Hong Kong and China Stocks Are on a Tear. Should You Invest?

Bloomberg2024-05-13

After a multi-year slump, a tech-fueled rally is luring investors back to the world’s second largest economy. But will it last? Photographer: Paul Yeung/BloombergChinese stocks are mounting a comeback...

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neo26000
2024-05-13
neo26000
Buckle up, folks! Here comes another round of groundbreaking "China's economy is uncertain" news. Color me shocked! Maybe they'll even write a book about it - "China: The World's Most Surprising Not-Total-Economic-Collapse." By the time that bestseller hits shelves, I'm sure the market will have, what's the word... oh yeah, FREAKED OUT ALREADY. So keep shorting those stocks, naysayers! Your unwavering pessimism is definitely having a never-before-seen impact on the world's second-largest economy.

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Should You Invest?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-05-13 17:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.bloomberg.com/news/articles/2024-05-12/hong-kong-china-stocks-are-rallying-should-you-invest><strong>Bloomberg</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>After a multi-year slump, a tech-fueled rally is luring investors back to the world’s second largest economy. But will it last? Photographer: Paul Yeung/BloombergChinese stocks are mounting a comeback...</p>\n\n<a href=\"https://www.bloomberg.com/news/articles/2024-05-12/hong-kong-china-stocks-are-rallying-should-you-invest\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"02801","symbol_name":"安硕中国","start_time":0,"source_url":"https://www.bloomberg.com/news/articles/2024-05-12/hong-kong-china-stocks-are-rallying-should-you-invest","article_id":"1164490908","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=1164490908","pubTimestamp":1715592600,"columns":[],"sourceInfo":{"source_id":"lsy1584095487587","name":"Bloomberg"},"weMediaInfo":null,"summary":"After a multi-year slump, a tech-fueled rallyis luring investors backto the world’s second largest economy. 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But will it last? Photographer: Paul Yeung/BloombergChinese stocks are mounting a comeback.After three brutal years that saw major indices plunge more than 40%, both the Hang Seng Index and the MSCI China Index are up more than 9% this year, on par with the S&P 500.In fact, Hong Kong stocks recently notched their longest winning streak since 2018, before retreating slightly. The reasons behind the optimism include relatively cheap prices and speculation that Chinese officials will enact more policies that support the market.“Comparing Hong Kong stock valuation to other markets like Japan or India, you see more interest in Hong Kong,” said Chok Wai Lee, director of greater China equity research at Morningstar. “Global money has seen and is thinking, maybe I shouldn’t miss out.”But does that mean it’s time to buy? Or are the mounting risks — think geopolitical tensions — reason to steer clear?First, a little explanation: The MSCI China Index is a key gauge for Chinese equities, while the Hang Seng Index is comprised of companies listed on Hong Kong’s stock exchange. An arrangement called Stock Connect allows mainland China traders to invest in Hong Kong and vice versa. For people outside China, the easiest way to invest is through exchange-traded funds — more on that later.Here’s what you need to know:The ProsBlazing tech rally. Much of the recent gains have been driven by the outperformance of tech companies like Alibaba Group Holding Ltd. and Tencent Holdings Ltd., with both notching double-digit gains since mid April. That’s drawn in money from global funds afraid of missing out. The question now is whether the rally will continue or fizzle — a key indicator will come this week when Tencent, Alibaba, JD.com Inc. and Baidu Inc. report earnings. Tencent is expected to record a 6% increase in revenue for the quarter through March, while Alibaba’s sales are predicted to increase by 5.6%, according to the average analyst estimates compiled by Bloomberg. Adrian Zuercher, co-head of global investment management for the Asia-Pacific region at UBS Global Wealth Management, said in a recent Bloomberg TV interview that since the rally has been driven by earnings, it could have more room to run as long, as companies deliver on results.Cheap valuations. Investors have started turning away from Japan — a winning play earlier in the year — to take advantage of lower costs for Chinese equities. HSBC Global Research analysts Herald van der Linde and Prerna Garg wrote in a recent note that they prefer stocks in China versus Japan in part because “crowded fund positioning in Japan suggest that Chinese markets are likely to remain in favor in the near term.”Policy support from Beijing. China’s housing crisis has weighed heavily on Asia markets, but potential new measures to boost the nation’s economy are giving investors hope. Late last month, the Communist Party said it would research ways to deal with unsold properties and use tools to lower borrowing costs. Officials will also meet in July to focus on economic reforms, a prospect that is boosting stocks in the near term, according to Bloomberg Intelligence analysts Marvin Chen and Jason Liao.Hong Kong’s dollar peg. Stocks listed in the city are also benefiting from the fact that the Hong Kong dollar is pegged to the