Hong Kong’s stock market has always bounced back strongly after big protests in the past. Will it this time?
- Hang Seng is down 3 per cent since first massive demonstration on June 9
- Hong Kong market has historically rebounded strongly after protests caused a tumble
Hong Kong is the ultimate comeback town. But ongoing protests are rattling its stock market – and its investors.
“The fundamentals of Hong Kong companies are really dampened by the social movement,” said Alex Wong, director of asset management at Ample Capital. “Investors should take this opportunity to cut their holdings of Hong Kong equities and move into overseas or Chinese companies, listed either in the mainland or in Hong Kong.”
The Hang Seng Index is down 3 per cent since the first major march on June 9. After a huge run at the start of the year – the benchmark was up nearly 17 per cent on April 9 – it has given up nearly all of its year-to-date gains and is now ahead by a mere 1.3 per cent.
Of late, protests have been the biggest weight on Hong Kong’s stock market, a number of analysts said, and they erupted into clashes between police and anti-government demonstrators again on Sunday. But the US-China trade war is likely to smack stocks again as well Monday, after US president Donald Trump “hereby ordered” American businesses to abandon China in a tweet Friday and said he is raising tariffs further following Beijing’s warning it will raise tariffs on US$75 billion in US imports.
Among those that have been especially hard hit during the protests are the city’s property developers, which have dropped 8 per cent since June 9, according to the Hang Seng property subindex. Consumer stocks tied to Hong Kong companies have been hammered as well.
People are less likely to go to malls, buy new homes or go out for dinner. That’s pounding related stocks. The protests have also beamed out a sometimes scary image of what is normally a safe and orderly city, hurting tourism and related listed companies.