Rally in solar and EV stocks lifts Hong Kong benchmark to 3½-year high

Expectations are high that the July Politburo meeting will introduce more measures to eliminate excess capacity in some emerging industries

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Bull statues overlook Exchange Square in Hong Kong on August 18, 2023. Photo: Reuters

Published: 10:19am, 22 Jul 2025Updated: 3:30pm, 28 Jul 2025

A rally in solar and electric-vehicle (EV) makers sustained gains that sent Hong Kong stocks to the highest close in more than three and a half years, as expectations built that a high-level government meeting in China will ramp up measures to weed out excess capacity in those emerging industries.

The Hang Seng Index finished at a level not seen since November 18, 2021, rising 0.3 per cent to 25,057.11 for a third day of gains. The Hang Seng Tech Index added 0.1 per cent. Xinyi Solar Holdings, a maker of solar wafers, and EV maker BYD led the pack of gainers. Humanoid robot manufacturer UBTech Robotics tumbled on a share-placement plan.

On the mainland, the CSI 300 Index closed 0.8 per cent higher, and the Shanghai Composite Index inched up 0.6 per cent. Infrastructure construction companies and building-material makers surged on the prospect that China’s plan to build a massive hydropower dam in Tibet would boost demand.

Investors will keep a close eye on a Politburo meeting later this month convened by President Xi Jinping, with expectations swirling that top leaders will reiterate the case for eliminating excess capacity in new industries including solar panels, electric vehicles and lithium batteries to reverse price declines.

The conference will also offer more insights into how the government will steer the world’s second-largest economy to contend with thorny issues such as tariff strife and the struggling property market.

“When policymakers signal a clear intention, it will be followed up by an intensification of policy efforts,” said Chetan Ahya, an economist at Morgan Stanley. “There will be forthcoming actions to address anti-involution and recognise that this is a significant shift in the policy stance.”

Involution or neijuan refers to a self-defeating cycle of excessive competition, in which companies are forced to invest increasing resources without benefiting from proportional returns.

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