Hong Kong’s financial leaders greeted the Year of the Dragon with fanfare, optimistic that the auspicious zodiac sign will breathe some fire – or at least some life – into the city’s beaten down stock market.
“Hong Kong stocks posted positive returns in the past four Years of the Dragon,” said Financial Secretary Paul Chan Mo-po during a ceremony organised by bourse operator Hong Kong Exchanges and Clearing (HKEX) on Wednesday to mark the first day of trading day of the Lunar New Year.
Chan said this year the market may be boosted by tailwinds such as potential interest rate cuts in Europe and the US.
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“In addition, the mainland [Chinese] economy is stable and improving. These factors will bring a positive atmosphere to investment sentiment and the asset market,” he said.
Since its inception, the Hang Seng Index has experienced positive returns every time the Year of the Dragon has rolled around. The mythical creature represents a particularly propitious year in Chinese culture.
Gains during the Dragon year ranged from 0.5 per cent in 2000 to 33.4 per cent in 1988, according to Bloomberg data.
“Various factors have made us cautiously optimistic about the Year of the Dragon,” said Chan. “The most important thing is to work with everyone to think of more solutions, innovate and find good development opportunities in the future.”
The market could certainly do with a dose of good fortune. The Year of the Rabbit, which ended on February 9, was a miserable one for local equities as the Hang Seng Index slumped by a record 29 per cent.
Things looked up slightly on Wednesday, after the two-day trading break, as stocks recovered from early losses to post a small gain in the early afternoon.
Recent pessimism about the Hong Kong stock market is ill-founded, according to Laura Cha Shih May-lung, chairman of the HKEX, who hosted the ceremony for the last time as her term comes to an end in April.
The American economist Stephen Roach had said Hong Kong’s best days were “now over” in an opinion piece in the Financial Times on Monday.
“I understand that many people have seen the recent coverage regarding a few stakeholders who hold a pessimistic view towards the Hong Kong market or that Hong Kong’s best days are behind it,” said Cha.
“I completely disagree. We recover and bounce back every time. When others say that we are headed for the bottom, we always rebound and hit new highs. Every time [Hong Kong] has proved its own strength and resilience.
“Hong Kong is still a free and open market, and as such we are inevitably affected by the macro-environment.”
She pointed to the city’s many advantages including rule of law and market transparency, which she said will support recovery and bring back investor confidence.
“The previous year has not been an easy one for Hong Kong’s financial community, but Hong Kong is defined by its resiliency and adaptability,” said Nicolas Aguzin, the CEO of the exchange operator.
Finance officials line up by the gong at the Lunar New Year market opening celebration at HKEX in Central. Photo: Jonathan Wong alt=Finance officials line up by the gong at the Lunar New Year market opening celebration at HKEX in Central. Photo: Jonathan Wong>
“For HKEX, 2023 was marked by three things: a challenging macroeconomic and geopolitical backdrop, strong results and important strategic delivery.”
Aguzin will step down as CEO on February 29, having brought forward his departure from May when his three-year term ends. Bonnie Chan will take the helm from March 1.
Despite the difficulties presented by the wider economic environment, the city’s markets continued to demonstrate resilience, with derivatives, fixed income, and ETF trading volumes reaching record highs, said Aguzin.
There is hope on the horizon, with many “opportunities to be captured”, he said, including the transition to clean energy, new technology and the increasing relevance of Asia to the global order.
“As China continues to grow, [and] as Asia represents more and more of the world, this part of the world will need places like Hong Kong to provide that access to opportunities,” said Aguzin.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP’s Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.
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