HK stocks hold their ground as investors assess China market optimism

Hong Kong stocks remained largely unchanged on Wednesday with investors adjusting their outlook on Chinese equities amid more macro uncertainties.

The benchmark Hang Seng Index closed at 24,777 – just over 30 points or 0.12 percent higher than the previous close – with a main board turnover of HK$271.85 billion.

The indicator once hit as high as 24,874 points in the afternoon session.

The Hang Seng Tech Index fell 1.05 percent, or 64 points, to 6,041 while the Hang Seng China Enterprises Index edged down by 0.15 percent, or 14 points, to 9,163.

In mainland China, the Shanghai Composite Index dipped three points to 3,426 while the Shenzhen Component Index lost 35 points, closing at 10,979.

BofA Securities warned that Chinese equities could face a meaningful correction soon, similar to the 2015 cycle, citing sticky economic headwinds and overlooked geopolitical tensions, according to Bloomberg.

JP Morgan, however, said it had never seen investors so optimistic about the China market in the past four years, with emerging market funds maintaining a “keep pace with the broader market” or “hold” rating on the China market, while global or international funds mostly took on a “hold” stance after meeting with some global and emerging market investors in North America over the past week.

Meanwhile, the market remains relatively divergent on the real estate, financials and consumer-related sectoral indicators, JP Morgan said. The bank expects citizens in tier 3 and below cities are able to support better consumption growth due to lower prices and increased affordability, while those in tier 1 and core tier 2 cities are experiencing less favorable consumption growth, although it needs more data to support this.

STAFF REPORTER