Hong Kong Protests Knock Investor Confidence in City’s Shares
(Bloomberg) -- Hong Kong property stocks are turning into the biggest casualties of the city’s escalating street protests as investors worry about the economic impact and Beijing’s response.
Swire Properties Ltd. and Wharf Real Estate Investment Co. slumped more than 3%, among leading decliners on the MSCI Hong Kong Index which closed down 1.6%. It pared a decline of as much as 2.2% after concerns about how Beijing would react to the latest protests were eased following a rare briefing by China’s top office for Hong Kong affairs. Link REIT and New World Development Co. also slid.
Hong Kong’s financial markets had been relatively resilient to the unrest, with the MSCI measure trading on Friday less than 5% away from its record high. But after an eighth weekend of protests saw police again firing tear gas and rubber bullets in downtown Hong Kong, investors are turning more cautious.
“Compared with the past political events, this round is the worst in Hong Kong so far,” said Shaun Tan, UOB Kay Hian analyst in Hong Kong. “It’s still very difficult to forecast the long-term impact. There will be lots of pressure on the retail sales given the recent political events. Sales of large residential units can also be coming down due to that.”
With Hong Kong’s leader Carrie Lam keeping a low profile, investors were on Monday looking to see what the Communist Party will do to maintain public order. Concerns about what stance Beijing may take weighed on sentiment ahead of the Hong Kong and Macau Affairs Office briefing, China’s most high-profile response to the unrest. The briefing made no mention of potential central government intervention and reiterated Beijing’s support for Lam.
“This morning there was concern among investors that the central government could express a tougher stance,” said Steven Leung, executive director at Uob Kay Hian (Hong Kong) Ltd. “Now it’s a removal of that overhang.”
The Hang Seng Properties Index fell 2.2%. The measure is down nearly 10% from this year’s high. Swire and New World sank to their lowest levels since January.
Jewelry sellers also slumped. Luk Fook Holdings (International) Ltd. fell 5% in its biggest drop since November, while Chow Tai Fook Jewellery Group Ltd. and Chow Sang Sang Holdings International Ltd. dropped at least 3.2%. The benchmark Hang Seng Index declined 1%.
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