A more bullish Hang Seng in 2021?

THE Hang Seng Index (HSI) had a challenging 2020, with the index down -5.36 per cent year to date (as of Dec 17, 2020) even after rallying off March lows. HSI not only faced a challenging year due to the multiple outbreaks of Covid-19 in the city, it also faced challenges both politically and economically.

As Hong Kong prepares for the end of 2020, the city is still tackling the spike in Covid-19 cases, with the government implementing new measures to rein in the spread. The current challenge remains to identify the source of the cases even while the new number of daily cases drop.

In November, China's State Administration for Market Regulation (SAMR) released the draft anti-monopoly measures for Internet platforms, designed to curb the dominance of big Internet and technology firms. This gave rise to some volatility in the sector, which contributed largely to the rebound of the Hong Kong stock markets. With more Internet giants being part of the HSI after a recent review of the constituents, regulatory pressure of these firms dampens the recovery phase of the index, which results in it lagging behind other Asian indices.