Year of the Dragon bodes well for Hong Kong’s ailing stocks as rate cuts, improving Chinese economy bring hope, officials say


Hong Kong stock sector falls underneath 15,000 degree, its least expensive in 15 months

Hong Kong stock industry falls underneath 15,000 degree, its most affordable in 15 months

The past Calendar year of the Dragon, in 2012, noticed a 15 for each cent achieve, in accordance to Bloomberg data, a yr highlighted by plan easing by international central banking companies. Similar aspects may spur the neighborhood market this yr too, Chan extra.

“Various elements have also designed us cautiously optimistic about the Year of the Dragon,” stated Chan. “The most crucial thing is to function with anyone to imagine of extra solutions, innovate and uncover excellent improvement options in the potential.”

The market could definitely do with a dose of superior fortune. The Calendar year of the Rabbit, which finished on February 9, was a miserable one particular for area equities as the Hang Seng Index slumped by a record 29 per cent.

“The current market will with any luck , see a floor in adverse sentiment, but the degree of optimism nonetheless hinges on how a great deal the fragile self esteem can boost,” reported Gary Ng, a senior economist at Natixis Hong Kong. The Federal Reserve fee decision in March, as perfectly as the two sessions – China’s yearly conferences of the legislature and political advisory entire body – will be significant activities to note, he extra.

China intervenes in industry as regulator methods up scrutiny of inventory rout

Chinese authorities have had to intervene in the current market, by using verbal help and state fund shopping for, to shore up economic marketplaces at home right after a rout that erased extra than US$1 trillion of benefit in Hong Kong, Shanghai and Shenzhen more than the earlier three many years. The Hang Seng Index fell about 14 for each cent in 2023, capping an unparalleled 4-calendar year dropping streak.

Sector pundits, together with the American economist Stephen Roach, experienced reported Hong Kong’s most effective times have been now over. Index supplier MSCI will clear away scores of Chinese stocks from its Worldwide Standard indices and three from the MSCI Hong Kong Index, just after its February critique.

“I understand that lots of persons have noticed the recent protection pertaining to a couple stakeholders who hold a pessimistic watch in the direction of the Hong Kong sector or that Hong Kong’s ideal days are behind it,” outgoing HKEX chair Laura Cha Shih May perhaps-lung, reported. “I totally disagree. We get better and bounce back every single time.”

“When other people say that we are headed for the base, we often rebound and hit new highs,” she said. “Every time [Hong Kong] has proved its own energy and resilience.” The city’s lots of benefits, including rule of law and current market transparency, will help recovery and restore investor confidence, she additional.

Finance officers line up by the gong at the Lunar New Calendar year market opening celebration at the HKEX. Photograph: Jonathan Wong
“The past 12 months has not been an simple just one for Hong Kong’s financial community, but Hong Kong is outlined by its resiliency and adaptability,” mentioned Nicolas Aguzin, the CEO of the exchange operator. The Argentine has agreed to phase down on February 29, acquiring introduced ahead his departure from May when his a few-yr phrase finishes. Bonnie Chan will choose the helm from March 1.

Despite the troubles offered by the wider financial surroundings, Hong Kong’s economical markets continued to reveal resilience, with derivatives, mounted cash flow, and ETF trading volumes achieving file highs, mentioned Aguzin. Lots of opportunities abound, he stated.

“As China continues to increase, [and] as Asia represents extra of the earth, this aspect of the entire world will require locations like Hong Kong to supply that obtain to possibilities,” reported Aguzin.