Latest news with #HangSengChina
Business Times
22-06-2025
- Business
- Business Times
Hong Kong stock rally shakes up investor playbook for China
Wall Street entered 2025 with bullish bets on onshore Chinese stocks, counting on Beijing's stimulus drive to cushion the blow from US tariffs. Six months in, they couldn't have been more wrong. Blame it on the breakthrough by DeepSeek in artificial intelligence (AI) that suddenly turned the tide in favour of Chinese shares listed in Hong Kong. With persistent economic woes battering the onshore market, the Hang Seng China Enterprises Index has beaten the CSI 300 Index by nearly 20 percentage points so far in 2025, heading for the biggest annual outperformance in two decades. Strategists at Julius Baer and Morgan Stanley are among those expecting the Hong Kong market's lead to continue. A slew of new hot listings, including bubble tea maker Mixue Group and battery giant Contemporary Amperex Technology, has reignited global interest towards the financial hub and expanded investment options. Mainland investors have poured nearly US$90 billion into Hong Kong stocks this year, already nearing 90 per cent of the whole amount for 2024. The sector structure in Hong Kong 'is also becoming more comprehensive with recent listings and upcoming IPOs', said Richard Tang, China strategist at Julius Baer. 'H-shares are likely to continue outperforming A-shares driven by global rebalancing flows and strong Southbound flows,' he added, referring to Hong Kong and mainland-listed stocks, respectively. As the Hang Seng China gauge has gained 17 per cent this year, the CSI 300 Index has shed more than 2 per cent. Analysts attribute the weakness to the onshore market's composition – heavy on property, financial and traditional consumption stocks – which are more reliant on domestic demand. Tech heavyweights including Alibaba and Tencent are listed in Hong Kong. Despite China's unexpectedly strong retail sales in May, deflationary forces and a housing slump persist. Even as trade tensions continue to simmer, the big bang stimulus from Beijing that some investors had hoped for has yet to materialise. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up A key source of support for the A-share market has also subsided. After actively propping up stocks early April as tariff shocks hit, state funds have been notably absent, according to Bloomberg's analysis of exchange-traded funds purchased by Central Huijin Investment. Meanwhile, things have been coming together for Hong Kong. HSBC expects mainlanders' purchases via the southbound stock connect to reach US$180 billion this year, an unprecedented amount. A reassessment of China's tech potential has driven a re-rating of stocks in Hong Kong. The Hang Seng China gauge now trades at 9.3 times its forward earnings estimates, above a five-year average of 8.5 and sharply higher than the 2024 low near a ratio of six. 'More single-stock opportunities related to AI and new consumption, particularly the larger caps, are listed in Hong Kong,' Morgan Stanley strategist Laura Wang wrote in a note earlier this month. 'Some of the long-term well-liked A-share companies are choosing to come to Hong Kong for dual-listing.' The steep underperformance of A-shares, however, means there may be room for catch-up. The premium that onshore stocks have long commanded over Hong Kong peers has narrowed to about 30 per cent, below a five-year average of around 42 per cent. Fiscal stimulus could revive interest in beaten-down sectors onshore, such as consumer staples. There's also an array of hardware tech firms that should benefit from Beijing's push for self-sufficiency. 'A-shares still have investment appeal,' said Agnes Ng, portfolio specialist at T Rowe Price. 'If China's economic growth slows in the second half and stimulus is deployed, A-shares would benefit directly.' Yet the limited pool of attractive megacap stocks onshore means the recovery will once again hinge on if and when Beijing will deploy greater stimulus. That lingering uncertainty will likely keep investors favouring Hong Kong for the time being. 'H-shares are typically higher beta due to the index make-up – and in an up year are likely to outperform,' said Robert Mumford, investment advisor at GAM Investments. 'The end-goal of a range of policy stimulus is to increase consumption, which is the core underlying business of the Internet platform companies. Hence, we are more positive on H shares versus A.' BLOOMBERG
Mint
22-06-2025
- Business
- Mint
Hong Kong Stock Rally Shakes Up Investor Playbook for China
Wall Street entered 2025 with bullish bets on onshore Chinese stocks, counting on Beijing's stimulus drive to cushion the blow from US tariffs. Six months in, they couldn't have been more wrong. Blame it on the breakthrough by DeepSeek in artificial intelligence that suddenly turned the tide in favor of Chinese shares listed in Hong Kong. With persistent economic woes battering the onshore market, the Hang Seng China Enterprises Index has beaten the CSI 300 Index by nearly 20 percentage points so far in 2025, heading for the biggest annual outperformance in two decades. Strategists at Julius Baer Group Ltd. and Morgan Stanley are among those expecting the Hong Kong market's lead to continue. A slew of new hot listings, including bubble tea maker Mixue Group and battery giant Contemporary Amperex Technology Co. Ltd., has reignited global interest toward the financial hub and expanded investment options. Mainland investors have poured nearly $90 billion into Hong Kong stocks this year, already nearing 90% of the whole amount for 2024. The sector structure in Hong Kong 'is also becoming more comprehensive with recent listings and upcoming IPOs,' said Richard Tang, China strategist at Julius Baer. 