[SINGAPORE] Global markets have been nothing but volatile on the back of tariff-induced swings – but China stocks were an outlier last week.
From Apr 7, the Hang Seng Index and the CSI 300 Index were steadily rising even as other markets in the region were still volatile. The indices were up around 2.2 per cent and 2.7 per cent last week, respectively, while the MSCI Asia-Pacific ex-Japan index traded flat for the week.
Year to date as at the end of last week, the Hang Seng Index was up more than 3 per cent, compared to a roughly 5.5 per cent decline for the MSCI Asia-Pacific ex-Japan index.
Share buybacks, of around 30 billion yuan (S$5.5 billion), were also announced by local companies.
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It is no surprise that two of the top sectors to outperform their peers are domestic oriented as investors steer clear of exposure to global markets. Here are the top three sectors on the Hang Seng index which bucked the trend last week.
1. Tech
Chinese tech stocks have had a long, rocky couple of years in recent times, but several are pushing higher recently on the back of artificial intelligence (AI), China’s gross domestic product target and other factors.
As at Friday (Apr 11), it was the top performing sector on the Hang Seng Index according to Bloomberg data, recording week to date gains of nearly 4.6 per cent.
Top performing stocks in this sector include Xiaomi, Semiconductor Manufacturing International Corporation (SMIC), and Sunny Optical, according to Bloomberg data.
Consumer electronics manufacturer Xiaomi surged by 21.4 per cent week to date.
Chinese AI startup DeepSeek’s rise to prominence also catalysed a rally, as positivity surged on the Chinese AI space.
In a Apr 8 report, UOB analysts added Xiaomi to their “buy” list with a target price of HK$63.90, in light of the launch of its AI smart glasses.
“Apart from its smartphone business, Xiaomi is also seeing surging influence in the Internet of Things devices market and electric vehicle (EV) market, wrote the research team. “This can give the company an unrivalled edge in the establishment of its AI ecosystem, given the wide range of devices and services the company is covering.”
Shanghai-headquartered SMIC has risen by more than 23 per cent from April 7 for the week.
“The company’s long-term growth driver is to ride on China’s massive investments in data centres, AI, autonomous driving and automation,” equity analyst for Morningstar Phelix Lee said in a Mar 26 report. “This echoes the Chinese government’s pledge to deploy 10 trillion Chinese yuan in support of the AI and semiconductor sectors.”
Meanwhile, Chinese optical device manufacturer Sunny Optical was also up 18.3 per cent week to date on Friday.
2. Consumer staples
The consumer goods sector was next in line in terms of outperformance, with a total week to date increase of more than 3.6 per cent.
China Resources Beverage was up around 6.5 per cent from Apr 7, closing at HK$14.12 on Friday. The drink maker has a market capitalisation of HK$34.4 billion, and made its debut on the Hong Kong Stock Exchange in October 2024.
Additionally, JD Health International, the healthcare unit of Chinese e-commerce giant JD.com, witnessed week to date gains of around 23.6 per cent as at Apr 11, with a closing price of HK$34.35.
Founded in 2014, the company focuses on providing digital health services and resources, which includes a telemedicine service named “JD Family Doctor”. It was added as a constituent to the HSI in June 2023.
According to research by Global X by Mirae Asset, many China consumer stocks faced initial pressure last year, but have been recording a “strong rebound” following forceful stimulus policies introduced since Sept 2024.
Local governments have distributed rounds of consumption vouchers in recent times to drive sales recovery and enhance consumer sentiment, under a clear direction to boost consumer domestic consumption, said the report.
“We believe policy stimulus remains key to enhancing consumer sentiment and bolstering stock performance (in the) China consumer (space) in 2025,” the researchers wrote.
3. Healthcare
Companies in the healthcare sector on the HSI also performed well as a whole, with the sector witnessing 3.6 per cent growth week to date.
Sinopharm, also known as China National Pharmaceutical Group Corporation, witnessed a 2.4 per cent growth in its share price week to date, closing at HK$17.82 on Apr 11. As at 11.16am, shares in the company have inched up to HK$17.94.
In a recent report, CLSA noted that considering the limited scale of pharmaceutical trade between the US and China, tariffs on China’s healthcare sector is expected to be “relatively minor” at this stage, particularly regarding the innovative pharmaceuticals segment.
Therefore, in addition to Sinopharm, its stock picks in China’s healthcare sector include Jiangsu-founded Hansoh Pharmaceutical and Huadong Medicine.
Moreover, Biopharmaceutical company Innovent Biologics saw a jump in its share price by 8.3 per cent week to date on Apr 11. Its shares were trading higher at HK$49.25 as at 11.20am.
Wuxi Biologics’ share price also increased by around 9 per cent week to date on Apr 11, closing at HK$19.94. As at 11.05am, it was trading higher at HK$21.
Morgan Stanley is bullish on the wider Wuxi series, which includes Wuxi Apptech and Wuxi XDC, with an “improving outlook” for the three companies forecasted in its Apr report. It is “overweight” on Wuxi Biologics, raising its target price from HK$31.60 to HK$35.
Some of the main growth drivers noted are the normalisation of global biotech financing, overseas licensing of Chinese drugs, capital expenditure on overseas facilities and an increase in commercial projects.
