Decoding the Divergence of Hong Kong and Mainland Chinese Equities

The recent US election caused considerable disruption across global asset classes. Gold and precious metals declined, possibly due to market relief over the clear presidential outcome. Similarly, assets tied to the energy transition, including miners and alternative energy sectors, fell. Long-dated US treasuries faced significant pressure due to concerns about inflation driven by restrictive immigration policies and higher tariffs.

Chinese equities displayed a sharp divergence:

• Mainland Market Performance: Chinese small-cap stocks increased by 2.3%, while the broader Shanghai Index rose 1.8%.
• Hong Kong Market Decline: Chinese equities listed in Hong Kong fell by 4.9%.

1. Factors Driving Divergent Performances