Hong Kong stocks start June with a bang, post biggest rise since March after Trump remarks ‘long on criticism of China, but short on action’
- Rising optimism among investors that Trump administration may not sanction Beijing for controversial Hong Kong national security law
- Tencent among gainers; Kweichow Moutai’s market cap reaches 1.78 trillion yuan
Hong Kong’s stock market kicked off June with its biggest gain since the end of March, even though the United States is set to scrap its special trading status, as optimism rose that the Trump administration may not sanction Beijing for passing a controversial national security law for the city.
Investors took it as a positive sign that Trump, speaking on Friday, did not extend his threat of punitive actions beyond the city to mainland China. The Hang Seng Index rose 3.4 per cent to 23,732.52 for its biggest jump since March 25, while in mainland China, the Shanghai Composite Index rose 2.2 per cent to 2,915.43.
Analysts said the absence of specific sanctions against mainland China buoyed the markets on Monday.
“Trump’s press conference last Friday was long on criticism of China, but short on action,” Stephen Innes, chief global markets strategist at AxiCorp, said in a note on Monday. The markets have temporarily shelved the trade war escalation playbook and are being bullish, he added.
Other analysts were surprised with the day’s gains. “The market thinks that US-China relations have not deteriorated that badly, so it rebounded and recovered losses made over the past two weeks,” said Castor Pang, head of research at investment services firm Core Pacific-Yamaichi. “I’m surprised about the rapid gains.”
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Donald Trump announces US will revoke Hong Kong’s special status
The Hang Seng Index was the worst performer in Asia in May, ending the month 6.8 per cent lower. And it might not be out of the woods yet. The passage of the national security law, as well as the 31st anniversary of the Tiananmen Square crackdown in Beijing, which has been marked annually in the special administrative region on June 4, loom large over Monday’s gains.