Hong Kong’s stock benchmark completes weekly gain as market wraps up an unprecedented four-year losing streak

Hang Seng Index’s 3.8 per cent gain this week offered some consolation for investors in another poor year for Hong Kong
Challenges in the China’s domestic economy could overwhelm any cyclical gains in Hong Kong next year, says Silvers at Kaiyuan Capital

Hong Kong stock market

Jiaxing Li

Published: 10:45am, 29 Dec 2023

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Hong Kong stocks rose, keeping the benchmark index at the highest level in four weeks. The market still logged an unprecedented fourth year of losses as trading volume shrank to the lowest since 2019. UBTech Robotics rose after completing the final stock offering of the year.

The Hang Seng Index gained 0.1 per cent to 17,047.39 on Friday, bringing this week’s advance to 4.3 per cent. The Tech Index was little changed while the Shanghai Composite Index added 0.7 per cent.

Tencent added 0.2 per cent to HK$293.60 while top EV maker BYD rose 0.4 per cent to HK$214.40 and Li Auto jumped 1.8 per cent to HK$147.10. Wuxi Biologics advanced 2.4 per cent to HK$29.60 and Hansoh Pharma rallied 6.3 per cent.

Limiting gains, Alibaba Group fell 0.3 per cent to HK$75.60 while Meituan slipped 0.5 per cent to HK$81.90. Smartphone maker Xiaomi tumbled 4.2 per cent to HK$15.60 and China’s biggest chip maker SMIC retreated 1.7 per cent to HK$19.86.

The 82-member Hang Seng Index fell 13.8 per cent this year, the worst among major stock indices worldwide. The city’s broader stock market lost about US$523 billion of market value in the process, according to Bloomberg data. The top three losers, Li Ning, Country Garden Services and Zhongsheng Group, slumped by 53 to 69 per cent.

Average daily trading volume in the city’s stock market has shrunk to HK$104.6 billion (US$13.4 billion) this year, lowest since 2019, according to Bloomberg data.

“Hong Kong’s role as an Asian financial powerhouse seems increasingly at risk,” said Brock Silvers, managing director at Kaiyuan Capital in Hong Kong. Struggles among Chinese developers and local governments, “along with investability and geopolitical concerns, are likely to overwhelm any cyclical gains next year,” he added.

UBTech Robotics makes its stock debut in Hong Kong on the last trading day of 2023. Photo: Yujie Xue

This week’s gain remains the best since end-July, driven by a recovery of video-gaming operators Tencent and NetEase. The duo had lost a combined US$63 billion in a sell-off last Friday, triggered by proposed curbs on excessive in-game spending.

“Hong Kong’s equity market is likely to face challenges in slower growth in turnover and financing activities in 2024,” said Gary Ng, senior economist at Natixis. With China’s policy risk and geopolitical tensions in play, it is still questionable if investors return to the city versus other more appealing alternatives, he added.

Elsewhere, two stocks debuted on Friday. UBTech Robotics rose 0.9 per cent to HK$90.85 in Hong Kong, while Dalian Dalicap Technology surged 225 per cent to 28.99 yuan in Shenzhen.

Asian markets mostly traded lower on Friday. Japan’s Nikkei 225 lost 0.2 per cent, the S&P/ASX 200 Index in Australia declined 0.3 per cent while South Korea’s Kospi Index jumped 1.6 per cent.