2026.01.0702:27:01UTC+00Hong Kong Shares Retreat After Recent Rally

Hong Kong's stock market saw a drop of 287 points, equivalent to 1.1%, reaching 26,431 during Wednesday morning's trading session. This decline came after a strong performance over the prior three sessions, as investors elected to secure profits with the market hitting a seven-week peak. The downturn was broadly felt across sectors, particularly impacting technology and consumer stocks. This movement occurs in anticipation of China's forthcoming December Consumer Price Index (CPI) and Producer Price Index (PPI) data, alongside Hong Kong's foreign exchange reserves figures set for release today. However, losses were curbed following an indication from China's central bank that it is prepared to reduce interest rates and lower banks’ reserve requirement ratios in the coming year to support the decelerating economy. Moreover, the People's Bank of China (PBoC) committed to implementing stronger counter-cyclical policies, improving credit transmission, and assisting with the roll-out of China's new five-year economic plan. Concurrently, mainland Chinese stocks maintained their upward trend, reaching decade-long highs, buoyed by robust optimism regarding artificial intelligence advancements. Among the early notable declines in Hong Kong were Tencent Music Entertainment with a 3.9% decrease, XPeng down by 2.7%, PICC Property & Casualty declining 2.6%, SMIC by 1.5%, and Trip.com dropping 0.9%.