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Opinion | Winter’s over and Hong Kong stocks are springing back to life
- Amid support from US rates and Chinese policies, investors are finally showing interest in Hong Kong stocks again
- It’s still far from the market’s heyday but the path has not been this clear for years
Reading Time:3 minutes
Why you can trust SCMP
It’s no secret that Hong Kong equities have endured a painful period. The high expectations for economic growth after Hong Kong lifted Covid-19 restrictions in late 2022 didn’t materialise, while the slowdown in China’s property market and stubborn global inflation further undermined support.
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There hasn’t been much good news on Hong Kong stocks to write about, but I think the market has finally woken up after what feels like a multi-year winter.
Since reaching a trough in January, the Hang Seng Index is up by nearly a quarter, the H-shares index – for mainland companies listed in Hong Kong – has risen by about 30 per cent and MSCI China is up by nearly 20 per cent in US dollar terms.
Recent economic indicators are encouraging. First-quarter growth was better than expected, and tourist arrivals over the Labour Day “golden week” holiday show the city is still appealing.
The economic environment in China and the United States is also supportive. The recent Federal Open Market Committee meeting underscored the US central bank’s continued easing bias, and there was positive news from Beijing’s Politburo meeting for further stimulus and regulatory support for the offshore market.
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There also appears to be a rotation out of popular but crowded investment themes such as artificial intelligence, Taiwan, Japan and the US markets into better-value propositions and cheaper stocks.
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