After last year’s sluggish performance, Hong Kong’s benchmark stock index has staged a sharp rebound to push through 30,000 for the first time since 2019.
Analysts attribute the rise in the Hang Seng Index
to Chinese investors who found valuations at home increasingly stretched, and were looking to snap up shares of other domestic companies that were listed offshore.
The chart below from JP Morgan shows $29 billion of inflows has already entered Hong Kong’s equity markets in January through the Stock Connect scheme that enables investors in Hong Kong and China to access each others’ equity markets.
Inflows from China have gained pace since last year, with Chinese investors plowing over $80 billion of funds into Hong Kong equities in 2020.
More attractive valuations and the greater availability of shares of highflying tech companies in Hong Kong have helped drive southbound flows, said the JP Morgan analysts.
The Hang Seng surged 2.4% on Monday, pushing the blue-chip benchmark up to 30,159.01.
Last year, Hong Kong’s benchmark logged modest losses, with shares struggling to match the double-digit gains of their onshore counterparts.
China’s CSI 300 index, a market-weighted benchmark composing of shares listed in both Shanghai and Shenzhen’s stock exchange, topped its all-time high in January. The Chinese benchmark
has gained 8% this month, versus the 2.3% in the S&P 500
over the same stretch.
JP Morgan analysts said the inflows into Hong Kong’s stock markets from Chinese investors may be capping the yuan’s gains as China’s recovery outpaces the rest of the world.