HONG KONG • Hong Kong's benchmark equity gauge rose above the 30,000 level yesterday for the first time in a decade, as energy producers and Chinese developers climbed.
The Hang Seng Index gained 0.6 per cent to 30,003.49 at the close.
Hong Kong Exchanges and Clearing was the top performer on the day after Morgan Stanley raised its price target, and turnover on the bourse climbed to a two-year high.
Among this month's gainers, Tencent Holdings has surged 22 per cent, taking its market value above US$500 billion (S$676 billion), while Ping An Insurance Group has jumped 23 per cent amid optimism over its digital expansion.
Hong Kong stock investors have had a rocky ride in the past 10 years, buffeted by the global financial crisis, the bursting of two different Chinese stock bubbles, as well as concerns over European debt.
Hopes of a sustained rally in 2015 were dashed by turmoil in mainland financial markets. This year, however, has seen sustained inflows from across the border, as well as surges in technology shares.
Gains in Hong Kong have helped fuel the wider regional rally in Asia, as the MSCI Asia Pacific Index hit another record close yesterday.
There is little sign of worry that the gains in Hong Kong will reverse any time soon. Goldman Sachs Group sees the gauge climbing to 32,000 by the end of next year, according to a note dated yesterday, while Bocom International Holding's chief strategist Hao Hong says a rally in Chinese banks, insurers and technology shares will continue amid improving asset quality and earnings growth.
"New economy companies like Tencent, as well as mainland banks and insurers, are major contributors to this round of the rally, and the Hang Seng Index crossing above 30,000 points means that funds remain bullish on China and Chinese firms," said Hong Kong-based strategist Linus Yip.
The Hang Seng Index still looks cheap relative to European or United States benchmark gauges.
The Hong Kong measure trades at 14 times reported profits, compared with more than 20 times for the Stoxx Europe 600 Index and the S&P 500 Index. The Hong Kong gauge is increasingly reliant on Tencent, however, with the Chinese technology company accounting for almost a third of this year's gains.
There are signs of caution emerging. Investors trimmed holdings in some of the top performers yesterday, with Ping An falling 2.4 per cent, while Tencent slid 0.7 per cent.
BLOOMBERG
