Hang Seng Index back to where it was in 1997
The hits just keep on coming for the Hong Kong stock market.
At yesterday's closing, Hang Seng Index fell close to two per cent to the year-low of 16,327, below the peak in 1997.
Not only Hong Kong is back to where it was 26 years ago when it returned to China, but it’s also the worst-performing equity market among the major markets so far this year.
The worst seemed to be far from over. Yesterday credit rating agency Moody’s downgraded its outlook for China from stable to negative due to its economic slowdown and property risks.
Who could have predicted Hong Kong would end up in this situation? A year ago, confidence seemed to be back when Hong Kong began to re-open after the three-year pandemic.
Unfortunately it was a mirage as mainland tourists are not spending as much as they were before. Even worse, many Hong Kong people went abroad to spend after the reopening. More importantly, foreign investors are not coming.
As such, almost all industries from banking to property to retail to dining are doomed. Last week, Sevva, the hangout club for investment bankers, said it is closing early next year, further confirming that Central is ailing.
Show me a good profession other than liquidation that is still vibrant under the current scenario.
That is perhaps why netizens on the mainland are questioning if Hong Kong has become an international finance centre heritage.
Secretary for Financial Services and the Treasury Christopher Hui Ching-yu hit back, saying that Hong Kong was “not a tall building or a monument that can be brought down by pressure”, adding that Hong Kong’s financial market has a solid foundation, it is “internationalised, comprehensive and growing in nature”.
We don’t need a senior government official to tell us the poor stock market performance is due to a multitude of macroeconomic factors such as the uncertain global economic outlook, unstable geopolitical conditions and the high interest rate environment.
This week, mainland netizens’ view on Hong Kong has turned even more negative, with some calling Hong Kong a ruined financial hub. One of them ridiculed Hong Kong is fast becoming a self-proclaimed Asian financial centre and will eventually become just one of the cities in Guangdong with a stock market.
Is this prediction too harsh? If the market continued its performance like the past week, perhaps we would see HSI sink below 15,000 by year-end.
It takes perhaps a leap of faith for HSBC Private Bank, which suggests the worst might be over for HSI as it predicts the market could go up to 19,890. Good luck to Hong Kong!
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