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.