HK stock market picks up steam
Ensured stability means investors can look forward to robust performance
The Hong Kong market entered rally mode on Thursday, with the benchmark Hang Seng Index (HSI) closing 2.85 percent up on the first trading day after the National Security Law took effect.
The rally on Thursday, led by property and insurance companies, propelled the HSI to a close above 25,000. Increased local market vibrancy reflects assured investor sentiment, market watchers said, as the newly adopted law and a flurry of listings on the local bourse by US-listed Chinese firms arguably underpins the strength of the local bourse operator, taking a long position in the Hong Kong market.
Shares in Hong Kong Exchanges and Clearing Limited (HKEX), the operator of the local stock market which is traded on the market also, gained 6.06 percent on Thursday, hitting a record new high.
The gains reflect a positive view of the National Security Law by investors, who are anticipating a more stable financial environment and a stronger link to the Chinese mainland economy, said Dong Dengxin, director of the Finance and Securities Institute at the Wuhan University of Science and Technology.
“The economic activities in Hong Kong and its financial market were under heavy strain amid the protests, when chaos ravaged the city with transportation cut and banks vandalized,” Dong said. “For finance people, the National
Security Law is speaking for a more stable and favorable environment for their capital in the market.”
“With more mainland companies going to Hong Kong, there will be ample capital in the market, and the Hong Kong stock exchange’s portfolio will also be diversified by Chinese technology and other high-growth sectors,” Dong said.
With the past reforms and future ensured stability, investors have good reason to look forward to the market’s long-term robust performance, in spite of the US’ recent revocation of the special status of the city, Dong said.
The Hong Kong market is predicted to welcome 180 IPOs for the whole of 2020, with funds to be raised totaling between HK$230-260 billion ($29.733.5 billion), PwC data showed.
The Hong Kong IPO market is likely to continue to thrive, with the local bourse operator estimated to once again secure a spot in the top three global IPO market rankings, PwC revealed, and the Hong Kong market is expected to welcome six to eight secondary listings from US-listed Chinese firms throughout the year.
The Hong Kong market appears to be much more vibrant this year with a daily trading volume of over HK$100 billion on average, versus the previous year’s number of roughly HK$80 billion, said Raymond Deng, investment strategist CIO of consumer investment and insurance products at DBS Bank.