Hong Kong is joining the global stock market party.
The city’s main market index surged to its highest ever close on Tuesday. The Hang Seng gained 1.8% to end at 31,904 points, topping its previous closing peak from way back in 2007.
That leaves it just 50 points or so shy of the record high set during a trading day in November 2007.
Hong Kong shares have been on a tear, returning more than 45% in the past 12 months. That’s almost double the gains recorded by the S&P 500 in the U.S. over the same period.
The Hong Kong rally has been propelled in part by tech companies like Tencent, which is often referred to as the Chinese equivalent Facebook.
Tencent, which has surged 125% in the past year, is the second-biggest component in the Hang Seng.
“Every time Tencent hits a historical high, it brings up the entire index,” said Dickie Wong, research director at Hong Kong broker Kingston Financial. “The nickname for the Hang Seng is now the Tencent index.”
Share prices have also been buoyed by renewed optimism over the Chinese economy, and a torrent of money from mainland China flowing into big stocks like bank HSBC, Wong said.
Hong Kong brokers think the Hang Seng’s winning streak still has a ways to go.
Douglas Morton, an analyst at money manager Northern Trust Capital Markets, said he expects the momentum to continue through 2018.
He points out that investment flows from mainland China into Hong Kong’s market are “surging,” while a “robust” Chinese economy is helping to boost corporate earnings.
Kingston’s Wong is also positive. He predicts the Hang Seng will hit 35,000 points by the end of this year, about 10% above current levels.
He said Hong Kong shares are much cheaper than they were back in 2007, based on a key earnings metric that many investors use to value stocks.
The possibility of new big tech listings in the city this year, such as smartphone maker Xiaomi, could help sustain enthusiasm, too.