Equity markets in the region, including Hong Kong, could face more rough weather in the near term due to liquidity outflows amid problems in emerging economies and rising interest rates in the United States, according to some investment veterans.
Victoria Mio, Robeco’s China chief investment officer and co-head of Asia Pacific equities, said poor sentiment in Hong Kong is partly due to fund outflows following the recent rate hike in the US.
The liquidity pressures have also exerted pressure on the Hong Kong dollar, which has fallen sharply against the US dollar in recent days, she said.
Mio warned that the Hong Kong stock market may slide further to the 2008 low as foreign investors who are barred from short-selling A-shares on the mainland may turn to Hong Kong for their selling, the Hong Kong Economic Journal reported.
It may take two months for the market to reflect all the uncertainties before it rebounds and hopefully achieves a single-digit rise by the end of this year, Mio said.
Andrew Milligan, head of global strategy at Standard Life, said institutional investors are likely to be prudent this year in making any big move in the market.
Large institutions probably will avoid acquiring large caps listed in the US, Europe and Japan this year unless they are certain that there will be a mild growth in the global economy for the coming two years and the downtrends in oil price and the value of the Chinese renminbi no longer remain an issue, Milligan added.
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