Hong Kong Stocks Below Liquidation Value Show Fear of Recession
- Shares just entered bear market for second time in two years
- Price-to-book below 1 has previously marked market bottom
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A month into one of the fastest global market meltdowns in recent history, investors aren’t willing to pay more than liquidation value for stocks in Hong Kong.
The 50-member Hang Seng Index now trades at 99% of book value, a level only seen twice before in data compiled by Bloomberg going back to 1993. That means traders are pricing firms’ assets at less than their stated worth, something that last happened in 2016. The gauge last week entered its second bear market in as many years.