Asian Markets Rally as Geopolitical Tensions Ease
Asian equities posted strong gains today as easing US-China tensions and a declining US dollar created favorable trading conditions. The positive sentiment emerged following Treasury Secretary Bessent’s truce comments, which helped calm markets ahead of TSMC’s post-close financial results. Hong Kong and mainland markets experienced relatively quiet sessions with light volumes as traders await further clarity on the geopolitical landscape. Market participants remain cautious despite the improved sentiment, particularly regarding ongoing trade and technology disputes between the world’s two largest economies.
Hong Kong’s growth, technology, and internet stocks have successfully worked off their overbought conditions, with declining Relative Strength Index (RSI) readings indicating healthier technical positioning. The 50-day moving averages have been providing reliable support for these names, suggesting underlying strength in the market structure despite the day’s muted trading activity.
Alibaba’s Singles Day Shows Early Strength
Alibaba recorded a modest decline of 0.25% despite impressive early numbers from its Singles Day pre-sales event that kicked off last night. The annual shopping extravaganza demonstrated robust consumer demand in its opening hour, with 35 brands achieving RMB 100 million in sales and 1,802 orders processed. Active user participation already exceeds last year’s levels, indicating strong engagement with the promotional event.
Cosmetics and sports apparel emerged as early category leaders, with Estee Lauder, Nike, and Anta reportedly seeing particularly strong demand out of the gate. However, not all companies benefited from the shopping festival enthusiasm. Cosmetics firm Giant Biogene plunged 15.21% on concerns about its product performance during Singles Day, though the company’s controlling shareholder demonstrated confidence by purchasing 760,000 shares during the decline.
Nio Faces Headwinds from GIC Lawsuit
Electric vehicle manufacturer Nio experienced significant pressure, falling 8.99% after revelations emerged about a lawsuit filed by Singapore’s sovereign wealth fund GIC in a New York City court. The August lawsuit alleges that Nio inflated revenues by recognizing sales to its battery swap affiliate before the batteries were sold to end customers. The legal challenge comes amid increasing scrutiny of corporate governance practices across global markets.
The negative news weighed heavily on the broader EV and battery sector, with Xiaomi declining 3.6%, CATL falling 1.2%, and Xpeng dropping 3.5%. The sector weakness occurred despite Xpeng CEO He Xiaopeng’s announcement that flying car production would commence in 2026, suggesting investors prioritized the legal concerns over future product developments.
Clean Energy and AI Developments Showcase China’s Advantages
At the 2025 Sustainable Global Leaders Conference in Shanghai, He Xiaopeng also revealed enhancements to the company’s humanoid robot launched last month, which will feature new AI visual and language systems. Meanwhile, the National Development and Reform Commission (NDRC) announced a comprehensive three-year plan to expand China’s EV charging infrastructure, driving outperformance in clean technology companies.
Sungrow surged 7.66% and Longi gained 2.61%, while Hong Kong and mainland electricity and coal sub-sectors also showed strength. China’s substantial investments in renewable energy position the country advantageously in the AI era, with solar accounting for 12% of electrical output, wind contributing 13%, nuclear providing 5%, and hydroelectric power generating 16%. This diversified energy mix could provide significant competitive advantages as power-intensive AI applications continue to expand globally.
Infrastructure and Investment Flows Signal Market Trends
In parallel developments, mainland media reported that “the world’s first onshore commercial modular small reactor” has passed the International Atomic Energy Agency’s safety review, representing another milestone in China’s energy innovation. Investment flows showed mainland investors purchased $2.035 billion of Hong Kong stocks today, accounting for 25% of Hong Kong volumes through Southbound Stock Connect.
Zijin Gold International gained 3.8% after being added to the Southbound Stock Connect, though mainland precious metals and mining stocks generally had a down day. The precious metals sub-sector has doubled since January 2024, potentially signaling caution for the red-hot global gold and mining space. Mainland markets displayed a significant value bias, with banks, insurance, and utilities outperforming while growth stocks including semiconductors and STAR Board constituents underperformed.
Sector-Specific Developments and Economic Indicators
The China Federation of Logistics & Purchasing released encouraging data showing the E-commerce Logistics Index increased month-over-month to reach a new high, reflecting the underlying strength of digital commerce ahead of major shopping events like Singles Day. National Team-favored ETFs recorded average to slightly above-average volumes, prompting speculation about potential strategic buying during market dips.
Meanwhile, the intersection of AI development and workforce evolution continues to generate innovative business models across multiple sectors. As companies increasingly leverage artificial intelligence for competitive advantage, China’s substantial investments in both AI research and the energy infrastructure to support it could prove strategically significant in the coming years.
Market participants continue to monitor several key factors including ongoing geopolitical developments, corporate earnings, and sector-specific trends as they position for potential opportunities and risks in the evolving market landscape.
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