Hong Kong stocks will resume their rally soon as Beijing support lifts sentiment: analysts

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A potential rate cut and more supportive measures expected to emerge from Beijing’s third plenum could all give the Hong Kong market the impetus it needs, say analysts and money managers

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The Hang Seng Index, which surged as much as 31 per cent in May from a January low in a US$1.2 trillion bull run, has been struggling to find direction lately. Photo: Eugene Lee

Eric JiangandJiaxing Li

Published: 6:00am, 21 Jun 2024

Hong Kong stocks could enjoy a better second half to the year following their recent decline, as global interest rates start to come down and more supportive measures in China provide a boost, analysts and money managers say.

A potential rate cut from the US Federal Reserve as early as the third quarter and more confidence-lifting measures expected to emerge from Beijing’s third plenum in July could all give the Hong Kong market the impetus it needs to resume the rally it achieved in the first five months of 2024, they said.

“The recent correction has opened up room for more structural opportunities,” Kevin Liu, equity strategist and managing director at CICC Research, said during a media briefing on Thursday in Hong Kong.

Risk appetite has been returning, and selling by foreign investors has passed its peak, which bodes well for the market, he said.

The Hang Seng Index, which surged as much as 31 per cent through May from a January low in a US$1.2 trillion bull run, has been struggling to find direction in recent weeks as the stimulus-powered upturn lost steam. The city’s benchmark index has fallen back 6.6 per cent after hitting a high on May 20, narrowing its first-half gain to 7.5 per cent, according to Bloomberg data.

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“The market is now looking for more catalysts, and is well positioned to climb higher” should the tailwinds come through, said Liu.