'H-shares are likely to continue outperforming A-shares driven by global rebalancing flows and strong Southbound flows,' he added, referring to Hong Kong and mainland-listed stocks, respectively. As the Hang Seng China gauge has gained 17% this year, the CSI 300 Index has shed more than 2%. Analysts attribute the weakness to the onshore market's composition — heavy on property, financial and traditional consumption stocks — which are more reliant on domestic demand. Tech heavyweights including Alibaba Group Holding Ltd. and Tencent Holdings Ltd. are listed in Hong Kong. Despite China's unexpectedly strong retail sales in May, deflationary forces and a housing slump persist. Even as trade tensions continue to simmer, the big bang stimulus from Beijing that some investors had hoped for has yet to materialize. A key source of support for the A-share market has also subsided. After actively propping up stocks early April as tariff shocks hit, state funds have been notably absent, according to Bloomberg's analysis of exchange-traded funds purchased by Central Huijin Investment. Meanwhile, things have been coming together for Hong Kong. HSBC Holdings Plc expects mainlanders' purchases via the southbound stock connect to reach $180 billion this year, an unprecedented amount. Read: What's Behind China's Listing Frenzy in Hong Kong?: QuickTake A reassessment of China's tech potential has driven a re-rating of stocks in Hong Kong. The Hang Seng China gauge now trades at 9.3 times its forward earnings estimates, above a five-year average of 8.5 and sharply higher than the 2024 low near a ratio of six. 'More single-stock opportunities related to AI and new consumption, particularly the larger caps, are listed in Hong Kong,' Morgan Stanley strategist Laura Wang wrote in a note earlier this month. 'Some of the long-term well-liked A-share companies are choosing to come to Hong Kong for dual-listing.' The steep underperformance of A-shares, however, means there may be room for catch-up. The premium that onshore stocks have long commanded over Hong Kong peers has narrowed to about 30%, below a five-year average of around 42%. Fiscal stimulus could revive interest in beaten-down sectors onshore, such as consumer staples. There's also an array of hardware tech firms that should benefit from Beijing's push for self sufficiency. 'A-shares still have investment appeal,' said Agnes Ng, portfolio specialist at T. Rowe Price Group Inc. 'If China's economic growth slows in the second half and stimulus is deployed, A-shares would benefit directly.' Yet the limited pool of attractive megacap stocks onshore means the recovery will once again hinge on if and when Beijing will deploy greater stimulus. That lingering uncertainty will likely keep investors favoring Hong Kong for the time being. 'H-shares are typically higher beta due to the index make-up — and in an up year are likely to outperform,' said Robert Mumford, investment advisor at GAM Investments. 'The end-goal of a range of policy stimulus is to increase consumption, which is the core underlying business of the internet platform companies. Hence we are more positive on H shares versus A.' This article was generated from an automated news agency feed without modifications to text.
Yahoo
21-03-2025
- Business
- Yahoo
Chinese Stocks in Hong Kong Set for Biggest Two-Day Drop in 2025
(Bloomberg) -- Chinese stocks slumped on Friday, extending this week's losses, with investors citing a lack of fresh catalysts after a blistering rally. New York Subway Ditches MetroCard After 32 Years for Tap-And-Go Despite Cost-Cutting Moves, Trump Plans to Remake DC in His Style LA Faces $1 Billion Budget Hole, Warns of Thousands of Layoffs Amtrak CEO Departs Amid Threats of a Transit Funding Pullback NYC Plans for Flood Protection Without Federal Funds The Hang Seng China Enterprises Index slid as much as 2.7%, headed for its steepest two-day drop since Nov. 12. Technology shares bore the brunt of the selling after powering the market for most of the year. Xiaomi Corp. and Alibaba Group Holding Ltd. lost more than 2.5% each. Onshore, the CSI 300 Index dropped 1.5%. Bearish calls have also started to crop up, with BofA Securities warning this week of a 'meaningful correction soon.' Morgan Stanley sees volatility ahead, noting that onshore investor sentiment has cooled. The caution suggests the market has priced in the positives that emerged from the National People's Congress earlier this month, when authorities pledged to support economic expansion and AI development. While tech earnings have been largely positive so far, share reactions have been mixed as upbeat expectations were already priced in. This year's rally has also taken valuations above historical averages. The Hang Seng China gauge is trading at 10 times its forward earnings estimates, compared to a five-year average of 8.5. Profit-taking pressure is rising on Hong Kong-listed tech stocks following their earnings, Alvin Ngan, an analyst at Zhongtai Financial International Ltd., wrote in a note. 'The valuation gap between Chinese and US tech stocks has significantly narrowed after a correction in US stocks.' Onshore investor sentiment has also dropped in the past week, reflected in lower trading volumes, Morgan Stanley strategists led by Laura Wang wrote in a note. They expect to see some volatility in the earnings season. The Hang Seng Tech Index dropped more than 3% on Friday. Even with that, the gauge is about 26% higher for the year. Food delivery giant Meituan shares slipped ahead of earnings due Friday. BYD Co. — one of this year's biggest stock winners — tumbled more than 8% in Hong Kong before results due next week. Earlier this week, Xiaomi Corp. hiked its 2025 delivery target, while Tencent's revenue rose a better-than-projected 11% in the final quarter and net income almost doubled. The coming week may offer investors some fresh cues as a spate of companies — including from some of China's biggest banks and consumer firms — are due to report their results. --With assistance from Mengchen Lu. A New 'China Shock' Is Destroying Jobs Around the World Tesla's Gamble on MAGA Customers Won't Work How TD Became America's Most Convenient Bank for Money Launderers The Real Reason Trump Is Pushing 'Buy American' One Man's Crypto Windfall Is Funding a $1 Billion Space Station Dream ©2025 Bloomberg L.P.
