Hong Kong stocks head for reality check as investors grow ‘leery’ of Trump’s agenda

Hong Kong stocks are predicted to head lower on Wednesday, the first trading day of the Year of Rooster, as markets return from a four-day holiday to catch up with recent losses for global equities amid concerns over Donald Trump’s tightening of US immigration rules, and a volatile political environment in the United States.

“Tomorrow, Hong Kong will most likely close down 1 to 1.5 per cent.” said Brett McGonegal chief executive of Capital Link International, who added that he would not be a buyer at those levels.

“While I think this story ends well later in the year, the next couple months will be very bumpy. I think we could see a 10 per cent move lower before we find meaningful support. This will not happen tomorrow but most likely over the next few months.”

Last Friday, the Hang Seng Index closed at 23,360.78, up 21 per cent for the Year of the Monkey, the biggest annual jump since the Year of the Ox in 2009. Meanwhile, the Hang Seng China Enterprise Index rose 21.73 per cent in the Year of the Monkey to 9,804.05. Sentiment was boosted by US equities, as last week the Dow Industrial Average topped 20,000 for the first time.

However, a controversial immigration ban by President Donald Trump unnerved global investors at the end of last week. On Monday, the Dow Industrial Average plunged by the most in three months, declining 122.65 points to 19,971.13.

“If we see a further decline in the US markets overnight, I would predict that on Wednesday Hong Kong will open a little lower, and close down about 100 points,” said Louis Tse, director at VC brokerage, speaking before markets opened in the US.