HSI surges 2.1% as US-Iran ceasefire sparks risk-on rebound

Hong Kong stocks staged their biggest rally in seven weeks as a US-Iran ceasefire agreement triggered a broad-based rebound across tech and healthcare names.

The Hang Seng Index surged 482 points, or 2.1%, to 23,153 at midday Monday — its sharpest single-session gain in seven weeks — after the US and Iran agreed to halt hostilities and resume peace talks as early as Tuesday.

"The ceasefire removes a major tail risk that had been weighing on Asian equities, particularly for markets like Hong Kong that are sensitive to oil price shocks and geopolitical uncertainty," said Kevin Ip, equity strategist at Edgen.

The Hang Seng Tech Index jumped 156 points, or 3.7%, to 4,412, leading the broader advance. The Hang Seng China Enterprises Index added 209 points, or 2.8%, to 7,670. Meituan (03690.HK) soared 7.5% to HK$69.05, Alibaba Group (09988.HK) climbed 6.1% to HK$95, and Tencent Holdings (00700.HK) rose 4% to HK$428.2. Healthcare names dominated the gainers list: Wuxi Apptec (02359.HK) hit a fresh all-time high, rising 5.4% to HK$153.2, while Akeso (09926.HK) jumped 13% and CSPC Pharmaceutical Group (01093.HK) added 10.5%.

The rebound comes after the Hang Seng Index suffered seven consecutive weekly declines, losing 5.2% last week alone and testing support at 22,668. The ceasefire agreement — reached after days of tit-for-tat strikes around the Strait of Hormuz — removes a key source of uncertainty that had driven a 27% retreat in gold prices from January's peak and pushed Brent crude above $72 a barrel. Traders will now watch for the resumption of formal negotiations in Qatar as early as Tuesday.

The rally was broad-based, with more than two-thirds of HSI constituents trading in positive territory. Biotechnology and pharmaceutical stocks led the charge, buoyed by a bullish Citi research report last week that highlighted improving fundamentals and under-appreciated valuations in the Chinese contract research organization sector. Innovent Biologics (01801.HK) gained 7.5%, BeiGene (06160.HK) added 5.5%, and Sino Biopharmaceutical (01177.HK) rose 7%.

On the downside, Lenovo Group (00992.HK) bucked the trend, falling 9.6% to HK$21.18, extending losses from last week's tech rout. The stock remains under pressure from the broader rotation out of technology hardware names that saw the Nasdaq 100 decline 4.2% last week.

The positive session in Hong Kong tracked a mixed picture across Asia. Japan's Nikkei 225 fell 1%, while South Korea's Kospi dropped 2.5% as memory-chip heavyweights Samsung Electronics and SK Hynix extended their slide. The Shanghai Composite Index declined 2.3% to 4,027, pressured by weak manufacturing data expectations ahead of this week's official purchasing managers' index release.

Crude oil prices edged higher, with Brent futures rising 0.6% to $72.40 a barrel and West Texas Intermediate climbing 1.1% to $69.97, as traders priced in the fragile nature of the ceasefire. ANZ Research cautioned that even if a longer-term deal is reached, physical oil flows through the Strait of Hormuz will take time to recover due to tanker backlogs and damaged infrastructure.

The focus now shifts to the resumption of US-Iran negotiations and this week's economic data calendar, including China's official PMI release and the US non-farm payrolls report on Thursday. A sustained recovery in Hong Kong stocks will depend on whether the ceasefire holds and whether the risk-on rotation can withstand the hawkish repricing of global monetary policy that has driven the recent selloff in technology stocks.

This article is for informational purposes only and does not constitute investment advice.