The Hang Seng index has surged this year and is beating some of its top global peers like the Dow Jones, Nasdaq 100, and S&P 500. It has jumped by over 22% in 2025 and is now hovering at its highest level since February 2022. It soared by over 68% from its lowest level in 2023.
In contrast, American indices have suffered a big reversal, with the Dow Jones and S&P 500 indices erasing most of their gains earlier this year.
Hang Seng index ignores the tariff wars
The Hang Seng and other Chinese indices like A50 and Shanghai Composite have all surged in the past few months.
This rally is because China has been highly optimistic on the economy this year. It expects that the economy will hit the 5% target this year. Recent data shows that this is happening, with the manufacturing and services PMI figures remaining above 50.
The economy will benefit from the stimulus package unveiled by Beijing in 2024. It will spend over $1.4 trillion in the next few years, with most of these funds going to struggling local authorities.
Beijing has also hinted that it will boost the stimulus package now that the US has launched a trade war with the country. Donald Trump has hiked tariffs on Chinese goods by about 20% this year. These tariffs are on top of those he implemented in the first term.
Analysts believe that China will do just fine even with these tariffs. Historically, Chinese manufacturers have dodged tariffs by routing their goods to the US through other countries in the Asian region.
Also, the volume of goods imported from China will likely continue doing well since companies will intervene by hiking prices. The odds that firms will move their businesses from China to the US are low because of the elevated cost of doing business there.
Hang Seng tech companies have soared
The other key reason why the Hang Seng index has jumped is that Beijing has supported the technology sector this year. Indeed, Xi Jinping has met with some of the top tech executives, including Jack Ma, the founder of Alibaba.
China is now keen to support the technology sector as it seeks to boost its competition with the United States. There are signs that it is achieving some of these goals, especially in the artificial intelligence industry. Just recently, DeepSeek sent shockwaves globally after its launch. Top firms like Alibaba and Tencent are now making advanced AI models.
The technology sector has helped to support the Hang Seng index this year. Top tech names in the index like Alibaba, BYD, Lenovo, SMIC, Alibaba Group, Alibaba Health, Xiaomi, and Kuaishou Technology have helped to lead this charge.
Hang Seng index analysis: golden cross nears
HSI index chart | Source: TradingView
The weekly chart shows that the Hang Seng index has surged in the past few years. It has moved from a low of H$14,538 in 2022 to H$24,505 today. The index has recently soared above the key resistance level at H$23,230, the highest swing on October 7.
It has also moved above the 50% Fibonacci Retracement level at H$24,040. Most notably, it is about to form a golden cross pattern as the spread between the 50-week and 200-week moving averages narrowed.
Oscillators like the Relative Strength Index (RSI) and the MACD indicators have continued rising, a sign that it has momentum. Therefore, the index will likely keep rising as bulls target the next key resistance level at H$26,290, the 61.80% retracement level, which is about 7.5% above the current level.
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