Strong start for Hang Seng Index in 2021

THE Hang Seng Index (HSI) experienced a great rally since the end of December 2020. It is currently up 10.1 per cent year-to-date in 2021 as at Feb 10 - at a level not seen since April 2019 other than during a week in mid-January 2021.

2020 has not been kind to HSI due to the Covid-19 pandemic and the government's measures implemented to rein in the spread of the coronavirus. China's new regulations in November 2020 also brought further volatility for big technology firms. In January 2021, regulation fears again kicked in on the abrupt suspension of Ant Financial initial public offering, an integral piece of Alibaba Group's future. However, as seen in the stock market performance, investors are focused on the benefits which might come about due to the changes in the long run, as more clarity is provided on the changes expected of technology firms.

In 2021, there are two key catalysts to look out for. The first is the vaccination process in China and Hong Kong as well as around the world. The expected economic recovery across the world might bring focus back to traditional sectors. The second is the new US administration. Although President Joe Biden is expected to take a more moderate stance with China, this is not expected to reverse in the short term.