21 January 2019
A Donald Trump victory could bring temporary shock to the market. Photo: Reuters
A Donald Trump victory could bring temporary shock to the market. Photo: Reuters

HK equities outlook for November: a mixed bag

November is shaping up to be an eventful month.

First there’s the US presidential election. Hillary Clinton could lose support as a result of FBI’s decision to reopen its investigation into her emails, raising Donald Trump’s hopes for a resurgence.

That has increased short-term market volatility.

It’s really difficult to predict who will win the election.

Nevertheless, I believe any surprise outcome might only bring a temporary shock to the market given the checks and balances in the American political system.

Meanwhile, the Shenzhen-Hong Kong stock link is expected to launch before the end of the month.

It is said that many fund houses are planning to issue exchange traded funds based on this theme. Investors should take note of their stock selections for trading cues.

Single’s Day, probably the world’s largest online shopping day, will take place on Nov. 11. That could bring some stimulus to the e-shopping sector.

On the mainland policy front, more stringent property rules imposed last month may continue to weigh on real estate plays.

UnionPay’s recent ban on the use of its cards to buy Hong Kong investment-related insurance products is part of the country’s efforts to stem capital outflows, and that is going to affect companies like AIA (01299.HK) and Prudential (02378.HK).

That said, if these insurance counters show a notable correction of, say, more than 5 percent, it might be the right time to buy them.

Last week’s sixth plenary session of 18th Communist Party of China Central Committee focused on fiscal policy.

The government intends to cut corporate tax and allow the private sector more access to infrastructure projects.

It takes time for these policies to be implemented and to take effect.

Whether they will work or not is hard to say, but if these measures are able to stimulate economic growth, both Hong Kong and mainland markets will benefit in the long run.

This article appeared in the Hong Kong Economic Journal on Nov. 1.

Translation by Julie Zhu

[Chinese version 中文版]

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columnist at the Hong Kong Economic Journal

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