Hong Kong shares rose 36% in 2017, much faster than the single-digit gains made by stocks on the Shanghai and Shenzhen exchanges, according to Caixin. And analysts expect that the Hong Kong market’s bull run may continue into 2018, although it will be difficult to repeat the stellar performance of last year.
Chinese mainland stocks, on the other hand, may face a more challenging environment this year due to the tighter liquidity rules introduced by regulators, though MSCI Inc.’s inclusion of A-Shares, improving corporate earnings and better economic growth prospects could give the Shanghai and Shenzhen markets a much-needed boost.
Hong Kong’s Hang Seng Index closed at 29,919.15 Friday. Last month, the city’s benchmark briefly broke through the 30,000 benchmark for the first time in a decade. Analysts attributed the excellent performance to improved corporate earnings, capital inflows and exceptional gains by some heavyweights such as Tencent Holdings Ltd.
The Shanghai Composite Index found going a bit tougher, however, gaining 6.6% over the year to end at 3,307.17, while the Shenzhen Component Index rose 8.4%. Meanwhile, start-up board ChiNext lost 10.7% this year as investors put their money into safer blue-chip stocks.
“For (A-share) traders, 2018 will be another year of coping with liquidity constraints,” said Hong Hao, managing director and head of research of BoCom International.