{"source_url": "https://www.barrons.com", "url": "https://www.barrons.com/articles/hong-kongs-stock-market-is-beckoning-despite-the-noise-51577788208", "title": "Hong Kong\u2019s Stock Market Is Beckoning, Despite the Noise", "top_image": "https://images.barrons.com/im-140213/social", "meta_img": "https://images.barrons.com/im-140213/social", "images": ["https://images.barrons.com/im-140213/social", "https://images.barrons.com/im-140213?width=620&size=1.5", "https://www.barrons.com/asset/barrons/images/barrons-logo.png"], "movies": [], "text": "Text size\n\n\u201cBuy when there\u2019s blood in the street\u201d is one of the oldest investing clich\u00e9s but is one of the toughest things to do. For those investors with the intestinal fortitude, Hong Kong\u2019s stock market beckons.\n\nMonths of protests have battered the city and its economy. But against this negative backdrop, the Hang Seng index is breaking out technically on the price charts, Jeff deGraaf, founder of Renaissance Macro Research, observes.\n\nThe combination of the weakest purchasing managers\u2019 indexes and rioting in the streets is the perfect formula for the bears, but the price action has been positive, he points out in a client note. In an email while on holiday break, deGraaf adds he tweeted back in October that the Hang Seng then was holding up in the face of the plunge in the PMIs, a positive divergence.\n\n\u201cRecessionary PMI readings and rioting in the streets have had us bullish on Hong Kong over the last few months, but those conditions had not been supported by the price data. That changed this week with Hong Kong trading at a six-month high,\u201d he wrote.\n\nEditor's Choice\n\nThe relative strength in the stock market also flew in the face of some prominent bears betting on a collapse, not only in equities, but also a break in the Hong Kong dollar\u2019s peg against the U.S. greenback. The Hong Kong Monetary Authority has maintained the peg in the face of other periods of distress, however, notably during the 1997-98 Asian crisis.\n\nHong Kong\u2019s market historically has been prone to sharp swings. \u201cVolatile\u201d was the modifier Peter Du Bois, Barron\u2019s original International Trader columnist, invariably invoked in discussing the Hang Seng.\n\nThe most proximate way to play this market would appear to be the iShares MSCI Hong Kong exchange-traded fund (ticker: EWH.) But investors should be aware this ETF isn\u2019t a clone of the Hang Seng.\n\nBy far the biggest component stock in the ETF is the AIA Group (HK: 1299), a giant pan-Asian insurance company, which comprises nearly 24% of the fund. CK Hutchinson Holdings (HK: 1), a multinational conglomerate, also has a significant presence at 5%. These stocks\u2019 fortunes have less to do with Hong Kong than the rest of Asia. That said, deGraaf writes in an email he also sees EWH \u201con the verge of breaking out, not quite there, but very close.\u201d\n\nThe Hang Seng also includes stocks of companies whose operations extend far beyond Hong Kong. A prominent example is Chinese internet company Tencent Holdings (HK: 700), which Rich Ross, the technical guru at Evercore ISI, points out accounts for 11% of the Hang Seng. Moreover, Tencent shares are breaking out of a two-year downtrend, he adds in a client note.\n\nWith pro-democracy protests continuing and slated to step up over New Year\u2019s Eve and New Year\u2019s Day, the pictures and videos are sure to be disquieting, especially for investors contemplating putting money to work in Hong Kong. When things look riskiest is when the biggest gains are made, and which seem easy in retrospect.\n\n\u201c\u2018Easy money\u2019 is an often-used term in this business, but almost exclusively with hindsight. It\u2019s easy to be dispassionate when viewing the markets in the comfort of history, but \u2018easy money\u2019 is almost always the hardest to earn psychologically, and Hong Kong is a great contemporaneous example in our view,\u201d deGraaf wrote. Now that Hang Seng is breaking out, he says there are \u201cno excuses\u201d to ignore it.\n\nThe difficult thing is to ignore the reports coming out of Hong Kong. It would be wise to remember the markets make the news, not the other way around, notwithstanding what we in the media might think.