Hong Kong, June 21, 2025 —
Hong Kong stocks bounced back on Friday, snapping a three-session losing streak, but still remained on track for their biggest weekly loss since early April as Sino-US trade tensions and Middle East instability continued to rattle investor sentiment across Asia.
The Hang Seng Index (HSI) rose 1.2% in morning trade, lifted by broad-based bargain buying after heavy declines earlier this week. Still, the benchmark was down 1.6% for the week, poised for its worst weekly performance since April 7.
Meanwhile, mainland Chinese equities were mixed. The CSI300 Index, which tracks the top 300 stocks on the Shanghai and Shenzhen exchanges, inched up 0.2%, while the broader Shanghai Composite Index rose 0.1%.
Monetary Policy Pause Offers Little Lift
The rebound came after the People’s Bank of China (PBOC) kept benchmark lending rates unchanged on Friday, choosing to pause after announcing wide-ranging monetary easing measures last month to stabilize China’s economic recovery. Analysts say the decision was widely expected and reflected a “wait-and-see” approach by Beijing as it assesses the impact of earlier stimulus efforts.
However, UBS strategist Lei Meng cautioned in a client note that onshore valuations could remain range-bound due to ongoing trade friction and geopolitical volatility.
“We expect limited downside, and potential upside catalysts mainly from stronger policy easing, the continual entry of medium or long-term funds and structural reforms,” Lei said.
Pop Mart Slides on Regulatory Pressure
Among notable movers, Pop Mart, the popular “blind box” toymaker, saw its shares slump more than 5% after People’s Daily, a key state media outlet, called for tighter regulation of the blind box industry, citing consumer protection concerns. Pop Mart stock has now fallen 13% this week, despite being up 162% year-to-date — a sign of extreme volatility and regulatory risk in niche consumer segments.
Meanwhile, the CSI Liquor Index, a proxy for consumer sentiment and high-margin sectors, rose 2.6%, leading gains on the mainland bourses.
Geopolitical Tensions Keep Risk Appetite in Check
Investor risk appetite remained subdued as the Israel-Iran air war entered its second week, with U.S. President Donald Trump yet to decide on direct U.S. involvement. The uncertainty has contributed to global volatility, pushing Asian investors to trim equity exposure and seek safer assets such as the yen and gold.
Yuan Strengthens as PBOC Guides Stronger Fix Amid Dollar Weakness and Trade Optimism
Hong Kong Dollar Weakens to Peg Limit
Adding to the regional concerns, the Hong Kong dollar (HKD) weakened to 7.85 per USD on Friday, hitting the lower bound of its trading band for the first time in over two years. The move suggests capital outflows and market pressure on the currency board regime, even as local markets try to recover from the week’s sell-off.
Weekly Recap: A Volatile and Uncertain Outlook
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Hang Seng Index: +1.2% Friday, -1.6% weekly
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CSI300 Index: +0.2% Friday, -0.3% weekly
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Pop Mart: -5% Friday, -13% weekly
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HKD: Hits 7.85/USD for first time since May 2023
Despite Friday’s rebound, markets remain fragile, with investors awaiting clearer policy signals from both Washington and Beijing, and monitoring geopolitical developments closely.
