Is There Reason to Be Concerned About the Hang Seng?

Even as Hong Kong shares are holding on to their eighth straight monthly gain, recent derivatives activity shows investors are getting jittery about Asia’s best-performing market this year. Bearish options volume on the Hang Seng Index is heading for its highest level since August 2011 this month, with the ratio of outstanding puts versus bullish calls near a 10-year peak. The hedging is happening as the benchmark gauge surged 25 percent since January, reaching a more than two-year high Aug. 8.

While a stabilizing Chinese economy and brighter earnings prospects have helped lift the Hang Seng Index, gains concentrated in some heavy-weight stocks such as Tencent Holdings Ltd. are raising concerns they may turn to pitfalls. And recently, the growing tension surrounding North Korea and worries over the impact of U.S. President Donald Trump’s administration on Asian shares have prompted investors to hedge, according to Hao Hong, chief strategist at Bocom International Holdings Co.

Source: Asia’s Top Stock Market Is Suddenly Drawing a Crowd of Skeptics – Bloomberg

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