Hong Kong equities look due for a value push

Sun Hung Kai Properties

06/01/2026 12:00

The author is a Reuters Breakingviews columnist.  The opinions expressed are his own.

By Hudson Lockett

HONG KONG, Jan 6 (Reuters Breakingviews) - Hong Kong’s Hang Seng Index .HSI surged nearly 28% in 2025, easily besting gains of 24% and 18% by Japan’s Topix .TOPX and China’s CSI 300 .CSI300. Yet valuations in the city lag: its stock market benchmark trades at about 1.2 times book value, per data provider Wind, compared to multiples of 1.7 and 1.5 for its Japanese and Chinese counterparts. That highlights an opportunity for the Asian financial hub to follow neighbouring markets’ examples with a value push of its own.

Campaigns led by officials in Beijing, Tokyo and Seoul are starting to pay off. The Chinese government last year pressured state firms to boost dividend payments and announced a 300 billion yuan ($42.6 billion) lending scheme to support buybacks. That put combined buybacks and dividends on a course to rise 20% annually to 3.6 trillion yuan, per Goldman Sachs. And while South Korea's new ruling party overhauled its companies law in 2025 to make boards more accountable to shareholders in a bid to boost returns, a governance push in 2024 by Hong Kong Exchanges and Clearing left tycoons’ influence over corporate directorships largely intact.

The city’s laissez faire government is unlikely to wade into the fight for better shareholder returns. Instead, the $65 billion bourse operator under Chief Executive Bonnie Chan could follow the light-touch lead of Tokyo’s exchange, which relies on non-binding guidelines to lean on listed firms to boost valuations and improve disclosures: By publishing a list of the companies that comply, it effectively names and shames those that don’t.

Running the same playbook in Hong Kong won’t augur a boom in consolidation or delistings like that seen in Japan, where fair M&A standards published by the government have emboldened private equity to help drive efficiency gains. But it would paint an exchange-sanctioned target on the backs of companies that don’t boost their valuations.

    As with Japan's largest publicly traded company, the $340 billion
    Toyota Motor 7203.T
    , some of Hong Kong's biggest and most popular listings might still do as they please. Technology giants Alibaba 9988.HK and Tencent 0700.HK , for instance, both have gobs of cash they could return to investors but, with relatively healthy valuation multiples, look unlikely to get named or shamed under such a scheme.

Big Hang Seng Index component stocks tied to Hong Kong's property tycoons, however, could face more meaningful pressure. Among such firms now trading below book value: CK Hutchison 0001.HK, CK Asset 1113.HK, Wharf Real Estate 1997.HK, Henderson Land 0012.HK and Sun Hung Kai Properties 0016.HK, per LSEG. The moguls may grumble at the attention, and tough geopolitics may make it tricky for some to unlock value, but investors will cheer.

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CONTEXT NEWS

Hong Kong’s benchmark Hang Seng Index trades at about 1.2 times book value, compared to 1.7 for Japan’s Topix, and 1.5 for China’s CSI 300, per data provider Wind.

Hong Kong property conglomerates have the lowest valuation multiples https://www.reuters.com/graphics/BRV-BRV/akvejyzgdpr/chart.png

(Editing by Robyn Mak; Production by Aditya Srivastav)

((For previous columns by the author, Reuters customers can click on LOCKETT/ hudson.lockett@thomsonreuters.com))