On January 20, 2025, Asian equities were poised for gains in early trading, influenced by a favorable discussion between US President-elect Donald Trump and Chinese President Xi Jinping. This dialogue has sparked optimism in the markets, with equity futures in Australia, Japan, and Hong Kong indicating early increases.
A notable rise was observed in US-listed Chinese shares, which surged by 3.2% on the previous Friday, reflecting the positive sentiment from the leaders' conversation. Trump characterized the interaction as 'very good,' which has contributed to the upbeat market outlook.
As Trump prepares to assume office for a second term, global investors are closely monitoring potential shifts in trade policies, particularly concerning the technology sector in China. The market is adopting a cautious 'wait and see' approach, especially regarding the Hang Seng Tech Index, where the cost of hedging against volatility has dropped to a four-month low.
Additionally, the total number of options on the Hang Seng Tech Index, which includes major companies like Tencent and Alibaba, has decreased to its lowest level since July 2023, indicating a shift in investor sentiment as they navigate the upcoming political changes.