“Going forward, Hong Kong equities could be more volatile as mainland investors are mainly dominated by retail investors and they tend to be more sentiment driven.”
Asset managers like Schroders believe the market momentum is not based on fundamentals and the rally in Hong Kong shares is largely driven by the valuation gap in the A-shares (listed in China) and H-shares.
Financial sector popularity
The portfolios of the top performing Hong Kong equity funds show that most have a significant allocation to the financial and industrial sectors.
“Among Hong Kong equity markets, the financial sector accounts for around 58% and 67% of the weighting of the Hang Seng and the Hang Seng China Enterprise indices, respectively. Therefore, the financial sector tends to have a higher portion among sectors in the portfolios.”
As for individual stocks, the most widely held names in portfolios are Tencent, China Mobile, Ping An Insurance and Industrial and Commercial Bank of China.
“These stocks are major constituents among most China and Hong Kong indices, so they tend to have bigger weightings in Hong Kong equity fund portfolios.”
