[True Insight Hong Kong Stocks Experts] US-UK trade deal boosts market, central bank releases trillion liquidity

Hong Kong Stock Market Trends and Analysis

U.S. stocks performed well on Thursday as the U.S. and U.K. reached a trade agreement, boosting market optimism about smooth trade negotiations and lifting all three major indices to close higher. The U.S. dollar strengthened, with the 10-year Treasury yield rising to 4.38%. Gold prices retreated, while oil prices climbed. Hong Kong's pre-market ADRs showed little change, suggesting a modestly higher open. Mainland stocks rose yesterday, with the Shanghai Composite recovering from early losses to close up 0.3%, though trading volume dipped slightly. Hong Kong's market fluctuated upward, rebounding after an initial dip to approach the 23,000-point level before paring gains at the close amid thin turnover. Investors are watching U.S.-China trade talks, with the market likely to see mixed performance as the index continues hovering between 22,000 and 23,000 points.

Industry News

PBOC Governor Pan Gongsheng stated at a State Council press conference that despite significant external shocks since April, China's financial system remains stable with strong market resilience. Amid global uncertainties, the central bank will balance financial openness with security, steadfastly maintaining stability in stocks, FX and bonds through enhanced macro controls and policy measures. The PBOC will cut the reserve requirement ratio (RRR) by 50bps, releasing about 1 trillion yuan in long-term liquidity, and lower policy rates by 10bps - reducing the 7-day reverse repo rate from 1.5% to 1.4%. Mortgage rates will drop 25bps, with the over-5-year first-home loan rate falling from 2.85% to 2.6%. Structural monetary policy rates will be cut 25bps. The central bank merged two capital market support tools - the 500bn yuan securities/insurance swap facility and 300bn yuan stock buyback relending - into an 800bn yuan combined quota. Auto finance firms' RRR will temporarily drop from 5% to 0%. New facilities include 500bn yuan for consumption/eldercare loans and 300bn yuan for tech innovation. These measures support macroeconomic performance and capital market development, improving market sentiment.

(The author is SFC-licensed and holds no mentioned stocks)

Harbor Family Office Business Development Director, CFA Guo Jiayao

Date: Friday, May 9, 2025