Time to be positive about Hong Kong stocks, fund manager who correctly forecast January pullback says
- There are ‘gradual but very clear’ signs that China’s economy has improved, MegaTrust Investment’s Qi Wang says
- Hong Kong’s ‘fear gauge’, the Hang Seng Volatility Index, has fallen back to levels seen before the Credit Suisse crisis rattled local investors
It is time to be positive about Hong Kong stocks again, with a US$450 billion correction over, according to boutique-fund manager Qi Wang. It will not be smooth sailing, but the market is more likely to rise than drop over the next two months, he said.
Wang’s call was echoed by Alpine Macro chief strategist Yan Wang’s optimism. “China should be insulated from the US and European banking sector turbulence,” Yan said. The latest economic data confirmed a steadfast recovery in China, while still-sluggish sectors will prompt authorities to stay firmly accommodative, he added.
“We expect growth rates will pick up strongly after the second quarter, as the favourable base effect kicks in,” Yan said in a note to clients on Tuesday.
About 75 per cent of Asian fund managers polled by the Bank of America expected Chinese equities to end the year on a higher note even if US stocks do not, according to the bank’s latest survey. US-China relations and potential policy tightening are still key risks for investors, the bank added.
Despite being optimistic about the outlook, MegaTrust’s Wang said he was unsure about where the Hang Seng Index will go from here in the next wave. “The market will be choppy,” he said. “But I think the upside definitely outweighs the downside risks.”
MegaTrust’s 39-member Hong Kong Reopening Index, launched towards the end of December last year to track the reopening of the Hong Kong and Macau economies, was down 2.4 per cent through Monday. That beats Hang Seng Index’s 4 per cent retreat over the same period.