Just surged collectively! Hong Kong stock market suddenly announced major news!

Funds from the Middle East are frequently returning to Hong Kong!

Today, the Hong Kong stock market clearly outperformed other global markets. In the morning, the Hang Seng Tech Index rose over 1% at one point, with the Hang Seng Index and the China Enterprises Index rising collectively, sharply contrasting with the Nikkei and KOSPI indices which surged then plunged.

On the news front, Wall Street’s “big short” Michael Burry publicly stated on social media that the Hang Seng Tech Index is significantly undervalued. According to Hong Kong media, some financial industry insiders have noted that recently, Middle Eastern clients have inquired about investing in the Hong Kong stock market and establishing family offices in Hong Kong.

Additionally, some knowledgeable market participants said that Middle Eastern investors who migrated to Singapore or Dubai years ago are now considering reallocating some of their businesses or assets back to Hong Kong.

Hong Kong Stocks Rise Collectively

On March 16, after opening lower, the three major Hong Kong stock indices rallied together. The Hang Seng Tech Index rose over 1%, NIO gained more than 4%, BYD, JD Health, and Meituan rose over 3%, Xiaomi Group and JD.com increased over 2%. The Hang Seng Index once rose over 0.5%, and the China Enterprises Index nearly 0.7%. Compared to other Asia-Pacific markets, Hong Kong stocks performed quite strongly.

Recently, Wall Street’s “big short” Michael Burry publicly said on social media: “The plunge in the Hang Seng Tech Index is the only case in history driven purely by multiple compression (i.e., valuation and sentiment). In fact, even when the index is in a bear market, the revenues and profits of its constituent companies remain steadily growing.” Known for short-selling, this investor rarely publicly states that an index is significantly undervalued.

Huatai Securities believes that last week’s external markets remained highly volatile due to geopolitical tensions and sharp oil price changes, but Hong Kong stocks, which are usually sensitive to geopolitical factors, showed relative resilience. The main reasons are twofold: first, Hong Kong stocks have many high-dividend and cyclical stocks; second, the short positions accumulated during the sustained pressure on Hong Kong stocks, especially the Hang Seng Tech, were partially closed during high volatility.

The bottoming and sustained rebound of Hong Kong stock indices still require patience. External factors include the possibility that the current dollar strength may persist; internal factors include the nearing end of earnings season, the slowdown in upward revisions of profit expectations at the start of the year, and the need to verify domestic fundamentals, especially real estate data. Currently, sentiment indices do not point to a buying opportunity. The main themes of technology growth and lagging stocks are running in parallel, which is a diversification strategy amid uncertain outlooks. However, these two themes are inherently contradictory, and once the situation becomes clearer, significant style shifts may occur.

Is Middle Eastern Capital Returning to Hong Kong?

Recently, due to ongoing conflicts in the Middle East, news about Middle Eastern funds returning to Hong Kong has been fermenting. According to Hong Kong media, Gao Zhaolin, head of Guotai Securities International’s Prestige Capital Management, said that recently, inquiries from clients in the Middle East have increased, showing signs of risk-averse capital flowing in. They mainly inquire about Hong Kong’s investment environment and the general requirements for establishing family offices and trusts in Hong Kong. As for the types of investments considered, they are quite diversified, including stocks, bonds, and insurance products across Hong Kong. However, since the situation in the Middle East has not changed for long, fund companies and other channels may not reflect this flow immediately. For now, Middle Eastern investors are mostly observing Hong Kong’s investment environment.

Yeyun, a director of the Greater China branch of the Australian Institute of Chartered Accountants, said that market feedback over the past two weeks shows a significant increase in inquiries from Middle Eastern families and high-net-worth clients about establishing Hong Kong family offices, including large families who migrated to Singapore or Dubai years ago and are now considering reallocating some of their assets or businesses to Hong Kong.

On the 15th, John Lee, Secretary for Financial Services and the Treasury, stated on a radio program that the Middle East situation presents both risks and opportunities for Hong Kong. Compared to other parts of the Middle East, Hong Kong’s safety, stability, and certainty are more prominent. Recently, some overseas funds, responding to the changing situation, are considering more diversified asset allocations.

Lee believes that these developments reflect increasing interest from overseas investors in Hong Kong. Energy is a key element of economic development and will inevitably impact the financial markets and future economy. The market is currently functioning smoothly, and Hong Kong will continue to ensure the effective operation of market functions.

The latest report from the Hong Kong Academy of Finance indicates that up to 91% of surveyed family offices have established a presence in Hong Kong. The proportion planning to invest in risk assets through family offices in Hong Kong over the next three years is expected to rise from 54% to 78%. The goal of attracting 200 family offices within three years was already achieved last August, and the number of ultra-high-net-worth individuals ranks second globally.