Beijing, January 24, 2025 - Chinese and Hong Kong stock markets experienced significant gains on Friday, fueled by U.S. President Donald Trump's recent remarks about his "friendly" conversation with Chinese President Xi Jinping, suggesting a potential trade agreement.
The markets were additionally supported by high-dividend stocks, benefiting from Beijing's plan to introduce long-term funds, projected to generate an extra 1 trillion yuan (approximately $140 billion) annually.
The CSI300 index closed up by 0.8%, while the Shanghai Composite Index rose by 0.7%. The Hang Seng Index in Hong Kong, which is more sensitive to geopolitical issues, surged by 1.9%.
In an interview with Fox News on January 23, Trump described his discussion with Xi as a "good and friendly conversation," expressing a preference against imposing tariffs on China. His decision not to implement tariffs upon taking office has contributed to a rally in Chinese stock markets earlier in the week.
Investor concerns eased further following Trump's recent comments indicating that tariffs could be avoided. Positive sentiment was also bolstered by Chinese regulators instructing insurance companies and mutual funds to increase their stock purchases.
Hwabao Securities estimates that this initiative could bring approximately 1 trillion yuan in long-term capital to the Chinese stock market annually. The STAR 100 index in China soared over 2%, as regulators approved the first batch of 12 exchange-traded funds (ETFs) tracking the newly launched STAR Market Composite Index, potentially attracting fresh capital to listed technology companies.
The CSI Dividend Index also rose as investors anticipated that high-dividend stocks, including banks, insurance companies, and utilities, would benefit from the influx of long-term capital from state insurance firms and government pension funds. In Hong Kong, the Hang Seng Technology Index jumped over 3%, with notable increases in technology, internet, and raw material stocks.