to the upcoming Politburo meeting, anticipated to set the economic agenda for the remainder of the year. Despite this optimism, gains were somewhat subdued due to recent data indicating a 1.8% year-on-year decline in China's industrial profits over the first half of 2025. This decline was sharper than the 1.1% drop observed in the January–May period, attributed to ongoing deflationary pressures and uncertainties in trade. Market participants now await the release of official Purchasing Managers’ Index (PMI) figures for July, expected later this week. Leading gainers included AIA Group with an increase of 5.4%, HKEX rising by 2.8%, and CK Hutchison up by 1.6%.
