Market bounce hands US$6.6 billion to Hong Kong’s super-rich as investors bank on China ‘returning to pragmatism’

Stock rally last week contributed to a US$6.6 billion wealth expansion for 16 of Hong Kong’s top billionaires tracked by Bloomberg
Investors are banking on Beijing returning to pragmatism by refocusing on the economy, says Wang Qi of MegaTrust Investment

Millionaires and billionaires

Jiaxing Li

Published: 7:30am, 17 Jul 2023

Why you can trust SCMP

The biggest rally in Hong Kong stocks since January helped deliver US$6.6 billion of wealth to the city’s richest tycoons. Forecasts by some market strategists for more upside this year could help reduce the damage inflicted by the Covid-19 pandemic.

The Hang Seng Index jumped 5.7 per cent last week for its best winning run since the opening days of 2023 as investors bet China’s years-long tech-sector crackdown has run its course. The rally also topped major global stock benchmarks, outpacing the S&P 500’s 2.2 per cent and the MSCI World Index’s 3 per cent advance.

The city’s 16 top billionaires enhanced their cumulative net worth to US$223 billion on July 14, according to Bloomberg data. They still remained poorer by US$1.6 billion from the start of the year.

02:40

How Li Ka-shing became Hong Kong's richest man

“Investors are desperately looking for signals of China returning to pragmatism [by] refocusing on the economy,” said Wang Qi, CEO of MegaTrust Investment in Hong Kong. “Such gestures do not really cost the government anything, yet they may be more effective than stimulus policies.”

Hong Kong stocks, futures halted on T8 signal as Typhoon Talim approaches city

Robin Zeng Yuqun is among the biggest winners so far this year with a net addition of US$653 million, allowing him to stay as the richest. His fortune is mostly tied to Contemporary Amperex, whose Shenzhen-listed stock has risen 4.4 per cent this year, outpacing CSI 300 Index’s 0.7 per cent gain.

Robin Zeng Yuqun, chairman and founder of CATL. Photo: Handout

The 55-year old founder of China’s top producer of batteries for electric cars is a Hong Kong citizen. He has topped the Bloomberg ranking since overtaking “Superman” Li Ka-shing in mid-May 2021. Li’s wealth climbed 3 per cent to US$29.3 billion. Henry Cheng Kar-shun remained as third richest, with a US$22.7 billion net worth.

Founder of Tesla supplier CATL topples Li Ka-shing as Hong Kong’s richest man

Lui Che-woo, 93, saw his wealth increase by about 7 per cent last week to US$17.3 billion, after this flagship casino operator Galaxy Entertainment surged 9.8 per cent. His fortune rose by almost US$1.2 billion this year through July 14.

In addition to the 16 top billionaires, Bloomberg’s list of the super-rich also names two additional tycoons whose assets are privately-held and assessed or estimated using peer-comparison benchmarks: Yeung kin-man, of iPhone parts maker Biel Crystal Manufacturing, and Sammy Lee, who controls the Lee Kum Kee group.

The second half may deliver more upside surprises, said Ai Xiongfeng, analyst at Sinolink Securities, especially after many China analysts at Wall Street firms have lowered their expectations over the past three weeks as Beijing’s slow-drip stimulus underwhelmed. The city’s equity market is likely to see a much better second half as liquidity improves, he added.

“The US dollar is set to enter a downward cycle as the Federal Reserve is nearing the end of its aggressive rate hikes, which will help Hong Kong stocks,” he said. Besides, China’s targeted stimulus measures will also whet the appetite for stocks.

Citigroup and Daiwa Capital Markets now expect the Hang Seng Index to climb by 10 per cent to 13 per cent by the end of this year, from Friday’s closing level. Goldman Sachs and Morgan Stanley predict the MSCI China Index will climb by about 10 per cent to 70 over the next 9 to 12 months.

China stock bulls wait for year-end bounce as economy, stimulus disappoint

Still, it may be a tough year to recover for the likes of Peter Woo of the Wheelock and Wharf property groups, Henry Cheng of Chow Tai Fook Jewellery and New World Development, and Xu Hang of Shenzhen Mindray Bio-Medical Electronics.

The trio has lost a combined US$4.8 billion of wealth this year, according to Bloomberg data, suffering the biggest erosion among the 16 billionaires with public-listed vehicles. Their flagship companies slipped by 5 per cent to 17 per cent in Hong Kong and Shenzhen this year.

“Their net worth is usually tied up in the value of the stocks they hold, and the valuation of Hong Kong companies has shrank quite a lot this year,” said Kenny Ng, strategist at Everbright Securities.

10:57

Boom, bust and borrow: Has China’s housing market tanked?

Hong Kong’s property market remains in the doldrums, with home prices sliding 5 per cent this year and prime-office vacancy in the central business district on the rise, while the presence of mainland Chinese investors has been sorely missed.

A series of interest-rate increases since March 2022 has also pushed borrowing costs to multi-year high, spoiling the real-estate investment market and unravelling some mega deals while burdening debt-laden developers. Mindray’s prospect has also dimmed as Covid-19 is downgraded to common flu.

For now however, investors will be savouring the turnaround in market sentiment, and hoping Beijing will keep sending the right signals to help restore confidence in the market.

The market has responded favourably to the news that China’s central bank levied a fine of 7.123 billion yuan (US$984.33 million) against Hangzhou-based Ant Group on July 7, in what is widely seen as the last chapter in a long regulatory crackdown on the technology sector.

“Since the Ant Group news, Hong Kong-listed tech stocks have added over US$106 billion in market capitalisation,” said MegaTrust’s Wang Qi. “Is this a good trade for everyone? Hell yeah.”