The Hang Seng Index has been in a strong bull run this year, and is now hovering at its highest level since July 2021. It jumped to a high of H$27,306, up by over 80% from its lowest level in 2024. This article explores why the index has jumped and the top constituents.
Why the Hang Seng Index has jumped this year
The blue-chip Hang Seng Index has been in a strong bull run in the past few months, moving from the 2024 low of H$14,898 to a high of H$27,306 this month.
The index has coincided with the ongoing stock market rally globally, with its American peers like the S&P 500 and Nasdaq 100 indices hitting their all-time highs.
Further, the Hang Seng Index has jumped because of the ongoing demand from Chinese investors who have nowhere else to invest their money following the collapse of the real estate sector. It is estimated that Chinese have accumulated trillions of dollars in savings in the past few years.
The Hang Seng has also soared because fears of the real estate sector crash have abated in the past few months. This is unlike what happened a few years ago when companies like Evergrande were collapsing.
Most importantly, the ongoing demand for artificial intelligence solutions and the ease of the regulatory crackdown in China has contributed to the surge in tech companies.
Pop Mart International
The best-performing stock in the Hang Seng Index this year is Pop Mart International, whose shares have jumped by 185%. This growth happened as the toy company’s labubu became an international sensation, leading to a surge in sales.
Recently, however, Pop-Mart shares have plunged by over 20% from the peak and shed $25 billion in value. This decline happened as analysts started to pare back their estimates of the stock, with JPMorgan analysts citing the cooling demand and its valuation. The bank noted:
“We believe the valuation is priced for perfection and any small fundamental miss/negative media reports (i.e. resale price drop and third-party licensing) might drive underperformance.”
Semiconductor Manufacturing International (SMIC)
SMIC is another top company in the Hang Seng Index this year as it stock jumped by 185%. It has soared by 328% in the last 12 months and 1,130% in the last 10 years.
SMIC is benefiting from the ongoing demand surge of semiconductors in China and other countries. Its rise has mirrored that of Taiwan Semiconductor, which has become a trillion-dollar company this year.
SMIC has seen substantial revenue growth as China has become more serious on AI. It has also benefited from American companies’ demand, like Qualcomm, Broadcom, and Texas Instruments.
Zijin Mining Group
Zijin Mining Group stock price has jumped by 145% this year, making it one of the best players in the Hang Seng Index. Its performance is primarily because of the ongoing gold price surge.
Gold’s performance is important for Zijin, a company that has become one of the biggest gold miners globally. Higher gold prices mean more money and wider margin.
Sino Biopharmaceutical
Meanwhile, Sino Biopharmaceutical’s stock price has surged this year. This is notable since it is one of the biggest companies in the pharma industry in China with a focus on oncology, hepatology, and respiratory. Its recent results showed that its revenue jumped by 10% in the first half, with the oncology segment soaring by 38%.
The other top gainers in the Hang Seng Index this year are companies like Wuxi Biologics, JD Health, Alibaba Group, and Kuaishou Technology.
On the other hand, the top laggards in the index are firms like Meituan, New Oriental, Haidilao International, and CK Infrastructure.
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