Hong Kong stocks surged on Tuesday, with the benchmark Hang Seng Index nearing a two-month high amid optimism over potential high-level trade discussions between the United States and China. The Hang Seng Index rose 1.5% to close at 23,512.49, the highest since March 19, while the Hang Seng Tech Index gained 1.1%.
Investor sentiment was driven by the possibility of direct talks between U.S. President Donald Trump and Chinese President Xi Jinping. White House spokeswoman Karoline Leavitt indicated on Monday that a conversation between the two leaders was “likely” to take place this week, though no further details were provided. If confirmed, it would mark their first direct dialogue since Trump’s return to office in January, raising hopes for progress following the 90-day tariff truce agreed in Switzerland in May.
Key gainers in the Hong Kong market included electric vehicle maker Li Auto, which jumped 5.8% to HK$116.40, and Techtronic Industries, which advanced 2.5% to HK$90.80. Among major banks, China Construction Bank rose 3.5% to HK$7.16 and China Merchants Bank climbed 3.1% to HK$49.60. Alibaba Group Holding and Tencent Holdings also posted gains of 0.6% and 1.3%, respectively.
On the mainland, the CSI 300 Index added 0.3% and the Shanghai Composite Index rose 0.4%.
Tensions between Washington and Beijing have escalated recently, with the U.S. imposing new restrictions on exports of advanced artificial intelligence technologies to China and revoking student visas. Washington also accused China of failing to hasten rare earth exports, as agreed in the preliminary trade deal.
Market analysts suggest that direct engagement between Trump and Xi could help stabilize investor confidence. “If Trump and Xi patch things up this week, expect another squeeze higher and whispers of new highs to echo through the street,” said Stephen Innes, managing partner at SPI Asset Management. “If they don’t, brace for a whiplash ride through summer.”
Meanwhile, economic data added to expectations of further policy support from Beijing. A private Caixin survey showed China’s manufacturing PMI fell to 48.3 in May, down from 50.4 in April, the weakest reading since September 2022. This followed an official PMI report over the weekend that also indicated a second consecutive month of contraction.
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