The Hong Kong stock market experienced a downturn on Friday after a high-profile phone call between U.S. President Donald Trump and Chinese President Xi Jinping failed to provide any definitive progress toward resolving the ongoing trade tariff dispute between the world’s two largest economies. This development brought an abrupt end to a three-day rally in Hong Kong equities that had briefly restored investor confidence.
The Hang Seng Index dropped 0.2% at midday to 23,857.09 points, reversing the recent upward momentum that had pushed the index up by 3.2% over the prior three trading sessions and helped recover some of the ground lost earlier this year amid escalating trade tensions. Despite the pullback, the Hang Seng still recorded a modest weekly gain of 2.4%. The Hang Seng Tech Index, which tracks major technology companies, was more sharply affected, falling 0.6%, reflecting investor caution toward the sector. Mainland China’s key stock indices, including the CSI 300 and the Shanghai Composite Index, also dipped by 0.1%, mirroring the risk-off sentiment seen in Hong Kong.
Individual stocks across various sectors showed declines, with Hong Kong and China Gas Company experiencing a 3.6% drop to HK$6.78 due to ex-dividend trading. Technology-related shares, a major driver of the recent rally, saw notable losses: Xiaomi, a prominent smartphone and electric vehicle manufacturer, fell 1.8% to HK$53.25; Ctrip, an online travel service provider, declined 2.4% to HK$471; Alibaba Group dropped 1.6% to HK$116.40; and Tencent Holdings edged down 0.2% to HK$514. These movements highlighted investors’ reluctance to push valuations higher without clear signs of easing trade frictions.
The phone conversation between President Trump and President Xi, closely watched by markets globally, did not yield any concrete commitments or a timeline for resolving tariff disputes that have weighed heavily on economic growth and corporate earnings. Analysts noted that while maintaining dialogue is positive, the absence of tangible progress leaves uncertainty lingering over the future trajectory of U.S.-China trade relations.
“This call was anticipated as a potential catalyst for market optimism,” said a Hong Kong-based analyst. “However, the lack of substantive outcomes has reaffirmed investor concerns about the prolonged nature of the trade conflict and its impact on cross-border business.”
Market participants will now closely monitor upcoming economic data and diplomatic developments for further indications of whether tensions might ease or escalate in the near term. For now, the pause in Hong Kong’s stock rally underscores the fragility of investor sentiment amid persistent geopolitical risks.
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