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Hong Kong stocks retreat as China speeds up security law, eyes on second wave of coronavirus pandemic
- National security law for Hong Kong could be passed as early as June 30 on the eve of handover anniversary
- Beijing doubles Covid-19 testing capability to 1 million a day as infections increase
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Hong Kong stocks fell as China took a step closer to implementing the controversial national security law in Hong Kong, while new cases of new coronavirus infections worldwide undermined expectations for quick economic rebound.
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The Hang Seng Index retreated 0.5 per cent to 24,511.34 on Monday, while the Shanghai Composite Index was little changed at 2,965.27 after swinging between gains and losses.
E-commerce stocks were notable losers. Alibaba Group declined 2.7 per cent to HK$213.00 and Meituan Dianping slipped 2 per cent to HK$170.50.
China could pass the new national security law tailor-made for the Asian financial hub as early as June 30, on the eve of the 23rd anniversary of Hong Kong’s handover from British rule. Details of the draft legislation released over the weekend suggest Beijing would have final say over how the law is implemented in the financial hub.
“Investors want a stable investment environment,” said Louis Tse Ming-kwong, managing director of VC Asset Management. “Right now we’re waiting to see when the national security law is implemented, and if anyone creates any difficulties. Once the situation stabilises, the markets will go back up again.”
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Recent large-sized stock offerings, primarily secondary listings of Chinese tech behemoths, have helped buoy investor sentiment as hot money flowed in. More, like the impending Yum China fundraising plan in Hong Kong, should follow.
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