Hang Seng Index: What investors should know before 2019 ends

With the worst of the political protests hopefully behind the city, and US and China’s improving trade relations, Hong Kong’s main index is seemingly moving toward a strong finish.

The last two weeks have been fruitful for Hong Kong benchmark Hang Seng Index.

The East Asian stock index continues to push higher, as it gained 0.96% week-on-week, amid positive global political and economic developments.

There was a small dip of 0.65% to below 27,550 at the start of this week that was a cause for concern, but a speedy recovery to 27,950 on Friday morning has since provided some relief.

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What to expect next week for investors

And there are now more reasons to celebrate for investors, not least because the holiday season is upon us, but because the HSI is expected to rise even more as 2019 draws to a close.

That’s according to Alan Li, a portfolio manager at local private wealth management firm, Atta Capital. He told South China Morning Post that the index could very well break the 28,000 mark – a level it hasn’t seen since July.

‘Following the trade deal and Fed rate decision last week, most of the recent uncertainty has been released,’ he said. ‘Chasing laggards and window dressing expectations are boosting market sentiment.’

Window dressing is a strategy that investment managers use toward the end of a quarter or the year to spruce up the appearance of a financial statement or product.

On a broader regional view, IG Asia Market Strategist Jingyi Pan said that while markets are set to recover in the coming months, there are still ‘some risks…as the two sides remain at work in sorting out their differences’.

Any re-escalation of the tariffs war or the carrying forth of the trade war to other fronts, such as financial, would jeopardise Asian markets’ performance, including the Hang Seng, she added.

A last hurrah in the form of the Santa Rally effect - when stock markets post positive results in the run up to Christmas and New Year - is also not out of the question for Hong Kong financial markets.

Increasingly upbeat stocks

In terms of individual company stocks, technology and financial services are also experiencing marked improvements in share value, despite the US-China trade deal euphoria slowly dying down.

On the technology front, China tech giant Tencent Holdings Limited is up almost 4.4% this week, while Alibaba Group Holding Limited hit a new peak of HK$208.40 on Friday morning, 20 December.

Among financial services companies as of 18 December, AIA Group rose 2.24%, Bank of China Hong Kong gained 1.9%, China Life Insurance added 0.97%, Industrial and Commercial Bank of China added 0.71%, and Ping An Insurance with 0.50%.

The Hang Seng Index is trading at 27,799.55 as of Friday, 20 December, 3.30PM.

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