Hong Kong Stock Rally Seen Immune to Currency Drop, for Now
- City’s pegged currency has declined most in Asia this year
- Hang Seng stock index has rallied 18% amid ample liquidity
An employee counts Hong Kong one thousand dollar banknotes in this arranged photograph inside the Hang Seng Bank Ltd. headquarters in Hong Kong, China, on Wednesday, Feb. 18, 2015. Hang Seng Bank, majority-owned by HSBC Holdings Plc, is scheduled to announce full-year earnings on Feb. 23.
Photographer: Billy H.C. Kwok/BloombergThe Hong Kong dollar may be sliding into the weak end of its trading band, yet money managers see no reason for stock investors to turn bearish just yet.
Unlike previous bouts of weakness in the pegged currency -- when fears of a Chinese hard landing sent capital fleeing the city’s equities -- this time around there’s plenty of liquidity in the system, and no shortage of buyers. Foreign and mainland Chinese investors alike have been piling into Hong Kong-listed shares, lifting the benchmark index to a two-year high last week, even as the local currency retreated to a 17-month low.