Hong Kong stock market shows signs of optimism with 7.4% increase, fueled by various factors.

From South China Morning Post: 2024-05-02 21:30:22

In April, the Hang Seng Index became the best performing major stock market globally, with a 7.4% increase. While still below February’s peak by 42%, the market is showing signs of optimism, with half of the gains happening since April 19. The rally is attributed to various factors including mainland investors’ interest, rebound in mainland shares, and overseas investors’ purchases of onshore stocks.

Hong Kong’s stock market growth is also fueled by mainland investors’ aggressive stock purchases, the unraveling of the “Asia ex-China” trade, and the city’s currency peg to the US dollar providing resilience amid Asian currency sell-offs. Although technical factors are driving the rally and underlying fundamentals remain uncertain, the market’s sudden recovery is surprising given its recent struggles.

Goldman Sachs warns that challenges persist for Chinese equities, including geopolitical tensions and market reactions to US monetary policy changes. Hong Kong’s stock exchange faces concerns over lackluster IPO market performance and the city’s ability to attract strong companies. While optimism for continued market growth exists, a significant change in perceptions of China’s economy and markets is necessary for long-term sustainability.



Read more at South China Morning Post: Opinion | Hong Kong’s stock market rebound: dead cat bounce or durable recovery?