Hot Chinese ADRs rallied as Hong Kong stocks march into bull market.
Hong Kong’s world-beating stock rally is showing no signs of letting up, with the city’s currency peg to the greenback burnishing its haven appeal amid the threat of higher-for-longer US interest rates.
The Hang Seng Index jumped 2.5% on Thursday to enter a technical bull market, even without the presence of mainland Chinese buyers due to a holiday. The risk-sensitive Hang Seng Tech Index surged 4.4%, alongside developers and casino operators.
The strong showing came as global money managers rejig their portfolios due to a repricing of the Federal Reserve’s policy path, with the US central bank downplaying the potential for imminent rate hikes. Asian currencies have been hammered by the dollar’s extended reign, eroding equity returns in respective markets. As a result, some funds are rotating out of top-performing markets such as Japan and Taiwan and into Hong Kong.
Meanwhile, the dollar peg has sheltered the city’s assets from a selloff in global markets, with the Hong Kong dollar being one of the only two Asian currencies that saw gains over the past month versus the greenback.