Market snapshot: focus on booming Chinese tech sector
A pubic holiday in the US means focus for now has shifted elsewhere, and developments in China are grabbing headlines. ii's head of markets has the latest from the Far East and rounds up events in the UK.
18th February 2025 08:32
by Richard Hunter from interactive investor
With Wall Street closed at the start of the week for Presidents’ Day, other markets turned to introspection following what has been an eventful year so far.
For the moment, US investors have brushed aside any technology threat from Asia, but investors in China are reading the runes rather differently.
- Invest with ii: What is a Managed ISA? | Open a Managed ISA | Transfer an ISA
The tech sectors in Hong Kong and China have risen strongly this year, with the Hang Seng Index for example already having added 20% after taking heart from the DeepSeek developments. While it seems increasingly unlikely that this will pose the existential threat which was initially feared, the fact that there may be others to follow, and that Chinese firms are displaying some ability to develop and deliver lower cost versions of the existing US kingpins, has boosted optimism.
At the same time, a rare meeting between the Chinese President and the country’s top business leaders was read as a sign that Beijing was at last considering abolishing its crackdown on both the tech and private sectors. Quite apart from the fact that the reciprocal tariffs between China and US are not for the moment as severe as some had expected, it also provides some solace to an economy which has been plagued by a weak property sector, high youth unemployment and tepid consumer demand over the last year.
In the UK, where any developing AI battles are of less direct significance, investors turned to the latest signal on the ailing domestic economy. The unemployment rate for the last quarter remained unchanged at 4.4%, as compared to estimates of a rise to 4.5%, although less positively wage growth continued to outpace inflation, which will further muddy the waters ahead of the Bank of England’s next interest rate decision.
- 10 hottest ISA shares, funds and trusts: week ended 14 February 2025
- eyeQ: have investors adjusted to the new norm?
- Sign up to our free newsletter for investment ideas, latest news and award-winning analysis
The report suggests that some strength in the economy remains, although recent growth numbers have been marginal at best. The impacts of the measures announced in the Budget, which could lead to job reductions and at the very least to companies passing on price rises to consumers, have yet to fully wash through, which has darkened the immediate economic outlook.
Fortunately for investors, the UK economy is not the UK market and the FTSE100 in particular is currently reaping the benefits of both its global exposure as well as its reputation as something of a haven investment destination.
Another cautiously positive open was achieved despite a 4% decline in the BT Group (LSE:BT.A) share price following a broker downgrade, which read across to Airtel Africa Ordinary Shares (LSE:AAF). There was also a fall in the price of InterContinental Hotels Group (LSE:IHG) after its full-year numbers, which saw a drop of 11% in pre-tax profit from the previous year, although the news was softened by the announcement of a $900 million share buyback.
There was also some strength in banking shares, which comes ahead of the reporting season being rounded off this week as HSBC Holdings (LSE:HSBA), Lloyds Banking Group (LSE:LLOY) and Standard Chartered (LSE:STAN) present annual results.
- Insider: directors back fintech firm’s ambitious growth plans
- eyeQ: 10 actionable trading signals for week beginning 17 February 2025
- Pensions and IHT: 54% of UK adults to adjust plans before 2027 changes
The story so far for Barclays (LSE:BARC) and NatWest Group (LSE:NWG) has been one of strong results but a muted market reaction, partly in response to both shares having doubled over the last year and therefore being subject to higher expectations. Gains in the share prices at the three remaining banks have also been notable over the last year, with HSBC having added 38%, Lloyds 46% and Standard 89%, thus making them susceptible to a similar reception.
For the index as a whole, a nudge ahead at the open has left the FTSE100 ahead by 7.4% in the year to date, having continuously tested record highs along the way over the last month.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.