Euphoria in Hong Kong: Brokers Cheer Historic Rally

Hong Kong stockbrokers are currently experiencing a rare surge, described as a "once-in-a-century event." Edmund Hui, CEO of Bright Smart Securities, one of the largest local brokerage firms, reports a "massive increase" in account openings. The spectacular interest has led many employees to cancel planned vacations and work around the clock to handle inquiries. The exuberance is fueled by recent stimulus measures from the Chinese government, which has sent Chinese company stocks soaring. According to Tiger Brokers, a popular trading platform for individual investors in Hong Kong, there was a 73% increase in account openings last week. While some penny stocks rose by over 400% on Wednesday and several insolvent property developers saw their stock prices double, there are no signs of buyer fatigue so far. Trading volume reached nearly a record high of HK$434 billion (US$55.9 billion) on Wednesday. Local media reports indicate system overloads at some brokers and banks, making access to mobile apps difficult. Kenny Wen, Head of Investment Strategy at KGI Asia, described the day as extraordinarily busy, even costing him his lunch break. He expects trading volume to remain high over the next one to two months. Sat Duhra, a fund manager at Janus Henderson, checked the prices of Chinese American Depositary Receipts at 3 a.m. and observed declining interest in other markets such as South Korea and India. "China is the only game in town," he noted. The Hang Seng Index rose by 6.2% on Wednesday, while the Hang Seng China Enterprises Index increased by 7.1%. The CSI 300 Index officially entered a bull market on Monday and remains closed until the end of the week-long holiday. These gains make Chinese stocks the best-performing major market asset this year. Linda Lam from Union Bancaire Privée notes that foreign funds are currently debating whether to close their underweights in Chinese stocks. The "panic buying mode" grips the market due to fears of lagging in relative performance this month. Daisy Li from EFG Asset Management adds that the rapid market development makes it challenging for long-term investors to keep up and expand positions. The current movement of the Hang Seng Index is the largest since November 2022, when the lifting of zero-Covid policies in China boosted the market. For some experienced market participants, the current situation is reminiscent of 2015, when a bullish run took over the stock markets in Hong Kong and China before the bubble burst and stock prices halved in the following nine months.