Hong Kong Market Undervaluation

Since the 2008 global financial crisis, most major stock indices have experienced significant growth from their respective peaks, often outpacing their countries’ GDP expansion. For example, taking each index’s highest price as reference, the US Nasdaq rose +773%, the S&P 500 gained +348%, and the Dow Jones increased +237%. Germany’s DAX and Japan’s Nikkei also delivered strong returns relative to their peaks despite relatively modest GDP growth. By contrast, the Hong Kong Hang Seng Index, measured from its highest price, fell -16.53% even though Hong Kong’s economy expanded by +30.5%. This disconnect highlights a valuation gap: Hong Kong equities have not reflected the underlying economic performance, unlike other global markets. This suggests that the Hong Kong market remains undervalued relative to its peers, creating a potential investment opportunity.