A day ago, former presidential candidate (whom I supported) Mr Tan Kin Lian revealed his hefty loss from his investment in Country Garden. If you remember, I shared my opinion on Country Garden with him on his Facebook page last year. That comment ended up being deleted by Mr Tan who considered it a “smear”. He was then very hopeful that his investment would earn him a profit of over 200%.
Fast forward to the present. 3 May 2024. I always respect Mr Tan for his honesty. Most people will hide such loses instead of airing them. Mr Tan is also unlike the 五毛 who would mislead people with the beliefs that they themselves would not commit to. Tan Kin Lian puts his money where his mouth is. That distinguishes him from the cheap 五毛 keyboard warriors.
The answer may lie not so much in investors’ optimism in the Chinese market but their pessimism in the RMB. HK stocks are traded in $HK which is pegged to the USD.
Hong Kong’s benchmark Hang Seng Index surged more than 7% in April as the best-performing major index in the world. It’s now heading into a bull market, rebounding nearly 20% from its January low. The rebound marks a sharp turnaround after a weak start to 2024 and years of heavy losses, which saw more than $3 trillion wiped off the value of the city’s stock market as global investors grew increasingly sceptical about China’s economic future. Indeed, mainland Chinese investors have contributed more and more to the HK stock market. The biggest stock movements are often caused by trading across the mainland. Meanwhile, it should be noted that another US interest rate hike is in the pipeline. Pessimistic mainlanders are eager to buy into HK$ which can be readily converted to USD at a stable exchange rate. Authorities in the territory have intervened in currency markets over the past few months, buying HKD to prop up the sliding currency as investors dump it in favour of the US dollar. They may not be able to do this for very long as HK’s foreign exchange reserves have been dwindling from attempts to maintain the peg to USD. Meanwhile, many keyboard warrior wolves are still tuning in to their trusted Chinese media and dreaming of dedollarisation.
