Upward looks as HSI kicks off into 2023

Staff reporter and Bloomberg

Analysts expect a modest rise of 100-200 points of the Hang Seng Index on today's first trading day of 2023 as investors continue to digest China's abrupt reopening from Covid curbs while awaiting more US data this week.

The SAR market could still be cheered by China's reopening plans, but the rise will be limited after recent gains according to Kenny Wen Kit, head of investment strategy at KGI Asia.

For many investors may adopt a wait-and-see attitude to observe the Covid situation in the mainland, and they are also waiting for US reports including a record of the US Federal Reserve's December meeting out tomorrow and US job data on Friday.

Consumer stocks are likely to continue to see a rally in the short term on hopes of a demand revival in the mainland, but Wen suggests investors could look at Chinese bank and insurance stocks, which will also benefit from the country's economic recovery but whose prices are now at a relatively cheaper level.

The benchmark HSI, which closed at 19,781 points on December 30, has seen mixed performances on the first trading days in the past three years. There were rises in 2020 and 2021 but a slip last year.

Meanwhile, the Hang Seng Index posted a 15-percent loss for the whole of 2022 the third consecutive year of decline.

Global stocks have also been reeling from a record US$18 trillion (HK$140 trillion) wipe out last year, with the MSCI All-Country World Index dropping more than 20 percent.

The slump in stock and bond markets last year has led to the first-ever contraction in the value of assets of global sovereign wealth funds and public pension funds, with total losses estimated at US$2.2 trillion, according to industry specialist Global SWF.

But 2023 is shaping up to be a better year for mainland and Hong Kong equities, market pundits say, now that authorities have made economic revival a top priority, ramped up efforts to salvage an ailing property sector and signaled more support for private enterprise.

But it will not be a smooth ride.

Analysts also say Macau casino stocks have room to rise this year given the mainland's reopening plans and Macau's own moves to scrap quarantine for overseas arrivals to pave the way for a major rebound.

This follows official data showing Macau's gross gaming revenue tumbled 51 percent to 42.2 billion patacas (HK$41.9 billion) in 2022 from the previous year.

On local firms, analysts believe Hong Kong and China Gas Co (0003) may see a short-term rise in share prices after the company, also known as Towngas, was to be listed in the Dow Jones Sustainability Asia Pacific Index for the first time.