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Singapore hedge fund says Hong Kong stocks have a ‘once in a lifetime’ chance to rally after the most volatile two years since 2008

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hong kong stock market The year ended on a dire note, with around US$520 billion in value wiped out. For Singapore-based hedge fund manager Chua Soon Hock, this is a “once in a lifetime” opportunity to get a piece.
market This year started with a bang, immediately after the Chinese government ended its zero-coronavirus policy, investors bought up so-called “Reopen China” stocks. It was also the highest this year for the domestic stock market, as gains quickly dissipated along with optimism about China’s economic recovery momentum and risk appetite over rising borrowing costs.
The Hang Seng Index rose 10.4% in the first month of the year, hitting a peak of 22,688.90 on January 27th. Highest closing price in 2023. The gauge’s worst month was just around the corner, with a 9.4% decline in February. The index’s volatility is among the most volatile, ranking alongside the volatility seen during the recent financial crisis.
The win-loss swing was 19.8 points in 2022, a difficult year for trading amid the Covid-19 pandemic. best profit It was 26.6% worst 14.7%. The index’s volatility is comparable to the two volatile years of the 2008-09 global financial crisis and the 1997-98 Asian financial crisis.

China’s weaker-than-expected economic recovery, underwhelming policy response, and rising U.S. interest rates have been plaguing investors’ lives lately. The real estate industry’s travails and concerns about regulation and enforcement in the technology industry added to the pressure. Things are changing for the better.

Chua Soon Hock is the founder and CIO of Asia Genesis Asset Management in Singapore.Photo: Handout

“All the worst news is priced into the market. [market] Players are locked into strong aversion and linear extrapolation,” said Chua, founder and chief investment officer of Asia Genesis Asset Management. “Chinese policymakers are taking further economic measures to combat the bear market and declining confidence.”

“For long-term investors looking for big upside in the future, quality Chinese stocks are a no-brainer. This is an unprecedented once-in-a-lifetime opportunity to invest in the Hong Kong and mainland stock markets.”

Yang Wang, chief China strategist at Alpine Macro, said on a podcast that Chinese stocks are unlikely to fall much from current levels as market valuations remain below their average over the past five years. But without a new policy tonic from the Chinese government, a stronger recovery may be difficult, he said.

“Unless the Chinese government makes a really fundamental change in policy direction, there is no clear trigger for a more positive reassessment,” he added.

Not many homes have accurate predictions for 2023. Wall Street bulls including JPMorgan Chase, Citigroup, Bank of America and Morgan Stanley touted a strong year for Chinese stocks at the start of the year. Goldman Sachs, one of the most bullish companies, called for a 15% upside, relying on a market rerating.

The top three companies this year were electric car maker Li Auto, laptop maker Lenovo and state oil company PetroChina, which posted gains of 91%, 70% and 44%, respectively. Collectively, the trio captured an additional $74.9 billion in market value.

Li Automobile’s automobile assembly line in Changzhou City, eastern Jiangsu Province. The company joined the Hang Seng Index family on December 4th.Photo: Xinhua News Agency

Li Ning, Country Garden Services and car dealership Zhongsheng Group finished the year last among the 82 companies in the Hang Seng Index, losing a total of US$28 billion in market capitalization.

But Hong Kong’s fourth consecutive year of record recession makes the potential rewards attractive for Mr. Chua, a former investment manager at the Monetary Authority of Singapore. His flagship macro fund has made a profit every year since its launch in May 2020, according to data on its website.

“China stocks and Hong Kong stocks are almost the cheapest compared to emerging markets,” he said. “Despite very negative views in the West, the profits of many Chinese companies are steadily improving. China’s top companies are moving into higher-margin businesses.

“The risk reward is the best I’ve seen in my 40 years of investing and trading. The best part is that it offers great scale and choice.”



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