Asset management company Prusik makes big bets on the Hong Kong stock market, with its flagship fund leading the industry with a 19% return so far this year.

Notice that the recovery of the Hong Kong stock market has brought substantial returns to asset management company Prusik Investment Management, which has previously bet against the trend on local Hong Kong property and conglomerate stocks. Chief Investment Officer Tom Norton firmly believes that there is still room for growth in the future. According to fund data, the flagship fund of this asset management firm, with $787 million in assets, has allocated over a third of its funds to Hong Kong companies or companies listed in Hong Kong, while the proportion of Hong Kong allocation in its benchmark index - the MSCI Asia Pacific (excluding Japan) Total Return Index - is only slightly over 5%. This perseverance has finally paid off: affected by the tightening policy of the Federal Reserve (which has dragged down Hong Kong assets under the linked exchange rate system) and the slowdown in the Chinese economy, the Hong Kong stock market has experienced a strong rebound after years of decline. Data shows that the fund's performance this year has surpassed 95% of its peers. "The Hong Kong market has rebounded significantly, but in terms of long-term valuation, it is still at an extremely low level," Norton, who is based in London, said in an interview last week. The past five years have been the most challenging period for Hong Kong, but with the weakening of the US dollar and the stabilization of the Chinese economy, some of the factors dragging it down are fading away. Data shows that as of July 23, 2025, the Prusik Investment Asia Equity Fund has returned over 19%. Fund data shows that since its establishment at the end of 2010 until the end of June this year, its cumulative return rate has exceeded 250%, far exceeding the MSCI benchmark index's approximately 106% increase. The fund's top holdings in the first half of 2025 include Cheung Kong Infrastructure, FIRST PACIFIC, and Henderson Land Development. Currently, Hong Kong stocks are still lower in many indicators such as P/E ratio and P/B ratio compared to their regional peers. Although Cheung Kong Infrastructure's share price has risen by 26% this year, its P/B ratio is only about 0.37 times. Outside of Hong Kong, the fund's largest risk exposure is in Indonesia, South Korea, and mainland China. Market sentiment shift Norton's views reflect a change in global investors' sentiment towards Hong Kong. The reappraisal of the value of Chinese tech stocks listed in Hong Kong, the boom in IPOs, and China's economic resilience in the face of US tariffs have all contributed to the Hang Seng Index reaching a near four-year high. "I am more optimistic about Hong Kong and reasonably speculate that this round of bullish sentiment has not yet ended," he said. For mainland China, Norton is bullish on the "New China" theme, which includes sectors such as artificial intelligence and pharmaceuticals, while also betting on the trend of consumer upgrades. He predicts that the economy will rebalance towards reducing residential savings and increasing consumption. Some of the markets Norton is most bullish on are in Southeast Asia. Norton has significantly increased his holdings in stocks from Indonesia, Thailand, and the Philippines, as these markets have experienced drastic volatility this year due to global investors' concerns about political noise and tariffs. "We really like markets where people are pessimistic," he said. Norton pointed out that Indonesian stocks with an economic growth rate of about 5% and a dividend yield of 6% are extremely attractive. He focuses on consumer and financial stocks in the country, avoiding strong cyclical sectors like cement and non-dividend-paying internet companies. "We can find stocks with a P/E ratio of only 5-6 times, with growth potential, good management, and no credit risk," he said. "These stocks should normally be valued at 10-15 times, and we are getting a huge discount."