28 October 2016
Financial Secretary John Tsang (inset), who usually takes a prudent approach, says there will be no bubbles in the stock market. Photo: HKEJ
Financial Secretary John Tsang (inset), who usually takes a prudent approach, says there will be no bubbles in the stock market. Photo: HKEJ

Lessons we learned from this week’s stock rally

What a powerful rally in the Hong Kong stock market! When investors came back from their extended holiday, they must have regretted not spending more because they found themselves at least 10 percent richer.

But what have we learned this week?

1. Easter meets Ching Ming.

This must be one of Hong Kong’s most confusing holidays. One sells you a story about rising from the dead, while the other reminds you to remember the dead. Who to believe? This year, Easter indeed brings hopes to investors. Cast the first stone against all those stock market commentators – none of them told you the Hang Seng Index would soar by 2,000 points and turnover would reach close to HK$300 billion. Even among those who watched New York and Shanghai rally in the past year, no one came close to thinking that this could happen in Hong Kong.

2. John Tsang says no bubbles.

Forget the past. The next thing to consider is whether to buy or sell. If you still believe in our government officials, what do they really mean when they say there will be no bubbles in the stock market? Take note that the assurance comes from a prudent financial secretary who is fond of giving warnings but recently found fun on Facebook. Does he want to please the next generation? Has he got any tips from Beijing that the Hang Seng Index will shoot up to 40,000 before summer? Do they know George Soros or any of his ilk are shorting the market in expectation for another Occupy Movement? Something is going on, but I don’t know. Perhaps you do.

3. Your loss is my gain.

There must be a reason why the God of Fortune shines on Hong Kong. Perhaps he has always been here but we couldn’t recognize him in the midst of the 40 million mainland tourists who flood the city every year. In hindsight, when China shares went up 20 percent in three months after a 50 percent rally late last year, you know they will need a break before the stock regulator steps in. so, where to go? Macau used to grab big winnings on the gambling table, but not when Beijing is working closely with the ICAC in the Sin City for the second wave of its anti-corruption drive. A luxury watch expo in Macau has just been canceled, and who knows what’s next. It is understandable why Hong Kong is having its moment now.

4. What goes up must go down?

Wealth is like the wind.  The same thing can be said about China’s richest tycoon Jack Ma, whose Alibaba Group stole the limelight last year with the world’s biggest initial public offering and an amazing post-IPO performance. Not this year, though. His stock is falling, and his company is being investigated for allegedly selling fake goods. Do we still regret that he didn’t list his company in this part of the world? Jack may be down but not the other Mas. Tencent’s Pony Ma and Ping An’s Peter Ma are fast catching up, which makes this three-horse race the most exciting ever.

5. What if you have grandma stocks like HK and China Gas (00003), Wharf (00004) and HSBC (00005)?

Come on, don’t you have any China stock? I am just double checking here. That’s alright. All these are good stocks for long-term investors. You just have to cover your ears when your friends regale you with their juicy stock-punting stories and let them pay the bill. Be patient. Think of the dividend payout dates this summer.

6. Who is your mom?

Say China, not US of A. After all, you may fancy their democracy and educational system, but they don’t give you a Hong Kong-New York Stock Connect. The rally reminds you of the importance of “pocket first” in Hong Kong. Money, not democracy, rules in Hong Kong. There is no better time to celebrate the Hong Kong stock rally with the Chinese national anthem:

Arise! Arise! Arise!
Millions of hearts with one mind
Brave the enemy’s gunfire, March on!

– Contact us at [email protected]


EJ Insight writer

EJI Weekly Newsletter