Stock market sees highest weekly gain in 12 years

Hong Kong’s stock market has recorded its best weekly performance since 2012, fueled by the surge of US Nasdaq market-listed technology shares.

It was also boosted by sustained Chinese mainland capital inflows snatching up Hong Kong shares following the China Securities Regulatory Commission’s measures to broaden the scope of eligible products for exchange-traded funds under the Shanghai-Hong Kong Stock Connect and the Shenzhen-Hong Kong Stock Connect.

The city’s benchmark Hang Seng Index gained 2.1 percent to close at 17,651 on Friday, with a market turnover of HK$157.2 billion ($20.1 billion). Hang Seng China Enterprises Index soared 2.4 percent while the Hang Seng Tech Index jumped 4.6 percent.

This week, all three indexes jumped at least 8.8 percent, and the HSI made its best weekly gain in 12 years. Based on the closing level on Friday, the benchmark index has rebounded more than 20 percent from the trough recorded on Jan 22.

The market rally was led by the surge of mainland technology shares. SenseTime skyrocketed 43.4 percent, and Meituan, Alibaba Holding and Tencent Holdings all soared between 2.7 percent and 3.7 percent.

CCBI Securities said the HSI has reached the long-run bottom level, supported by the cumulative spread between CCBI Hong Kong Market Liquidity Index and the HSI level.

“We maintain our view that the HSI will fluctuate around the 17,000 mark in the short run,” said CCBI analysts Cliff Zhao and Wilson Zou.

They said they expected that if the HSI rose above the 17,000 mark, it would have to be sustained by positive policy tailwinds coupled with corporate earnings recovery.

UBS Group has rated Hong Kong’s stock market as the most preferred since the city’s macroeconomics are seeing robust investment while the recent easing of property policies should also help to stabilize sales volume.

Hong Kong private residential prices in March, as tracked by the Rating and Valuation Department, reversed the consecutive 10-month fall, signifying the positive effect after all home market cooling measures were scrapped in February.

The private domestic property price index in March climbed 1.1 percent month-on-month to 305.7, the largest month-on-month increase in nearly a year. The index, however, still posted an annual decline of over 13 percent. The cumulative home price drop narrowed to 23.21 percent compared with the historical high level recorded in September 2021.

“After the abolition of the cooling measures, secondhand homeowners can narrow the bargaining space and even increase their offering prices that stimulates the overall property price to rebound at a low level, driving the property price index to rebound sharply,” said Derek Chan, head of research at Ricacorp Properties.

Chan said he expects Hong Kong home prices in the first half of this year could rise by up to 2 percent if prices rise steadily in May and June.

Hannah Jeong, head of valuation and advisory services at Colliers Hong Kong, added: “Even though there might be a delay in the US Fed’s rate cuts, the residential market is reviving because of the lifting of the cooling measures and the current property price level.”

As the available number of firsthand private residential units in the city has reached a record high, it is expected to propel developers to cut firsthand property selling prices to clear inventory. Jeong said she expects Hong Kong home prices to dive around 5 to 10 percent this year, if interest rate cuts fall short of expectations.

According to Housing Bureau figures released on Friday, there will be some 112,000 firsthand private residential units on the market over the next three to four years.