Hong Kong stocks edge higher on Monday, the last trading session of Year of the Dog
- Hang Seng Index declined by 10 per cent during the lunar year
- Reasons to be positive in Year of the Pig, JPMorgan Asset Management says
Hong Kong stocks ended the Year of the Dog on a positive note on Monday, with the benchmark Hang Seng Index rising by 0.21 per cent to 27,990.21 in a shortened session. In what has been a naughty run, the gauge declined by 10 per cent during the lunar year, its worst performance since the Year of the Goat in 2015. The market will reopen on Friday.
The lunar year was marked by escalating tension between the United States and China, a slowing Chinese economy and a stronger US dollar weighing on emerging market activity. These three “big rocks” combined to dampen Asian financial markets over the past 12 months, said Tai Hui, chief market strategist for Asia at JPMorgan Asset Management.
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But, there is reason to be positive going into the Year of the Pig, he added. “Valuations in Asia, in Hong Kong, they continue to be attractive. They may not be super cheap, but they are certainly fairly priced.
“I think investors will appreciate that. Also, investors towards the end of last year were just a little bit too pessimistic on the prospects for the global economy. The fact that the Fed is slowing down, that the Chinese authorities are turning on the stimulus, I think it will help to provide a bit more confidence on the growth outlook for both the Asian and the global economy. That should definitely provide some support to Hong Kong stocks and Asian equities for the first half.”
US President Donald Trump put tariffs on nearly half of all goods imported from China in a trade war that broke out last year. Beijing imposed its own tariffs and cut imports from the US, in response. And as the trade war escalated, China’s economic growth continue to slow, with gross domestic product increasing at its worst pace since 1990. GDP growth in the fourth quarter was at its lowest since the global financial crisis.
China’s benchmark Shanghai Composite Index ended the Year of the Dog down 18.2 per cent in its final trading day of the lunar year on Friday, posting its biggest lunar year loss since the Year of the Rat in 2008. The Shenzhen Composite Index ended the Year of the Dog down 26.3 per cent to 7,684.
Hong Kong’s economy also grew at its slowest quarterly pace in two years in the third quarter, according to the most recent data available from the Hong Kong government. Fourth quarter GDP numbers will be released later this month.