Key Benchmarks Performance
After the sluggish downturn in January, China and Hong Kong have roared back to life and become the top-performing Asia stock market for February, with monthly gains of +9.4% on the CSI 300, +8.1% on Shanghai Composite CR and the Hang Seng Index notched up by +6.6%. Most of Asia markets, including Japan, Taiwan, Vietnam and Korea, all posted outstanding market performance for February.
Asset Types Analysis
The total 376 Hong Kong Mandatory Provident Fund (MPF) registered for sale in Hong Kong posted positive return of 2.8% on average in February. Among all by asset type, Bond is the only one which posted negative return of 0.8% on average in February, while Equity type rallied 5.1% on average.
Hong Kong MPF Performance by LGC Analysis
There are overall 376 Hong Kong Mandatory Provident Fund (MPF) registered for sale in Hong Kong market with a total 24 Lipper Global Classifications. Among all 24 classifications, the best outperforming sector for February is Equity Korea, rallied overall on average with 9.27%. Equity China was the 2nd outperforming sector with an average return of 8.53%. Equity Greater China and Equity Hong Kong also posted positive return of 6.67% and 6.62% on average. The worst performing sectors in February were Bond Global LC (-1.13%) and Bond HKD (-0.72%).
For the year-to-date period, the best outperforming sectors were Equity Japan (+9.54%), Equity US (+6.65%) and Equity Sector Healthcare (+5.79%) while the most underperforming sectors were Equity Hong Kong (-3.56%), Bond Global LC (-2.15%), Equity Greater China (-2.04%) and Equity China (-1.40%).
Outlook
The recent bout of outperformance seen in the China and Hong Kong stock markets has been driven by policies that target the trading mechanism of the stock market, such as banning or making it difficult for high-frequency firms and hedge funds to enact short positions on Chinese equities. China pledged to improve policy transparency while state-run funds have stepped up intervention. Chinese authorities are seeking to mobilize about 2 trillion yuan ($278 billion), mainly from the offshore accounts of State-owned enterprises, as part of a stabilization fund to buy A shares via the stock connect program linking the Shanghai, Shenzhen and Hong Kong bourses. This action has boosted the market’s confidence. The People’s Bank of China also surprised markets with a larger than expected easing measure, announcing the reserve ratio requirements will be cut by 50 basis points. However, this is only a short-term fix, and less likely to reverse the long-term secular bearish trend of the CSI 300 and Hang Seng indices in place since February 2021.
