Despite what doomsayers say, the local market appears to be taking the current political turmoil in stride.
Fifty days after the mammoth rally against the extradition bill on June 9, one can say that the Hang Seng Index is performing better than Hong Kong itself.
On Monday the benchmark index closed over 28,100 points after the State Council’s Hong Kong and Macau Affairs Office reaffirmed its support for the administration of Chief Executive Carrie Lam Cheng Yuet-ngor and praised the police to high heavens, dashing speculation of a change in the leadership of the SAR government and easing worries that the People’s Liberation Army might be called to enforce law and order in the territory.
The gauge had stayed below the 27,000 level before that game-changing demonstration that saw over a million people taking to the streets to show their opposition to Lam’s proposed legislation.
It is said that resilient Hong Kong has seen it all. The Occupy Movement of 2014 arguably brought in more disruptions for 79 days but its actual impact on the economy was low.
Does that mean that investors don’t have to worry about losing their shirts? While the Hang Seng Index was holding up, many Hong Kong-related stocks took a hit on Monday. Property plays such as Swire Pacific (00019.HK) and Wharf Holdings (00004.HK) tumbled between 3.7 and 4.7 percent, while retail stocks were also clobbered; Chow Tai Fook Jewelry fell 5.7 percent amid worries that the protests would discourage tourists from coming to Hong Kong.
Anyway, who wants to come to hot and humid Hong Kong in the summer?
Even the mighty Watson, a retail arm of billionaire Li Ka-shing’s CK Hutchison (00001.HK), recorded a double-digit decline in sales in July.
Ask your overseas friends, and they will probably tell you that they think the city is in chaos – all because of the images of gore and destruction they are fed regularly by the press. (Some say they will feel a lot better if they don’t read Apple Daily or Facebook.)
Top bankers such as David Li Kwok-po of Bank of East Asia (00023.HK) and the Hong Kong General Chamber of Commerce, which comprises all the local blue-chip companies, have voiced concerns that the street fights between riot police and protesters would affect business sentiment.
However, property stocks are not doing so badly. Sun Hung Kai Properties (00016.HK), for example, remained above its price level before the June 9 protest, although its shopping malls New Town Plaza in Sha Tin and YOHO Town in Yuen Long had been affected by clashes between police and protesters.
Hong Kong has seen it all, and it will be able to overcome this crisis. Prosperity is our trademark. Let’s just give ourselves a little more time.
– Contact us at [email protected]