The Hong Kong stock market has risen by eight percent this week

Hongkongaktier har stigit med åtta procent sedan i tisdags. Amerikanska aktier har emellertid överpresterat Hong Kong börsen med 94 procent under de senaste fyra åren.

Hong Kong shares have risen eight percent since Tuesday. However, US stocks have outperformed the Hong Kong stock market by 94% over the past four years.

After falling by nine percent in 2023, the Hong Kong stock exchange has enjoyed a recent revival by jumping by eight percent in the last 3 days.

What is the reason?

This is because there is news that the Chinese government is considering a package of measures (worth USD 278 billion) to stabilize the falling stock market.

This doesn’t mean that Hong Kong shares are an obvious buy.

The performance of the Hong Kong stock exchange, as many of us know, is deeply linked to the Chinese market.

The two headwinds for Hong Kong stocks and indirectly the Chinese market have been:

1) Unresolved structural issues, especially in key sectors such as the real estate market.

The systematic liquidity and weak demand challenges in the Chinese real estate sector may take “years” to address.

I imagine that what may happen going forward is that the real estate sector may be more driven by the state and the golden years of rapid growth are likely over for this critically important sector.

2) Loss of confidence, especially from foreign investors

The loss of confidence has driven significant outflows from the Hong Kong and Chinese markets.

According to Morgan Stanley’s analysis, fund managers of benchmark-tracking funds have sold a net $300 million of stocks traded in mainland China and Hong Kong this month.

In addition, Asian fund managers have reduced their allocation to China by 12 percent to a net underweight of 20 percent, the lowest in more than a year according to the latest Bank of America survey.

Estimates from the Institute of International Finance show an outflow of USD 82.2 billion from China’s portfolios in 2023.

While the recent news of oversized government support is positive for Hong Kong stocks, we really need to see more clarity on the contours of the actual policy before we can consider this more than a short-term market recovery.

US stocks still show significantly better returns compared to HK stocks

Although US stocks have their own set of problems ahead of them such as their ability to sustain this market rally and that rally becoming more and more ‘narrow’.

In 2023 the US market was mainly driven by the Magnificent 7 (US megacap stocks) it would not be surprising to see this transition to become a “Fab 5” or “Fantastic 4” in 2024 given that Telsa’s stock is already starting to fall by 16 percent since the start of the year.

What is your view on stocks in Hong Kong?


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