Hang Seng Index knocked by poor Chinese data
City's share market starts 2014 badly, with some analysts expecting it to underperform this year
Hong Kong shares got off to a sluggish start to the new year under the shadow of more disappointing manufacturing data from the mainland. Some market watchers have already lowered their sights for the market, expecting the benchmark index to lag global peers in 2014.
The Hang Seng Index gained 33.66 points, or 0.14 per cent, to finish at 23,340.05 yesterday, after a factory activity report for last month fell short of estimates. The final HSBC/Markit manufacturing purchasing managers index, released yesterday, slipped to 50.5 from 50.8 in November.
Hong Kong was the worst performer among major developed equity markets last year, as investors cashed out due to growing worries about the mainland's economic growth and concerns over the tapering of quantitative easing in the United States.
The city's benchmark index rose just 2.6 per cent last year, compared with gains of 56 per cent for Tokyo's Nikkei Index and 29 per cent for the S&P 500 Index in the US.
"The price to earnings ratio is still below the average 12.7 times, but the index lacks a catalyst for growth in the short term," Catherine Cheung Man-wah, head of investment strategy and research at Citibank Hong Kong, said yesterday.
Cheung expects the local benchmark to climb to 25,000 points by the end of this year, representing a gain of only 7.1 per cent from yesterday's close. She expects the market will benefit from cheap valuations, with potential support from economic restructuring on the mainland.