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The future of the Hong Kong Stock Exchange and the Hang Seng Index are diverging

Bloomberg
Bloomberg7/23/2020 05:08 PM GMT+08  • 3 min read
The future of the Hong Kong Stock Exchange and the Hang Seng Index are diverging
Two of the most straightforward ways to bet on the future of Hong Kong’s stock market are telling opposing stories.
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Two of the most straightforward ways to bet on the future of Hong Kong’s stock market are telling opposing stories.

Take the Hang Seng Index, the city’s 50-year-old benchmark that’s down 10% for the year. On a price-to-earnings basis it’s near the cheapest on record relative to MSCI Inc.’s index of global shares. Last month it clocked up the worst quarterly drop versus the S&P 500 Index since the Asian financial crisis in 1998. Three-fifths of its members have lost 16% or more this year.

The flipside is Hong Kong Exchanges & Clearing Ltd., the firm that actually operates the stock exchange. Worth about $61 billion, it’s the biggest of the world’s 24 listed bourses, eclipsing Chicago’s CME Group Inc. as of Thursday’s local market close. It’s the priciest exchange, trading at about 40 times price-to-earnings, and boasts a 66% premium to peers. The stock, which closed at a record earlier this week, is up nearly 50% in 2020.

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