Institutional and retail investors still bullish on Hong Kong stocks
Institutional investors and retail investors are still bullish on the Hong Kong stock market despite a recent sell-off by some institutional investors, say analysts.
Institutional investors were "constructive" on the market because of recent stimulus measures and the overall rally of Hong Kong stocks in recent months, said Francis Cheung, CLSA managing director of China-Hong Kong strategy.
Although the Hang Seng Index fell 0.39 per cent to 27,585.05 yesterday, it has risen 12.7 per cent since March 27.
"The broader market sentiment in Hong Kong remains positive. It is understandable investors want to take profits from the strong gains in recent months," said Stephen Peepels, Asia-Pacific head of US capital markets at DLA Piper.
An unidentified institutional investor offered for sale on Tuesday 34.56 million shares of New China Life Insurance for US$221 million. Sparkling Investment offered 60 million shares of Digital China for up to US$105 million, while Deutsche Post Beteiligungen put on sale 191.4 million shares of Sinotrans for up to US$140 million.
"Some institutional investors are taking profits. Markets have been strong and they may be paring back exposure or allocating gains into new stocks. I don't believe any of the recent activity in the secondary market is indicative of people losing confidence nor do I think the activity portends a sell-off," said Brett McGonegal, chief executive of Reorient Group.
However, the MSCI Hong Kong index has dropped from its position as one of the four cheapest MSCI indices in Asia excluding Japan, a position it has held for the past 15 quarters, said a Credit Suisse report this week.
