If investors continue to maintain an interest in stocks, more gains are possible, strategists say
Strong inflows of foreign capital and favourable economics have put Hong Kong at the centre of an apparent rerating of Asian markets, with strategists arguing that further gains are likely should global investors maintain their renewed love of equities.
Hong Kong stocks rose to a one-year high this week, helped by bountiful liquidity that pushed turnover to the highest levels seen in two years, a trend repeated across regional markets as the rotation from battered bonds to equities gathered place.
Hong Kong benefited from asset allocators' shift out of European markets and a move away from Asian centres such as South Korea as investors focus on the effects of boom-bust credit cycle in that country.
Tuesday's confirmation of a continued low interest-rate policy by the United States Federal Reserve, strong economic data and a resulting continued sell-off in bonds have created a favourable alignment for Hong Kong, which many investors are touting as having been oversold during the Sars crisis.
'Hong Kong has done so badly for six months. It has not figured on regional institutional fund managers' radar screens but now investors are looking at it again,' Morgan Stanley Asia-Pacific Strategist Norman Villamin said.
