Today, the Hong Kong stock market is showing significantly stronger performance compared to other global markets. In early trading, $Hang Seng TECH Index (800700.HK)$ Increased by 2.18%. $Hang Seng Index (800000.HK)$ and $Hang Seng China Enterprises Index (800100.HK)$ A collective rise occurred, related to $Nikkei 225 (.N225.JP)$ and $Korea Composite Index (.KOSPI.KR)$ the sharp rise followed by a plunge.

In terms of market news, Michael Burry, Wall Street’s ‘big short’, publicly stated on social media that the Hang Seng Tech Index is significantly undervalued.

According to reports from Hong Kong media, financial industry insiders have pointed out that there have been recent inquiries from Middle Eastern clients regarding investments in the Hong Kong stock market and even the establishment of family offices in Hong Kong, China.

Additionally, individuals familiar with the capital markets indicated that some Middle Eastern investors who had earlier relocated to Singapore or Dubai are now considering reallocating part of their operations or assets to Hong Kong, China.

Hong Kong stocks collectively surged

On March 16, after the three major Hong Kong stock indexes plummeted at the opening, they collectively rebounded. The Hang Seng Tech Index surged over 2%, while the Hang Seng China Enterprises Index and the Hang Seng Index both rose more than 1%. $NIO-SW (09866.HK)$ rising over 5%, $JD HEALTH (06618.HK)$ 、 $XIAOMI-W (01810.HK)$ rose more than 4%, $MEITUAN-W (03690.HK)$ Up by more than 3%. Compared with other Asia-Pacific markets, the Hong Kong stock market demonstrated relatively strong performance.

Recently, Michael Burry, known as the Wall Street ‘big short,’ publicly commented on social media: ‘The plunge in the Hang Seng Tech Index is the only case in history purely driven by multiple compression (i.e., valuation and sentiment). In fact, despite the index being in a bear market, the revenue and profits of its constituent companies have maintained steady growth.’ This investor, renowned for his short-selling strategies, made a rare public statement asserting that an index is significantly undervalued.

Institutional analysts believe that last week, external markets remained highly volatile due to significant changes in geopolitical tensions and oil prices. However, Hong Kong stocks, which are typically sensitive to geopolitical risks, demonstrated relative resilience. There are two main reasons for this: First, Hong Kong stocks include a large number of high-dividend and cyclical stocks. Second, short positions accumulated during the previous period of sustained pressure on Hong Kong stocks, particularly on Hang Seng Tech, were partially unwound amid the heightened volatility.

The bottom of the Hong Kong stock market index is gradually approaching, but a sustained rebound still requires time. External factors: the current strong US dollar trend may persist; internal factors: as the earnings season nears its end, the momentum for upward revisions of profit expectations at the beginning of the year has slowed, and domestic fundamentals, particularly real estate data, still need verification. Currently, sentiment indicators do not signal buying opportunities. The concurrent focus on technology growth and stagnation-inflation trading reflects a diversification strategy amid low visibility, but these two themes inherently contradict each other, potentially leading to significant style shifts once the situation becomes clearer.

Are Middle Eastern funds returning to Hong Kong?

Recently, due to the ongoing conflicts in the Middle East, reports about Middle Eastern funds returning to Hong Kong have been gaining attention. According to Hong Kong media, Gao Zhaolin, Head of Everbright Securities International Prestige Capital Management, stated that there has been an increasing trend in inquiries from clients in the Middle East, with signs of inflows of safe-haven funds. These clients are mainly inquiring about the investment environment in Hong Kong and the general requirements for establishing family offices and trusts in Hong Kong. The products under consideration are highly diversified, covering Hong Kong stocks, bonds, and insurance products. However, given the recent shift in the Middle East situation, it would take time for fund flows to be reflected through channels such as fund companies. For now, Middle Eastern investors remain cautious about investing in Hong Kong.

Yip Yun-hoi, council member of CPA Australia’s Greater China Division and someone familiar with the capital markets, stated that based on market feedback, there has been a noticeable increase in inquiries from Middle Eastern families and high-net-worth individuals regarding the establishment of family offices in Hong Kong over the past two weeks. This includes large families who had previously relocated to Singapore or Dubai and are now considering reallocating part of their businesses or assets to Hong Kong.

Christopher Hui Ching-yu, Secretary for Financial Services and the Treasury, said on a radio program on the 15th that the situation in the Middle East presents both risks and opportunities for Hong Kong. Compared to other places in the Middle East, Hong Kong’s safety, stability, and certainty are more prominent. Recently, overseas funds, responding to changing circumstances, are considering more diversified asset allocations.

Christopher Hui believes that the above situation reflects growing interest from overseas investors in Hong Kong. Energy is a crucial element for economic development and will inevitably impact financial markets and future economies. The market is currently operating smoothly, and Hong Kong will continue to ensure effective market functionality.

The latest report from the Hong Kong Academy of Finance indicates that up to 91% of surveyed family offices have already established operations in Hong Kong. The proportion of family offices planning to purchase investment risk products in Hong Kong within the next three years is expected to rise from 54% to 78%. Hong Kong’s goal of attracting 200 family offices within three years was achieved as early as August of last year, while the number of ultra-high-net-worth individuals ranks second globally.

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Editor/KOKO