Market capitalisation climbs to record $10 trillion as HSI closes 0.94pc higher The stock market made a double breakthrough yesterday with the Hang Seng Index breaching the 17,000-point barrier for the first time in almost six years and the market capitalisation hitting a record high of $10.009 trillion. To mark the occasion, Financial Secretary Henry Tang Ying-yen joined new Hong Kong Exchanges and Clearing chairman Ronald Arculli, his predecessor Charles Lee Yeh-kwong and HKEx acting chief executive Patrick Conroy for a ceremony in the trading hall. 'I am honoured to witness the market cap pass the $10 trillion landmark after becoming chairman just a few days ago. We are proud of this achievement, but we will not become complacent,' Mr Arculli said. 'I am confident the local stock market will continue to grow with the support of the central government and the coming new listings of mainland enterprises.' Led by banking giant HSBC Holdings and property plays, the index rose 158.94 points or 0.94 per cent to close at 17,026.98. At one stage, it soared 231.44 points to reach an intraday high of 17,099.48. HSBC, which created its own record by reaching $137.30, added 49.69 points to the index alone, thanks to a strong British pound. Property plays were supported by market talk that the cycle of 15 consecutive US interest rate rises could be coming to an end, while developers are preparing to accelerate the launch of new projects to boost sales. Turnover rose to $39.25 billion from $37.08 billion on Tuesday. However, traders are bearish about the market's outlook, saying the blue-chip index was technically 'overbought' at the current level. They suggest investors consider reducing their holdings gradually. 'It is difficult to anticipate where the peak is now but clearly the upside for the index is very limited,' said Louie Shum, Sincere Securities' managing director. Further austerity measures to cool the mainland economy, another increase in US rates and rising oil prices were 'risks that are easily called to mind but currently not priced in the market', he said. Arjuna Mahendran, the chief economist for Credit Suisse's private banking business in Asia Pacific, said investors were likely to move away from Hong Kong dollar investments if the US dollar fell much further because of the peg. Credit Suisse sees a 10 per cent band near 16,700 as fair value level for the index. Mr Mahendran said it could yet rise to 17,500 but would not stay there for long. 'There will be sudden corrections and subsequent peaks. This is the pattern that we have seen in Japan and India this year,' he said. Mr Mahendran also noted that many markets exceeded their fair value when there was a lot of liquidity, which is driven to Asia mainly by US dollar weakness and strong growth prospects. Ricky Cheung, a fund manager at Phillip Asset Management, has an index target for this year at 17,200 with property stocks outperforming the market in the second half on the back of peaking rates.
