Highlights

• The Hang Seng Index ended a highly volatile week with a net loss of approximately $0.78\%$.
• After falling for four consecutive sessions, the index staged a dramatic $1.43\%$ relief rally on Friday.
• This powerful surge sharply diverged from the negative sentiment seen in U.S. and European markets.
• The rebound from the key 25,000 level has investors questioning whether a sustainable bottom has been formed or if it’s a temporary reprieve.

Hang Seng’s Powerful Friday Rally: A Dead Cat Bounce or a Genuine Turning Point?

A powerful relief rally on Friday provided a dramatic end to what was otherwise a punishing week for Hong Kong’s Hang Seng Index. After a sustained sell-off dragged the market to its weekly lows, a surge of buying activity reversed the course, but the gains were not enough to erase the cumulative damage. This volatile price action has created a critical inflection point, leaving investors to debate whether the fierce rebound is the start of a genuine recovery or merely a fleeting “dead cat bounce.”

A Four-Day Rout Meets a Fierce Reversal

The week began on a weak footing and deteriorated from there. Starting from a close of $25,617.42 on Monday, the Hang Seng entered a steady decline, shedding value through Tuesday and Wednesday. The selling pressure intensified on Thursday, pushing the index down to its weekly low of $25,058.51 as concerns over regional economic data and persistent regulatory uncertainty weighed heavily on sentiment. Just as the market appeared poised for a breakdown, sentiment shifted dramatically. On Friday, buyers returned in force, driving the index up $1.43\%$ to close at $25,417.98. The rally from the lows suggests that bargain hunters saw significant value after the steep four-day drop.

A Local Rebound in a Cautious World

Friday’s surge was particularly noteworthy as it occurred in isolation. While markets in the U.S. and Europe ended the day in negative territory, the Hang Seng charted its own bullish course. This divergence indicates the rally was fueled by local factors rather than a global “risk-on” shift. The aggressive buying was likely a combination of investors bargain-hunting in beaten-down technology and property stocks, coupled with short-covering from traders who were forced to close out bearish bets. The psychologically important 25,000 level acted as a firm line in the sand, triggering a powerful technical and psychological rebound as it held as a key support.

What to Monitor Moving Forward

The crucial test for the Hang Seng will be whether it can build on Friday’s powerful momentum in the week ahead. The immediate challenge will be to reclaim the ground lost earlier, with the 25,500 level acting as the first significant hurdle. Market direction will continue to be dictated by economic data flowing from mainland China and any policy signals from Beijing. Investors will be watching closely to see if Friday’s reversal marked a true exhaustion of selling pressure and a sustainable shift in sentiment, or if sellers will simply re-emerge at higher levels to resume the prior downtrend.