HSI may hit 30,000 after consolidation, says StanChart

April 09, 2015 18:54
Standard Chartered investment strategist Will Leung Chun-fai says the market needs time to digest its recent sharp rallies. Photo: EJ Insight

The Hong Kong stock market may reach 30,000, but is likely to experience some consolidation in the short term, an investment strategist at Standard Chartered said.

“We believe that what is going to happen is unlikely to be as smooth as what happened in the past three months. The market needs time to digest the sharp rallies," said Will Leung Chun-fai, head of investment strategy in wealth management at Standard Chartered.

The volatility of the Hang Seng Index this year is expected to be between 5,000 and 6,000 points, more than the 4,000-plus points seen in the previous year, Leung said.

But the market is currently enjoying a bull phase, and is likely to rise further in view of the low valuation of stocks, Beijing's supportive measures, and a possible delay in the much anticipated interest rate hike in the United States, he said.

The HSI added to Wednesday's sharp rally, rising 2.7 percent or 707 points to finish at 26,944 points on Thursday. Turnover reached an all-time high of HK$291.5 billion.

The benchmark gauge opened strongly with a rise 676 points and soared 1,685 points to 27,922 at its peak. It rose 961 points to close at a seven-year high on Wednesday.

The Hong Kong stock exchange became the world's biggest bourse in market capitalization after a sharp rise in its stock price on Wednesday. It is now worth HK$279.9 billion.

Hong Kong Exchanges and Clearing Ltd. (00388.HK), the bourse operator, added 8.9 percent to end at HK$239.6 in Thursday's trading.

Lenovo Group (00992.HK) led the rally among blue chips, climbing 9.3 percent to HK$12.74.

Funds continued to flood the Hong Kong stock market after mainland fund houses without quota under the Qualified Domestic Institutional Investor scheme gained regulatory approval last week to invest in Hong Kong shares via the Shanghai-Hong Kong Stock Connect.

The daily quota of 10.5 billion yuan (US$1.69 billion) for Hong Kong-bound investments under the connect scheme was used up at about 2 p.m. for the second time since the inception of the stock trading link.

Northbound trading stood at 17.97 billion yuan, showing that there were more selling than buying orders, as it exceeded the daily stock quota of 13 billion yuan.

The Hang Seng China Enterprises Index, the main gauge for H shares, was up 2.6 percent to close at 13,748.

But the mainland stock market took a breather from its five-day rally. The Shanghai Composite Index slipped 0.9 percent to 3,957 while the CSI300 Index was down 0.8 percent at 4,262.

– Contact us at [email protected]


EJ Insight reporter