China & Hong Kong Stocks Surge Amid Economic Strategy Shift & Middle East Optimism

China and Hong Kong stocks climbed following China's lowered economic growth target and optimism over potential progress in the Iran conflict. The central bank strengthened the yuan, stabilizing markets amid Middle East tensions. The move supports growth in technology sectors like AI and semiconductors.

China and Hong Kong stocks surged on Thursday after Beijing slightly adjusted its annual economic growth target. This move signals a shift towards economic rebalancing and coincides with optimism surrounding the Iran conflict, boosting investors' risk appetite.

By midday, the CSI300 Index rebounded 1.3%, while the Shanghai Composite Index saw a 0.8% uptick. The Hang Seng Index in Hong Kong climbed as much as 1.9%, recovering from a half-year low. Meanwhile, the yuan strengthened, buoyed by the central bank's strongest daily midpoint guidance in nearly three years.

Beijing's new growth target for 2026 allows for expansive policy measures aimed at reducing industrial overcapacity and rebalancing the economy. The country's plan includes a push for technological self-reliance and growth in industries such as semiconductors, aerospace, and artificial intelligence. Enhanced risk appetite was further supported by potential dialogue developments in the Middle East, according to reports suggesting Iran's willingness to engage in talks with the U.S.