\n\nWrite to Randall W. Forsyth at randall.forsyth@barrons.com", "keywords": [], "meta_keywords": ["Tencent Holdings", "0700.HK", "HK:700", "AIA Group", "1299.HK", "HK:1299", "CK Hutchinson Holdings", "asia", "companies", "markets", "barron's take"], "tags": [], "authors": ["Randall W. Forsyth"], "publish_date": null, "summary": "", "article_html": "", "meta_description": "Against the backdrop of Hong Kong\u2019s turmoil and unrest, the Hang Seng index is breaking out technically on the price charts, Jeff deGraaf, founder of Renaissance Macro Research, observes.", "meta_lang": "en", "meta_favicon": "//www.barrons.com/favicon.ico", "meta_data": {"viewport": "width=device-width, initial-scale=1.0, minimum-scale=1.0, maximum-scale=1.0, user-scalable=no", "dj.asn": "i-0983", "user.type": "nonsubscriber", "user.exp": "default", "page.content.type": "Article", "page.content.format": "responsive", "page.content.source": "Barrons Online", "page.site": "Barrons Online", "page.site.product": "BOL", "article.template": "full", "page.region": "na,us", "article.id": "SB51313239837644343326904586110821511656078", "article.type": "Up and Down Wall Street Daily", "article.type.display": "Up and Down Wall Street Daily", "article.access": "paid", "article.origheadline": "Hong Kong\u2019s Stock Market Is Beckoning, Despite the Noise", "article.headline": "Hong Kong\u2019s Stock Market Is Beckoning, Despite the Noise", "article.summary": "Against the backdrop of Hong Kong\u2019s turmoil and unrest, the Hang Seng index is breaking out technically on the price charts, Jeff deGraaf, founder of Renaissance Macro Research, observes.", "apple-itunes-app": "app-id=409882593,app-argument=barrons://launch?articleid=SB51313239837644343326904586110821511656078&headline=Hong%20Kong%u2019s%20Stock%20Market%20Is%20Beckoning%2C%20Despite%20the%20Noise&weburl=http://www.barrons.com/articles/SB51313239837644343326904586110821511656078", "article.page": "Daily", "article.section": "Daily", "article.published": "2019-12-31T10:30:00.000Z", "article.updated": "2019-12-31T10:30:00.000Z", "article.created": "2019-12-31T08:42:00.000Z", "dateLastPubbed": "2019-12-31T10:30:00.000Z", "author": "Randall W. Forsyth", "keywords": "Tencent Holdings,0700.HK,HK:700,AIA Group,1299.HK,HK:1299,CK Hutchinson Holdings,asia,companies,markets,barron's take", "news_keywords": "Tencent Holdings,0700.HK,HK:700,AIA Group,1299.HK,HK:1299,CK Hutchinson Holdings,asia,companies,markets", "description": "Against the backdrop of Hong Kong\u2019s turmoil and unrest, the Hang Seng index is breaking out technically on the price charts, Jeff deGraaf, founder of Renaissance Macro Research, observes.", "article": {"word_count": 616, "image_count": 1, "embed_count": 1, "internal_link_count": 3, "opinion": "false"}, "robots": "noarchive,noodp", "language": "en-US", "twitter": {"title": "Hong Kong\u2019s Stock Market Is Beckoning, Despite the Noise", "description": "Against the backdrop of Hong Kong\u2019s turmoil and unrest, the Hang Seng index is breaking out technically on the price charts, Jeff deGraaf, founder of Renaissance Macro Research, observes.", "image": {"identifier": "https://images.barrons.com/im-140213/social", "alt": "Hong Kong\u2019s Stock Market Is Beckoning, Despite the Noise"}, "card": "summary_large_image", "creator": "@randallwforsyth", "site": "@BarronsOnline"}, "fb": {"app_id": 64579042740}, "og": {"title": "Hong Kong\u2019s Stock Market Is Beckoning, Despite the Noise", "description": "Against the backdrop of Hong Kong\u2019s turmoil and unrest, the Hang Seng index is breaking out technically on the price charts, Jeff deGraaf, founder of Renaissance Macro Research, observes.", "url": "https://www.barrons.com/articles/hong-kongs-stock-market-is-beckoning-despite-the-noise-51577788208", "image": {"identifier": "https://images.barrons.com/im-140213/social", "width": 900, "height": 471}, "locale": "en_US", "type": "article"}, "cx_pv_id": "k4u2nlxh4u787fce", "cx_shield": "{\"campaign\":202,\"placement\":\"cx-articlecover\",\"tag\":\"default\",\"type\":\"free\",\"bucket\":2}", "parsely-title": "Hong Kong\u2019s Stock Market Is Beckoning, Despite the Noise", "cXenseParse": {"wsj-display": "Asia", "wsj-brand": "Barron's Take", "wsj-ad-page": "Asia", "wsj-barrons-tags": "Companies,Markets,Asia,Barron's Take,"}, "referrer": "always", "article.continuous.publisher": "BARRONS", "article.continuous.limit": 8, "recommendedArticles": "SB50533666572999854056204586044553035108650"}, "canonical_link": "https://www.barrons.com/articles/hong-kongs-stock-market-is-beckoning-despite-the-noise-51577788208"}