FX.co ★ Hang Seng Turns Early Gains to Finish Lower

The Hang Seng index declined by 184 points, or 0.7%, closing at 25,635 on Monday, reversing the modest gains recorded in the previous session as markets entered the final trading week of 2025. Initial market strength dissipated due to increased geopolitical tensions, sparked by China's extensive military exercises around Taiwan. Market sentiment was further dampened by data from China indicating a significant drop in profits for industrial firms, marking the steepest decline in over a year for November, attributed to persistently weak domestic demand. All sectors experienced downturns, with the property and consumer sectors among the most affected, despite Beijing's renewed commitment to adopting a more proactive fiscal policy in 2026. Shares of Zijin Mining fell by 5.7%, while SMIC decreased by 1.8%, Xiaomi Corp. by 1.4%, and Tencent Holdings by 1.0%. Despite this setback, Hong Kong's equities are poised to end 2025 with an approximate 28% gain, potentially achieving a second consecutive annual increase, bolstered by strong liquidity conditions in China and a revival in risk appetite following a de-escalation of Sino-U.S. trade tensions.