Investors worried about China’s economy shunned Hong Kong’s stock market, once one of the biggest and most important in the world.
Reporting from Hong Kong
Dec. 29, 2023
This summer, when Hong Kong’s stock market rout seemed to have no end in sight, the city’s financial chief, Paul Chan, jumped into action, creating a task force to inject confidence into a market that was being pummeled by global investors wary of China.
Hong Kong cut taxes on trading, and Mr. Chan went on a roadshow to Europe and the United States, promising measures to “let investors feel optimistic about the outlook.” Investors were anything but sanguine, however, and the city’s stock exchange is among the world’s worst-performing stock markets this year.
The Hang Seng Index finished Friday, its last trading day in 2023, 14 percent lower than it started the year. Stocks in mainland China also recorded losses this year, with the CSI 300, an index that tracks companies listed in Shanghai and Shenzhen, declining 11 percent.
Hundreds of billions of dollars flowed out this year as money managers and pension funds reduced their holdings in Hong Kong, which has long been a gateway for foreign investors wanting to put money into mainland China. The outflows were largely driven by an economic downturn in China and mounting pressure on American investors to sell their exposure to Chinese companies.
“Many of the companies in the Hang Seng Index are essentially companies that are leveraged to economic growth in China,” said Chetan Seth, an Asia equity strategist at Nomura, a Japanese bank. “China’s weak economy clearly has weighed on the performance of Chinese stocks listed in Hong Kong,” Mr. Seth said.
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The losses in Hong Kong and the mainland contrasted sharply to what happened in the United States, where inflation eased and the job market was strong. The S&P 500, which broadly tracks U.S. stocks, was up 25 percent in 2023, underlining the divergent paths of the world’s two largest economies.
Global investors started the year optimistic that https://milodingines.com China’s economy would bounce back after three years of strict pandemic rules and lockdowns. But when China fully opened its borders in January for the first time since 2020, many households were reluctant to spend. Private businesses floundered, and the economy slowed.