Asian markets saw mixed performances on Tuesday, with Hong Kong leading a tech-driven rally following a meeting between President Xi Jinping and top business leaders. The meeting fueled optimism that China’s prolonged crackdown on the private sector could be coming to an end.
The Hang Seng Index extended its strong start to the year, with additional momentum coming from the launch of a new chatbot by Chinese AI startup DeepSeek. Other Asian markets, including Tokyo, Singapore, Seoul, Taipei, Manila, Bangkok, and Jakarta, also posted gains.
Meanwhile, European markets had a strong trading session on Monday, with Frankfurt reaching a record high. Wall Street was closed due to a public holiday. However, losses were recorded in Shanghai, Wellington, and Mumbai. Sydney’s stock market also dipped after the Reserve Bank of Australia announced its first interest rate cut since late 2020 but signaled that further cuts would be challenging due to global economic uncertainties.
The resurgence of Chinese tech stocks has provided a counterbalance to concerns over U.S. President Donald Trump’s tough foreign policies, including sweeping tariffs imposed on trade partners.
Xi Meets Business Leaders Amid Market Optimism
Prominent Chinese business leaders, including Alibaba co-founder Jack Ma, Huawei founder Ren Zhengfei, and BYD CEO Wang Chuanfu, attended the high-profile meeting with Xi in Beijing.
Since assuming leadership, Xi has strengthened state-owned enterprises and implemented crackdowns on private firms engaged in “disorderly” expansion, which significantly impacted the market value of China’s biggest tech companies.
State media outlet Xinhua reported that Xi acknowledged the challenges faced by the private sector, emphasizing that these difficulties were “partial rather than general, temporary rather than long-term, and surmountable rather than unsolvable.”
He reassured business leaders that Beijing was committed to removing barriers to commerce, promoting fair competition, cracking down on arbitrary fines, and safeguarding business interests.
Monday’s meeting signaled to investors that the regulatory crackdown may be easing, leading to renewed confidence in the tech sector.
Alibaba and Other Tech Stocks Rally
Asian markets initially surged but later lost some momentum as traders took profits after a strong rally.
Hong Kong’s stock market, however, remained resilient, with Alibaba jumping more than 2%, bringing its year-to-date gains to over 50%. Game developer XD Inc surged nearly 10%, while Tencent and NetEase each gained more than 1%.
Pepperstone research analyst Dilin Wu highlighted investor curiosity regarding the sustainability of this rally. “Has the market reached an inflection point for a full-scale ‘Buy China’ strategy? And what risks lie ahead?” he asked.
Jack Ma’s participation in the meeting was seen as a potential sign of his public rehabilitation after years of regulatory scrutiny.
U.S. Interest Rates and Market Reactions
Federal Reserve Governor Christopher Waller suggested that the U.S. central bank could cut interest rates this year if inflation follows last year’s pattern—rising in winter but quickly easing afterward.
“If this wintertime lull in progress is temporary, as it was last year, then further policy easing will be appropriate,” Waller stated in remarks prepared for a speech in Sydney. “But until that is clear, I favor holding the policy rate steady.”
With inflation showing signs of picking up in recent months, traders have revised their expectations on how many rate cuts the Fed might implement in 2025.
Waller emphasized that current data does not support an immediate rate cut but noted that if economic conditions mirror 2024, reductions could be appropriate later this year.
His comments come amid concerns that Trump’s proposed policies—including new tariffs, tax cuts, deregulation, and immigration restrictions—could fuel inflation, further complicating the Fed’s decision-making.
