Hong Kong Equity Market

Hang Seng Index: A Real-World Test of Contrarian Value Investing

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A Case Study in Valuation, Mean Reversion, and Patient Investing On October 3, 2022, the Hang Seng Index (HSI) closed at 17,079.51, weighed down by extreme pessimism, regulatory uncertainties, and economic headwinds in mainland China and Hong Kong. In the article I published at that time – What is the expected rate of return of Hang … Read more

Hong Kong’s Real Estate Companies: From Crisis to Opportunity Amidst Social Unrest, Pandemic Lockdowns, and Rate Hikes

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Introduction: The Case for Dividend Investing in Hong Kong’s Real Estate Sector Hong Kong’s real estate market, long a cornerstone of wealth creation, has faced unprecedented challenges since 2019. Social unrest, prolonged pandemic lockdowns, and aggressive interest rate hikes have battered property developers and Real Estate Investment Trusts (REITs) listed on the Hong Kong Stock … Read more

China announces coordinated package of policy measures to boost economy, property sector and stock market

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On the morning of September 24, 2024, the Chinese government unveiled a series of economic measures aimed at boosting growth in sectors like the property market and stock market. The announcement was made at a State Council press conference attended by three key government officials: The coordinated package of policiy measures focus on monetary easing, property market … Read more

What is the expected rate of return of Hang Seng Index? (as of 3rd October 2022)

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What is the expected rate of return of Hang Seng Index?

The Hang Seng Index (HSI) closed at 17079.51 points on October 3rd, down 34.9% from its 52-week high of 26,234.94 points. The index has clearly undergone a significant correction and is now in bear market territory. This short post attempts to estimate the expected rate of return of the Hang Seng Index with help from … Read more

A Tale of Two Markets – Personal observations on the current state of the US and Hong Kong Equity Markets

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A Tale of Two Equity Markets

Summary:

This article is a summarizes some personal observations that I have made regarding the current state of the US and Hong Kong Equity Markets. 2021 has been an eventful year for both US and Hong Kong equities.The S&P 500 has smashed multiple records in 2021, hitting record highs, one after another, culminating in the 52-Week High of 4545.85 on  2nd September 2021. 
In contrast to the superb performance of the S&P 500, the Hang Seng Index peaked early this year, hitting its 52-Week High of 31183.36 on 18th February 2021 and has been on a downward trajectory since then.
Given the stark contrast in the performance of the two stock indices over the past 52 weeks, an inquisitive investor would want to pose the following questions:

  • How does the current valuation of each index compare to historical data?
  • Given the current valuation levels, what will be the Implied Return on Investment for the S&P 500 and the Hang Seng Index?

Introduction

So far this year the US and Hong Kong equity markets have travelled along diverging paths. The US market has moved steadily upwards, drawing strength from the country’s economic reopening and recovery from the Covid-19 lockdowns. Consequently, the S&P 500 has climbed a wall of worries, moving from its 52-Week Low of 3233.94 (30th October 2020) to the recent 52-Week High of 4545.85 achieved last month on 2nd September 2021. The S&P 500 closed at 4391.34 on 8th October 2021.
On the other side of the Pacific Ocean, the Hong Kong equity market’s performance has been disappointing, to say the least, for the better part of the year. Earlier this year, the Hang Seng Index (HSI) hit its 52-Week High of 31183.36 on 18th February 2021. Since then, the index has followed a declining path to reach a 52-Week  Low of 23681.44 on 5th October 2021.  The Hang Seng Index (HSI) closed at 4391.34 on 8th October 2021.

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