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The View | Hong Kong’s violent protests aren’t the greatest threat to its economy. Global conditions are
- The strength of the Hang Seng Index this fall suggests that the protests are the new normal, and no longer a drag
- However, looking at global markets, it appears we are now in a ‘last hurrah’ environment typical of bubbles
Reading Time:3 minutes
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The markets have a definite last-harrah, fin-de-siècle, Last-Chance-Saloon air about them.
This year to date has been one of extraordinary performance in the financial markets. The FTSE China A50 price, an index of the 50 largest Chinese domestic stock listings, soared by more than 30 per cent this year. It is an extraordinary rise; the Shanghai Composite Index (which follows all the shares listed) is up only 18 per cent.
And, despite what you read in the news; Hong Kong is up nearly 6 per cent. In a normal year, we would be pretty happy with this performance – and it’s fair to say that this year hasn’t been normal; though perhaps we are in a new normal.
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Nasdaq, the index of US technology companies, is up 28 per cent while the S&P 500 is up a mere 23 per cent. Europe has done its bit this year with the Euro STOXX index of 50 leading companies up 24 per cent although Brexit-hit Britain is languishing at a rise of only 9 per cent.
Admittedly these figures are flattered by a near 10 per cent fall last November and December, which has meant that the figures have started from a lower base, but they are impressive nonetheless. This economic cycle is likely to end, like most cycles, with a bubble – and this is beginning to look like a bubble.
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