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Key Benchmarks Performance

Hong Kong’s stock markets, which closely mirror China’s struggling performance, have recovered since March as Beijing rolled out economic support measures. Hang Seng Index surged more than 7% in April and becoming the best-performing major index in the world, rebounding nearly 20% from its January low. For the year-to-date period (as of 2024/04/30), Japan’s benchmark’s Nikkei 225 index rallied 14.8% and took the crown. Taiwan was the 2^nd outperforming Asia market which soared 13.8%.

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Asset Types Analysis

The total 376 Hong Kong Mandatory Provident Fund (MPF) registered for sale in Hong Kong posted negative return of 0.2% on average in April. Equity type was the best performing one which soared 1.1% on average. For the year-to-date period, Equity posted the best performance of 4.4% on average while bond type posted negative return of 2.7%.

Hong Kong MPF Performance by LGC Analysis

There are overall 376 Hong Kong Mandatory Provident Fund (MPF) registered for sale in Hong Kong market with a total 24 Lipper Global Classifications. Among all 24 classifications, the best outperforming sectors for April were Equity China(+6.95%), Equity Hong Kong(+6.93%) and Equity Greater China(+4.51%).

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For the year-to-date period (as of 2024/04/30), the best outperforming sectors of MPF were Equity Japan(+9.80%), (Equity China(+7.13%) and Equity US(+5.23%) while the most underperforming sectors were Bond Global LC(-3.94%), Bond HKD(-1.33%) and Bond Asia Pacific LC(-1.14%).

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Outlook

For an improving economic landscape in China, cheaper valuations and a flurry of mainland investors putting money into Hong Kong to protect their portfolios from a weakening Chinese currency have combined to resuscitate the market. The China Securities Regulatory Commission announced plans to encourage major mainland Chinese enterprises to list in Hong Kong and expand the scope of products for Hong Kong Stock Connect scheme that links it with the mainland. Hong Kong’s stock exchange is also trying to revive its fortunes and attract foreign investors, with the Hang Seng index down more than 42 per cent since early 2021 and investors showing little appetite for initial public offerings. Nevertheless, the situation has turned around. The valuation of Hong Kong stocks has also become more “compelling” and “attractive” relative to the rest of the Asian region after the pullback last year. Sentiment has shifted on Chinese equities, with foreign investors starting to chase lower-valued, high-dividend Hong Kong-listed shares. They have been shifting funds away from other Asia-Pacific markets such as Japan or India, where currencies are under pressure from a stronger dollar.

Even Hong Kong market has an outstanding performance in April, it was still too early to say this a turning point for Hong Kong while most of the funds are coming back to Hong Kong for the purpose of hedging, to avoid possible interest rate hikes from Bank of Japan and the US stock market turbulence. It needs to take some more time to see its further development.

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