After a 14-day run, Hong Kong’s Hang Seng Index on Monday came close to breaking through its historical record set more than a decade ago. Technical analysts now caution the benchmark looks overbought.
Bull Run
Hong Kong’s Hang Seng Index has risen for 14 consecutive days, closing in on 2007’s record
Its strength, however, shouldn’t be surprising. That’s because the Hang Seng today isn’t what it was a decade ago.One of the most conspicuous changes has been the arrival of real technology companies. On Oct. 30, 2007, China Mobile Ltd. was the biggest elephant in the room, with a 15 percent index weighting. Today, that’s Tencent Holdings Ltd.
Everything Changes
Tencent has replaced China Mobile as a top five company on the blue-chip Hang Seng Index
Two things have happened since Tencent’s arrival.
The Chinese tech giant has an excellent track record, raising the profile of the Hang Seng Index. Tencent investors have been well rewarded since the company debuted in 2004; even the 14.8 percent loss they weathered in 2008 wasn’t that bad considering the financial crisis. And because Tencent is adept at spinning off and floating its various subsidiaries, we can be confident it won’t fall into the conglomerate discount trap of Japan’s SoftBank Group Corp.
Track Record
Since its IPO in 2004, Tencent has rewarded its investors well
