Investors maintain confidence in Hong Kong

The protests in Hong Kong caused the territory to plunge into recession in the third quarter, and has also begun to weigh on local markets. But investors remain upbeat.

Cityscape Hong Kong and Junkboat at Twilight

Junkboat of Hong Kong at Night

Nikada

Is Hong Kong on the "brink of a total breakdown"? That was how one police spokesman described the situation after a week that saw anti-government protesters block roads in the central business district. Lawyers and bankers have been joining "radicals at the barricades" during their lunch breaks, says Amy Gunia in Time.

The violence "on the doorstep of some of the world's largest banks" caused the territory to plunge into recession in the third quarter. Tourist arrivals are down by a third over the past year.

The violence has also begun to weigh on local markets. Mainland companies make up about 70% of the Hong Kong Stock Exchange. That should make equities' performance more tied to developments on the mainland than to turbulence in the former British colony.

Yet the city's Hang Seng index is down 2.5% over the past six months as the mainland's CSI 300 index has gained 9%. Falling prices for local financial and property firms have dragged down the broader index, explains Zhang Shidong for The South China Morning Post.

A recent Morgan Stanley report predicts that the Hang Seng will continue to underperform other Chinese stock indices. Faced with its "worst business outlook since the 2008 financial crisis", Hong Kong's corporate earnings are going nowhere fast, says Bloomberg News. Mainland-listed China A shares are "28% more expensive than their Hong Kong-listed peers".

Not everyone is so gloomy, says Sherisse Pham on CNN. Investors were this week "falling over themselves" to buy into Alibaba's secondary listing in Hong Kong That enthusiasm is "a vote of confidence in the Asian financial hub", despite the current unrest. It could also "cement the Hong Kong Stock Exchange's status as 2019's largest venue for public offerings."

Recommended

The top funds to invest in
Funds

The top funds to invest in

Investors continued to the passive preference throughout May, while high-yields were also sought. We look at the top funds, stocks and trusts that inv…
5 Jun 2023
Cheap and cheerful or reassuringly expensive?
Sponsored

Cheap and cheerful or reassuringly expensive?

Many investors aim to pick up “cheap” shares. But cheap does not always mean good value, says Max King. Quality comes at a price.
21 Dec 2022
Profit from patience
Advertisement Feature

Profit from patience

Smart investors will reap the rewards by staying focused on the long-term, research from Alliance Trust shows.
9 Dec 2022
Share tips of the week – 9 December
Share tips

Share tips of the week – 9 December

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
9 Dec 2022

Most Popular

Best debit and credit cards to use while travelling abroad
Personal finance

Best debit and credit cards to use while travelling abroad

If you’re going on holiday or travel abroad regularly, it’s worth knowing what the best card is to avoid hefty fees. We weigh up the charges and any p…
6 Jun 2023
Nationwide to give £100 cash boost to customers
Personal finance

Nationwide to give £100 cash boost to customers

Nationwide Building Society is giving customers £100 as it reinvests profits. Dubbed the Nationwide Fairer Share scheme, we look at who is eligible.
22 May 2023
A discounted REIT to buy now
Investments

A discounted REIT to buy now

This real estate investment trust is carving out a niche for itself by recycling old offices. Investors should take advantage of the discount and buy …
6 Jun 2023