Technical factors, like the unwinding of the ‘Asia ex-China’ trade, seem to be driving Hong Kong’s stock rally, as opposed to underlying fundamentals. In the longer run, the narrative around China’s economy and markets has to brighten considerably if Hong Kong stocks are to continue their recovery.
China finds itself in need of its latest landmark reform as the urban-rural divide keeps growing and the broader economy is seeking new sources of growth. One possible solution is finding better uses for rural land and giving farmers the same legal rights as urban residents to rent, transfer or mortgage their land.