Date
28 June 2017
Even if US President Donald Trump encounters more resistance to his reform plans, it may not hurt the Hong Kong market as his setbacks would prompt investors to diversify away from US equities into HK equities. Photo: Reuters
Even if US President Donald Trump encounters more resistance to his reform plans, it may not hurt the Hong Kong market as his setbacks would prompt investors to diversify away from US equities into HK equities. Photo: Reuters

Trump’s troubles may be a boon for Hong Kong market

US President Donald Trump’s failure to repeal Barack Obama’s Affordable Care Act is widely considered as negative for the market.

While Trump has decided to shift his focus to his tax measure in an apparent bid to restore his credibility, the healthcare bill fiasco continues to cast doubt on his ability to realize his numerous economic plans.

Since I don’t have a strong conviction as to whether the bull market is still intact, although I am not too bearish yet, I would suggest that investors trim their positions while retaining their core investments.

Profit-taking pressure may increase in the near term, but I remain positive about US equities in the medium and long term.

US corporate giants may suffer a bit if Trump’s reform path continues to be bumpy, but their competitive edge remains intact and their earnings prospects are still bright.

With lots of investors waiting to buy on dips, the market is unlikely to fall dramatically.

Outlook for the Hong Kong market is better than that for Wall Street at the moment.

Hong Kong equities have been underpriced for years, and quite a few of them got revalued after announcing solid 2016 results.

Meanwhile, the stabilizing mainland economy is also helping to restore market confidence.

Gradually, investors would realize the benefit of diversifying into the Hong Kong market rather than placing most of their bets on US equities.

This article appeared in the Hong Kong Economic Journal on March 28

Translation by Julie Zhu

[Chinese version 中文版]

– Contact us at [email protected]

RT/CG

Director, Asset Management at Ample Capital Limited.

EJI Weekly Newsletter

Please click here to unsubscribe