【Zhenzhuo Hong Kong Stock Experts】Fed cuts interest rates by 25 basis points, insurers' risk factors lowered
Hong Kong Stock Market Trends and Analysis
U.S. stocks performed well on Wednesday, with the Federal Reserve cutting interest rates by a quarter percentage point as expected by the market. The authorities also announced a plan to buy short-term Treasury bonds. Federal Reserve Chairman Powell further stated that without new tariff measures, inflation is expected to peak, which boosted expectations for further rate cuts. All three major indices recorded significant gains at the close. The U.S. dollar weakened, and the yield on the 10-year Treasury note fell to 4.15%. Gold prices rose, and oil prices also saw moderate gains. Hong Kong-listed depositary receipts generally rose, and the market is expected to open higher in early trading following the positive overseas performance. Mainland stocks fell yesterday, with the Shanghai Composite Index opening lower and closing down 0.2%. Trading volume in the Shanghai and Shenzhen markets slightly decreased. After consecutive declines, Hong Kong stocks rebounded from lows, with the index rising back above the 25,500-point level. Trading volume remained light. Blue-chip stocks showed mixed performance, and market conditions saw little change. The index is expected to fluctuate between 25,200 and 26,200 points.
Industry News
The National Financial Regulatory Administration recently issued the "Notice on Adjusting Risk Factors for Insurance Companies' Related Businesses." First, it adjusted the risk factors for insurance companies' investments in related stocks, specifying that for constituents of the CSI 300 Index and the CSI Dividend Low Volatility 100 Index held for more than three years, the risk factor would be reduced from 0.3 to 0.27. For ordinary stocks listed on the STAR Market held for more than two years, the risk factor would be reduced from 0.4 to 0.36. Second, it adjusted the risk factors for insurance companies' export credit insurance business and China Export & Credit Insurance Corporation's overseas investment insurance business, encouraging insurers to increase support for foreign trade enterprises and effectively serve national strategies. The notice clarified that the premium risk factor for export credit insurance and overseas investment insurance would be reduced from 0.467 to 0.42, and the reserve risk factor would be reduced from 0.605 to 0.545. The solvency adequacy ratio constrains the upper limit of insurance capital's equity allocation, and the reduction in risk factors can free up minimum capital requirements, further expanding the space for insurance capital to enter the market. The market estimates that the reduction in risk factors could bring up to 100 billion yuan in potential incremental funds to the stock market, benefiting A-share performance and becoming a key driver of the mainland's slow bull market.
Kwok Ka Yiu CFA, Business Development Director, Harbour Family Office
Date: Thursday, December 11, 2025
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