Mainland and Hong Kong stocks ended higher on Monday, driven by gains in non-ferrous metals and AI shares, as investor optimism over a potential Federal Reserve rate reduction this month outweighed concerns over domestic economic weakness.

The benchmark Hang Seng Index ended up 174 points, or 0.67 percent, at 26,033.

The benchmark Shanghai Composite Index was up 0.65 percent at 3,914 while the Shenzhen Component Index was 1.25 percent higher at 13,146 and the ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, gained 1.31 percent to 3,092.

The blue-chip CSI300 index rose 1.1 percent.

Sub-indexes tracking non-ferrous metal and AI-related sectors rose 3.03 percent and 2.43 percent, respectively.

Investors will focus on comments from US Federal Reserve chairman Jerome Powell later in the day for more clues on the US monetary policy outlook.

Earlier dovish comments from policymakers have led traders to price in an 87 percent chance of a US rate cut later in the month.

On the domestic front, China's factory activity contracted last month, according to both official and private surveys.

Investors will look to the upcoming Central Economic Work Conference this month for possible hints on the policy agenda for next year.

Bucking the trend, Hong Kong-listed shares with cryptocurrency-related businesses tumbled after China's central bank vowed to crack down on virtual currencies and flagged concerns about stablecoins.

So far this year, the Shanghai stock index is up 16.8 percent and the CSI300 has risen 16.3 percent, while the HIS has jumped about 30 percent.

"Capital inflows have returned based on the net FX settlement data, as foreign investors have increased their holdings of domestic Chinese equities consistently since April 2025, and this is expected to continue in 2026," ANZ analysts said. (Reuters)