Stock indexes of China, Hong Kong ended the first quarter with spectacular surges. Can they repeat the feat next three months?
- Shenzhen’s Composite Index recorded the best quarter in years, while benchmarks of Shanghai and Hong Kong soared
- Outcome of US-China trade war will either make or break markets in the second quarter, analysts say
Stock indexes of Hong Kong, Shanghai and Shenzhen were among the world’s biggest winners in the first quarter, after spending 2018 near the bottom of the pile. Now comes the hard part: repeating the feat in the next three months.
Shenzhen’s Composite Index soared 33.7 per cent in the first quarter, the top gainer out of 94 stock benchmarks tracked by Bloomberg, while Shanghai’s main gauge jumped 23.9 per cent. In Hong Kong, the Hang Seng Index rose 12.4 per cent to close the quarter at 29,051.36.
“The incredible run-up has reflected all the good news in the first quarter,” said Ronald Wan, non-executive chairman of Partners Financial Holdings.
That include improving liquidity in China and beyond on the back of the government’s monetary easing policies and the decision by the US Federal Reserve to slow its pace of raising interest rates. Progress in trade negotiations and China’s promised fiscal stimulus, including a planned 2 trillion yuan (US$297 billion) tax and fee cut this year, also lifted sentiments.
For the momentum to hold, investors must see substantial improvement in company earnings and the real economy, Wan said.