Hong Kong stocks have gone from hero to zero with seemingly endless waves of regulations. Alicia Garcia Herrero , Chief Economist Asia Pacific at Natixis, analyzes the drivers behind the weakness of Hong Kong’s equity market and its outlook.
Why Hong Kong equity performance is the weakest in Asia?
“The tailwind in tech-related listings has now become a headwind in stock performance, which is in conjunction with the weakness of the HKD.”
“The signs of capital outflows in Hong Kong are in clear contrast to renewed foreign inflows into Asian shares.”
“The FED’s tapering is a risk for Asia, but even more for Hong Kong with a dollar peg. This means Hong Kong financial conditions could be tighter passively with extra pressure from the broader and tighter regulatory crackdown in Mainland China.”
“The situation looks like a falling knife, which may push investors to diversity through other Asian markets.”