Hong Kong’s battered stock market surged Wednesday on a South China Morning News report that chief executive Carrie Lam plans to formally withdraw the controversial extradition bill that has hammered local businesses and raised questions about the future of the city as an international financial centre.
The Hang Seng Index closed up 3.9 per cent, at 26,523.23, after shooting up as much as 4.35 per cent. That was its biggest daily gain in 10 months. On November 2, the HSI gained 4.2 per cent, or 1,070.35 points.
Luxury retailers, property heavyweights and MTR were among big winners, after seeing their shares hammered as the protests that started June 9 steered away local shoppers and mainland tourists.
MTR, the owner and operator of the city’s subway system, had seen its shares plunge 20 per cent over six weeks as clashes between protesters and police ended with tear gas fired and arrests. It closed up 6.4 per cent to HK$47.35.
Cathay Pacific, the city’s flag carrier that became caught up in the protest storm, rose 7.2 per cent to close at HK$10.7.
Wharf Real Estate Investment soared by 12.1 per cent to HK$46.30.
New World Development jumped 10 per cent to HK$10.60. Sun Hung Kai Properties closed up 9.8 per cent at HK$118.5. Sino Land jumped 7.8 per cent HK$11.64.
Retailers and the consumer sector were also big gainers.
Sa Sa International soared by 17.2 per cent to HK$1.90. Chow Tai Fook shot up 9.7 per cent up to HK$9.74.
The decision by Lam will mean that the government is finally giving in to one of the five demands of the protesters, who have taken to the streets over the past 13 weeks to voice not just their opposition to the legislation but the overall governance of the city. The demonstrations became increasingly violent.
But analysts warned that the troubles weighing on stocks are not over. Not only are the other demands out there by protesters -- including fully democratic elections -- but also the US-China trade war. Both have put the city on the brink of a recession.
“Don’t expect this to be the market’s turning point”, predicted Alan Li, portfolio manager at Atta Capital.
“This is only one of the (protesters’) demands, and the least important one. It won’t calm people down … Not much change on fundamentals (of stocks). This overshoot of market gives short-term opportunities,” he said.
Kevin Leung, executive director of investment strategy at Haitong International Securities, also said the strong momentum is unlikely to be sustained.
“For those hit the worst by the protest, like retailers and property developers, withdrawal of the extradition bill could partly warm sentiments … but still this is far from solving the whole problems. I also think the government needs to issue more concrete measures to help small and medium business to overall restore confidence,” he said.
Investors were being too optimistic, said Kenny Wen, wealth management strategist at Everbright Sun Hung Kai.
“Protesters have five demands, and withdrawing the bill is only one of them. And there are other negative factors affecting Hong Kong, including the trade war and depreciation of RMB,” he said.
More from South China Morning Post:
- Hong Kong protests 2019 vs Occupy Central: after 79 days, retailers, investors, developers hit far worse by this year’s demonstrations
- An emergency declaration could quell Hong Kong’s protests, but at what cost to our city?