US greenback, which has remained strong as the Federal Reserve projects higher-for-longer interest rates. A strong US dollar typically punishes foreign markets in part because it leads to outflows of capital. So while emerging markets in Asia and elsewhere are hurt by dollar gains, Hong Kong won’t be as affected.The ConsOverheated rally. Some strategists, including Laura Wang and Jonathan Garner at Morgan Stanley, have warned that equities in China and Hong Kong are overbought and that momentum is fading. They instead recommend purchasing individual stocks or looking at thematic opportunities. Researchers at Swiss Bank Union Bancaire Privée have also noted that the recent rally is likely driven by inflows from Chinese onshore investors, meaning it’s not backed by fundamentals.Uncertainty over China’s economy. Although policy support has increased optimism, the nation has a long way to go. China reported faster-than-expected economic growth in the first quarter, but also saw a retail sales growth decline in March, and industrial output fell short of forecasts. Bank of America strategists led by Winnie Wu wrote in a recent report that despite some “green shoots” in China’s economy, the overall macro recovery is relatively soft. Plus, in the first quarter, “the property market, which is a top concern for global investors, saw continued price and volume decline,” the strategists wrote.Geopolitical tensions. With relations between China and the US on shaky footing, especially in regard to data security, some of the biggest tech companies in Asia may face headwinds. For instance, new US legislation around national security risks may affect operations at Chinese firms such as Tencent’s WeChat app or PDD Holdings Inc.’s e-commerce marketplace Temu. Chok Wai Lee at Morningstar cautions against buying shares of companies that could be caught in the crosshairs of geopolitical tensions. “This year is a US election year, and you don’t know what the negative news flow will be,” he said.How to InvestFor US investors, the easiest way to invest in Chinese stocks is through ETFs listed on American exchanges. Two of the largest are BlackRock’s iShares MSCI China ETF (MCHI) and State Street’s SPDR S&P China ETF (GXC), both count Tencent and Alibaba among their largest holdings.For more tech focus, there’s the KraneShares Hang Seng TECH Index ETF (KTEC). And those wanting to bet on the Asia-Pacific region as a whole can use the JPMorgan BetaBuilders Developed Asia Pacific ex-Japan ETF (BBAX) or the iShares MSCI Pacific ex Japan ETF (EPP).Traders based in Asia have similar options. The iShares Core Hang Seng Index ETF (3115 HK) and Tracker Fund of Hong Kong (2800 HK) both closely correspond with the Hang Seng Index — similar to what the SPY ETF does for the S&P 500 in the US. To track the MSCI China Index, there’s the iShares Core MSCI China ETF (2801 HK).And for those wanting more tech exposure, the iShares Hang Seng TECH ETF (3067 HK) and CSOP Hang Seng TECH Index ETF (3033 HK) would fit the bill.","kind":"news","is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[{"id":305399393857672,"gmtCreate":1715594985483,"gmtModify":1715594989886,"author":{"id":"4131703342800552","authorId":"4131703342800552","name":"neo26000","avatar":"https://community-static.tradeup.com/news/11d50ec0d6202770a8629aa7f06a5d4f","vip":1,"hat":"https://static.tigerbbs.com/4c5ceab71416b120bab4604c0754b52a","crmLevel":9,"crmLevelSwitch":1,"idStr":"4131703342800552","authorIdStr":"4131703342800552"},"htmlText":"Buckle up, folks! Here comes another round of groundbreaking \"China's economy is uncertain\" news. Color me shocked!&nbsp; Maybe they'll even write a book about it - \"China: The World's Most Surprising Not-Total-Economic-Collapse.\"&nbsp; By the time that bestseller hits shelves, I'm sure the market will have, what's the word... oh yeah, FREAKED OUT ALREADY.&nbsp; So keep shorting those stocks, naysayers!&nbsp; Your unwavering pessimism is definitely having a never-before-seen impact on the world's second-largest economy.","listText":"Buckle up, folks! Here comes another round of groundbreaking \"China's economy is uncertain\" news. Color me shocked!&nbsp; Maybe they'll even write a book about it - \"China: The World's Most Surprising Not-Total-Economic-Collapse.\"&nbsp; By the time that bestseller hits shelves, I'm sure the market will have, what's the word... oh yeah, FREAKED OUT ALREADY.&nbsp; So keep shorting those stocks, naysayers!&nbsp; Your unwavering pessimism is definitely having a never-before-seen impact on the world's second-largest economy.","text":"Buckle up, folks! Here comes another round of groundbreaking \"China's economy is uncertain\" news. Color me shocked! Maybe they'll even write a book about it - \"China: The World's Most Surprising Not-Total-Economic-Collapse.\" By the time that bestseller hits shelves, I'm sure the market will have, what's the word... oh yeah, FREAKED OUT ALREADY. So keep shorting those stocks, naysayers! Your unwavering pessimism is definitely having a never-before-seen impact on the world's second-largest economy.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/305399393857672","repostId":1164490908,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":16,"commentSize":1,"repostSize":1,"favoriteSize":1,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.30.0","shortVersion":"4.30.0","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/1164490908"}