Hong Kong stocks closed higher on Wednesday amid optimism that China can absorb the impact of the tariff war and sustain its economic growth.

The Hang Seng Index rose 0.6%, the Hang Seng Tech Index was up 0.5%.

CATL rose 10%; Laopu Gold up 7%; Bilibili, BYD, Li Auto, Pop Mart up 4%; Alibaba, Tencent up 1%.

“China’s economic recovery is under way, but mildly and slowly, and expectations are growing for a cut in interest rates and banks’ reserve requirement ratio,” said Yan Zhaojun, an analyst at Zhongtai Securities. “A sustainable flow of capital into the Hong Kong market would require an end to the deflationary trend and an improvement in consumer confidence.”

Morgan Stanley on Wednesday raised China’s economic growth forecast for 2025 to 4.5 per cent from 4.2 per cent and for 2026 to 4.2 per cent from 4 per cent. The US investment bank said in a report that it expected China’s central bank to cut the policy rate by 15 to 20 basis points and the reserve requirement ratio by half a percentage point by the end of the year.