Hang Seng Index rebounds from rout as proposed security law roils sentiment, HKEX surges on Chinese IPO outlook

Hang Seng Index posts a small gain, after losing as much as 1.8 per cent in a market roiled by proposed security law

HKEX surges by the most in 18 months on optimism more Chinese companies will list in the city to escape Sino-US tensions

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A man wearing face mask walks past a bank electronic board showing the Hong Kong share index. The city is gripped by political tensions following China’s move to introduce a tailor-made security law for Hong Kong. Photo: AP

Published: 9:58am, 25 May 2020Updated: 5:37pm, 25 May 2020

Hong Kong’s Hang Seng Index rebounded from its worst rout in almost five years in a market troubled by rising political tensions after China proposed a security law aimed at cracking down subversive acts in the city.

The Hang Seng Index rose 0.1 per cent, or 22.10 points, to 22,952.24 at the close, reversing an intraday loss of as much as 1.8 per cent. The Shanghai Composite Index added 0.2 per cent to 2,817.97, finishing higher for the first time in four days. Hong Kong Exchanges and Clearing (HKEX), the bourse operator, surged as more Chinese companies signalled plans to relist in the city amid Sino-US hostility.

Hong Kong’s stock market had lost more than HK$1.6 trillion (US$210 billion) in value on Friday, after the benchmark index slumped the most since July 2015 as Beijing unveiled the proposed law tailor-made for the city after years of deadlock in the local legislature.

The Hang Seng’s volatility index remained near ia seven-week high amid concerns further social unrest will jeopardise the city’s status as a global financial centre even as top officials attempted to allay those fears. The city is also caught in the middle of rising US and China hostility on trade and pandemic fronts.

The controversial security law heralds a rocky road for investors leading up to Hong Kong’s Legislative Council election in early September. The opposition bloc is seeking to win control of Legco for the first time since Hong Kong returned to Chinese rule in 1997, emboldened by a landslide victory in November’s district council elections.