Investors fear disruption to the 3-month rally in Hong Kong’s stock market has just started
- Investors are beginning to question if the 7 per cent decline in the Hang Seng Index since January 27 has further to go
- Foreign funds’ purchases of Chinese stocks have slowed down to US$1.3 billion in February versus a record US$19.4 billion in January
The market rally in Hong Kong has come up against an unexpected triple whammy of geopolitical risks, a tighter regulatory environment and the Federal Reserve rate outlook.
The US-China tension triggered by the spy balloons, imminent restrictions to curb capital outflows in China and a tighter Fed policy outlook have hobbled the 54 per cent gain in the Hang Seng Index following the boost from the border reopening three months ago. Some analysts and money managers are starting to question if the 7 per cent decline since the rally peaked on January 27 has more room to go.
The Hang Seng Index has fallen by an average of 11.7 per cent after a bull run based on market history in the past 10 years, and the decline lasts for two to three months, Ou Yafei, an analyst at GF Securities in Guangzhou, said in a note on Monday.
