Hong Kong’s battered stock market is poised for a turnaround

BEIJING: Hong Kong stocks will end the year on a high note after handing investors the world’s worst returns this quarter.

That’s according to analysts in a Bloomberg survey, who say attractive valuations, easing trade tensions and stimulus measures from Beijing will help lift the Hang Seng Index about 7.9% by the end of December from Wednesday’s close. History is on their side, with data since 1989 showing stocks rise an average 5.9% in the final three months of the calendar year, at least twice as much as any other quarter.

Investors will be glad to see the end of a painful three months, set to be the benchmark’s worst since China’s stock bubble burst in 2015. Already reeling from a tumbling yuan and the Sino-us trade dispute, months of often violent street protests have added pressure on earnings for some of Hong Kong’s biggest companies.

The city’s beleaguered stock market has lost more than Us$400bil since the end of June.

“We are cautiously positive on Hong Kong for the rest of the year,” said Jessie Guo, equity research strategist at China Merchants Securities HK Co, who sees China ramping up efforts to boost liquidity, retail consumption and industrial output.

The revival of Anheuser-busch Inbev NV’S listing of its Asian unit is also expected to give a boost.

The Hang Seng Index is lagging global peers by the most since 2006, when China’s central bank began an interest rate-hiking cycle to curb excessive lending.

Sell-offs accelerated in the three months since June after the US and China levied higher tariffs on each other. Adding to the gloom was worsening economic data that pointed to deepening problems in Hong Kong and on the mainland. —