Top fund backs Tencent to drive Hong Kong index

Bloomberg

One of the world’s best-performing equity gauges is set for further gains in 2018 as tech giant Tencent Holdings Ltd. and consumer stocks drive it higher, according to Shanghai-based money manager
Wang Menghai.
The Hang Seng Index has led the charge among Asia’s biggest markets this year, rising 36 percent. Tencent, which has now overtaken Facebook Inc. in market value, accounts for nearly one-third of that advance. Wang, who works for Fullgoal Fund Management Co., has seen his fund beat 92 percent of peers in 2017. He plans to stay loyal to Tencent and boost exposure to companies that may benefit from quickening inflation.
“The Hong Kong benchmark is very likely to perform well in 2018, though the index rally may not be as much as this year,” Wang said. “Some of this year’s best performers are worth holding as long-term bulls.”
The Hang Seng Index jumped the most in seven weeks on Tuesday, and Tencent was again among the main drivers as it rose 2.4 percent. The company’s share price has more than doubled this year. Wang’s Fullgoal SH-SZ-HK Value Selected Flexible Allocation Mixed Fund, which manages about $483 million, was weighted 9.68 percent to Tencent in its third-quarter performance statement. “We are optimistic about Tencent in the next two or three years,” he said.
Demand from investors on the Chinese mainland will support Hong Kong stocks into next year, said Wang, who plans to continue investing 75 percent of his portfolio in the city’s shares. Mainland investors have purchased more than 390 billion yuan of Hong Kong equities in 2017 and November is poised to see the most buying this year on a monthly basis.