Date
13 December 2017
Artificial intelligence, self-driving cars, virtual reality, Big Data are some themes that may take years to fully run the course. Photo: Reuters
Artificial intelligence, self-driving cars, virtual reality, Big Data are some themes that may take years to fully run the course. Photo: Reuters

Divergence is the new norm in equity market

Although Hang Seng Index is usually seen as a gauge of the overall Hong Kong market strength, the benchmark is in reality becoming less and less reflective of the broad trading landscape in the city.

That is because lot of the action is taking place in counters that are outside the HSI, and the performances of various sectors are also becoming increasingly divergent.

For example, cyclical plays have done fairly well in recent months while blue-chip counters like China Mobile (00941.HK) and properties have continued to lag behind.

Meanwhile, stocks associated with new investment themes have emerged as fresh hotspots and are riding a bullish trend.

Artificial intelligence, self-driving cars, virtual reality, Big Data are some themes that will take a long while to fully run the course.

Backed by a strong, lasting theme, companies linked to new businesses have been showing high resilience on the stock market, with pullbacks very limited and very brief.

Investors who already own such counters better stay invested rather than trying to get in and out.

Since we are in the middle of some drastic technological changes, certain groups of stocks feasting on such trends will continue to prosper for years to come.

On the flip side, companies that are going to be disrupted by new technologies could remain under pressure for an extended period.

This article appeared in the Hong Kong Economic Journal on April 11

Translation by Julie Zhu

[Chinese version 中文版]

– Contact us at [email protected]

RC

Director, Asset Management at Ample Capital Limited.

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