The charge of Hong Kong and China bulls
Economic sentiment is improving in Hong Kong and China. This is evident by the bullish performance of Hong Kong’s Hang Seng Index and the Shanghai Composite Index.
According to South China Morning Post, Hong Kong’s Hang Seng Index on Monday gained 3.8 per cent to 26,339.16, led by information technology and consumer staples stocks. That surge was enough to power it into a bull market.
The benchmark tumbled into a bear market – defined as a 20 per cent drop from a recent high – on March 13, but continued to fall to its lowest level on March 23, when it hit 21,696.13. What gave it the big push downhill was the coronavirus spreading from China to the rest of the world, and in the process upending global stock markets and supply chains. To be in a bull market, the Hang Seng Index needed to rise 20 per cent from that March 23 hole. On the way to getting to Monday, it gained US$1.1 trillion in market capitalisation.
Bulls are rushing on positive sentiment
The Shanghai Composite Index shot up 5.7 per cent on Monday, just a hair less than its 5.8 per cent run-up on July 2015, when China markets were experiencing extreme turbulence that would lead to a more than US$3.4 trillion market cap wipe-out.
The market enthusiasm followed a front-page editorial in the state-owned newspaper China Securities Journal on Monday that said nurturing a “healthy bull market” after the pandemic is crucial to the economy. Retail investors rushed in.
A steady stream of positive data has been coming out of China, signalling the economy is steadily recovering from the devastation of the coronavirus, which exploded in the city of Wuhan in January, leading to unprecedented lockdowns and business closures. The positive signals have boosted not only mainland stocks, but also the Hang Seng, where more than half of the market capitalisation is made up of mainland companies. In addition, mainland investors have been buying record amounts of Hong Kong stocks, pushing up the benchmark and overall sentiment.
The virus came after months-long protests in the city that turned violent at times, as well as the US-China trade war. The triple whammy has the city stuck in a nasty recession.
But, as the world’s governments and central banks rushed in with huge fiscal and monetary lifelines, sentiment has improved. Global fund managers are now bullish on Hong Kong stocks in the second half of 2020. A stream of initial public offerings is in the pipeline, and there is much anticipation that more US-listed Chinese companies will do secondary listings, following Alibaba, NetEase and JD.com.
Ideal time to invest
With Asian countries managing the pandemic quite well within their borders, and economic recovery underway within Asia, it is likely that the financial markets have reached the bottom and are having a rally. While some businesses are under financial distress, which resulted from the lockdowns in many parts of the world, several businesses are adapting to the new global financial order.
Given these developments, there are reasons for us to be cautiously optimistic about the future. As people and businesses make adjustments to the new environment posed by the pandemic, economic activity is improving, and the global economy will be on the road to recovery.
This recovery will present plentiful investment opportunities for you to invest. Aplex VA is able to use its resources and channels to grow the wealth of its investors. Emerging bargains, as a result of depressed government bonds, credit, stocks, and commodities, are presenting investment opportunities for investors. This is the time when there are plentiful investment opportunities for investors to generate positive returns. We track developments in global financial markets to ensure we can achieve good financial returns on our clients’ investments.
Therefore, if you need professional assistance in growing your wealth, let’s have a discussion. Let us, Aplex VA Limited, become your financial partner can help you to build your wealth.