FT: Hong Kong market rally starts to reshape global league table

A woman smiles as she chats with a man at a brokerage house in Fuyang in central China’s Anhui province

China Construction Bank has overtaken JPMorgan, Facebook and Chevron in terms of size, a sign of how a dramatic stock market rally in Hong Kong “is reshaping the league table of the world’s largest companies,” the Financial Times noted yesterday.
The surge has come even as Chinese economic indicators worsen. China’s exports slumped 15 per cent in March, raising the prospect of disappointing first-quarter economic growth.
The market capitalization of Hong Kong-listed shares set a new record on Monday, passing the HKD30tn mark for the first time to close at HKD30.55tn (USD3.9tn). The Hong Kong share market has risen 17.6 per cent in the past month, making it the best performer in the world this year outside the Chinese mainland.
The surge in valuations comes as investors, wary of frothy valuations in Shanghai and Shenzhen, switch into lower-priced Hong Kong stocks. A move by the Chinese authorities to give mutual funds access to the Hong Kong market via Stock Connect has also boosted share volumes in the territory.
As a result, “a host of companies now eclipse their global rivals,” FT said. CCB, China’s second-largest lender by assets, has risen by a fifth in the past month, giving it a market capitalization of USD248bn. It is now the 15th biggest company on the FTSE All World index, and the third ranked bank after local rival ICBC and US-based Wells Fargo.
“Other price changes have been equally impressive.” Online games maker Tencent – up 27 per cent over the past month – is now larger than Amazon, Oracle and Samsung Electronics, while Air China has a bigger market cap than Singapore Air and Cathay Pacific combined, following a 42 per cent rise.
Citic Securities, China’s leading brokerage, has gained 45 per cent over the past month. At $61bn, it now has a significantly larger market cap than either Blackstone or Credit Suisse. China Merchants Bank rose 25 per cent yesterday alone, putting it ahead of Barclays, Mitsubishi UFJ and Royal Bank of Canada, with a market cap of $91bn.
According to FT, the arrival of billions of dollars from mainland China has triggered a 65 per cent appreciation in the share price of Hong Kong Exchanges and Clearing, valuing the operator at $44bn, comfortably above global rivals.
The HKEx has now displaced American CME Group (Chicago Mercantile Exchange Group), with a market capitalisation of $31bn, as the world’s largest exchanges operator in the past month.
The Hong Kong bourse also outstrips fellow US derivatives exchange operator Intercontinental Exchange, which owns the New York Stock Exchange and has a market valuation of $25bn.
The increase in activity has raised expectations for the earnings performance of HKEx. The Hang Seng index is now up 12 per cent since the start of the month.