Hang Seng Rebounds, but October Pressures Persist!

The Hong Kong stock market strengthened again during Friday’s trading session (October 30, 2026), with the Hang Seng Index rising 1.1%—or approximately 255 points—to reach the 23,220 level. This gain marks a recovery following selling pressure in previous sessions, driven by strength in the energy, technology services, and financial sectors. Despite returning to positive territory, the index remains down by about 4.8% for the month of October, reflecting that investor sentiment has yet to fully recover from concerns regarding China’s economic conditions and the outlook for global technology investments.

The energy sector’s gains were bolstered by Sinopec’s financial performance, which saw a 57.2% year-on-year increase in net profit for the third quarter. This growth was supported by high oil prices and improved refining margins, even as fuel demand continues to face pressure. Meanwhile, sentiment in the technology sector received a boost from Tencent’s development of new artificial intelligence (AI) models and the expansion of its AI-powered office agent services into international markets. Nevertheless, investors remain skeptical about whether technology companies can generate profits commensurate with their massive AI development expenditures.

Several blue-chip stocks contributed to the Hang Seng’s recovery: PetroChina rose 2.5%, insurer AIA climbed 3.6%, and Meituan surged 4.0%. Despite this, capital flows remain a challenge for the Hong Kong market. Investors from mainland China reportedly recorded a net sale of approximately HK$24 billion in Hong Kong stocks throughout October, potentially making this month the largest period of capital outflow since 2021. This suggests that the rise in stock prices has not yet been fully matched by a recovery in investor confidence over the medium term.

Looking ahead, market attention is focused on the release of China’s manufacturing Purchasing Managers' Index (PMI) for October, scheduled for Saturday (October 31, 2026). The data will provide insight into factory activity and the strength of demand within the world’s second-largest economy. If the PMI shows a stronger-than-expected improvement, the Hang Seng could gain support to continue its recovery. Conversely, weak data might reignite concerns regarding China’s economic growth. In our view, the Hang Seng’s gains on Friday represent a positive development; however, a sustained recovery will still require support from economic data, corporate performance, and stable capital flows.