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Tuesday, July 26, 2016, 19:07

Confidence returns to Hong Kong stock market

By Lin Wenjie

HONG KONG - Confidence returned to the Hong Kong stock market as the benchmark index continue to rally on Tuesday after Monday’s neap rise, outperforming the Nikkei Index and Korea Composite Stock Price Index in the region. Experts believe that the Hang Seng Index (HSI) will recapture the bullish trend to reach 23,000 points in the coming months.

The HSI gained 0.62 percent, or 136 points, to close the day at 22,129.7 points, slightly lower than the day’s high at 22,300 points, which hit a seven months high.

Gambling and automobile companies fared well. The Hang Seng China Enterprises Index finished 0.3 percent higher at 9,062 points, with total market turnover increased to HK$715.36 billion ($92.22 billion), up 45 percent from Monday.

"The atmosphere now in the market is pretty bullish with a much higher turnover, signaling the return of strong market confidence. I don’t see many obstacles in the coming months, so I think we will see 23,000,” Lukfook Financial analyst Ricky Huang-wei said in a telephone interview with China Daily.

He said that in the short term, the results of the US Federal Reserve policy meeting were unlikely to be a concern for the market, because there is a larger chance that the Federal Reserve will remain dovish to keep interest rates unchanged, as policymakers will hold out for more evidence of a pickup in inflation.

But In the long term, he believed that the slowdown of China's economy still remains a risk for the Hong Kong market. “Whether the mainland economy will be headed for a hard landing remains a question," he added. "There are signs that the country’s property market is cooling down, which contributed a large portion of China's gross domestic product growth.”

Huang said the valuation of gambling companies is still low, with their revenues and earning coming back to the levels seen in 2010, so the stocks have significant growth potential.

As for his preference, Huang recommended insurance companies as the sector’s fundamentals are stable and the demand for overseas insurance is very strong from the mainland.

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