Hong Kong’s most sustainable companies report some of the year’s worst stock performances
- Conglomerates, utilities and property and construction companies have reported share price returns of between -10 and -40 per cent since January
- Sectors that thrived were, on the other hand, largely absent from index of best ESG performers
Many of these companies are old economy stocks, from sectors hit hardest by the Covid-19 pandemic, said Gary Chiu, a senior research manager at Hang Seng Indexes Company.
Conglomerates, utilities and property and construction companies, which account for about half of those on the Hang Seng Corporate Sustainability Index, have reported share price returns of between -10 and -40 per cent since January.
Sectors that thrived – seeing upwards of a 90 per cent jump in their market value – were, on the other hand, largely absent from the index. These include information technology, health care and industrial companies.
The underperformance of Hong Kong’s most sustainable companies was at odds with global trends, and the city’s best performers needed to raise their ESG standards, if they were to meet investor expectations that have only hardened this year.
“With growing recognition from investors that integration of ESG factors in investment decisions could help them manage risk more effectively, we see opportunities for fast-growing technology companies to improve their sustainability performance,” Chiu said.