Hong Kong Developers’ Stocks Drop as Protest Arrests Deepen Uncertainty
Hong Kong Developers’ Stocks Drop as Protest Arrests Deepen Uncertainty
(Bloomberg) -- Hong Kong stocks dropped following news that prominent protest figures including Joshua Wong have been taken into police custody, stoking concerns that a long-running political crisis will intensify and take a greater toll on a frayed economy.
The MSCI Hong Kong Index fell 0.9%, paring a drop of as much as 1.7%. Losses accelerated after Reuters reported that China had rejected a proposal by the Hong Kong government to withdraw the contentious extradition bill that sparked this summer’s protests.
Property developer stocks fell. Swire Properties Ltd. slumped 3.6%, leading declines on the MSCI Hong Kong gauge. Sun Hung Kai Properties Ltd. slid 1.8%, among the worst performers on the Hang Seng Index. The company, owned by the Kwok family, is among the most exposed to the anti-government protests as demonstrators also vent against sky-high property prices in the city. The unrest is about to enter its 13th weekend and has included violent clashes at Sun Hung Kai’s New Town Plaza shopping mall, prompting the company to beef up security.
CK Asset Holdings Ltd., founded by billionaire Li Ka-shing, was also among the worst performers on the Hang Seng Index, dropping 2.3%. The stock hit a two-and-a-half year low earlier this month, shortly after the company said it was postponing a luxury residential project - where flats would cost at least HK$100 million ($12.7 million) each -- because of the protests. CK Asset has slumped 26% from an April high, while Sun Hung Kai is down 21%.
“Developers are falling in response to this morning’s arrests,” said Jackson Wong, asset management director at Amber Hill Capital Ltd. “Now people really fear emergency law could be implemented in Hong Kong. Property stocks are sold most, because if Hong Kong is not different from other Chinese cities, it’s hard to retain talent. And property prices won’t find support.”
Wong was detained Friday morning, according to his Demosisto party. Activists Andy Chan and Agnes Chow were also arrested ahead of another weekend of planned protests in Hong Kong. Police have banned a mass protest on Saturday called by the Civil Human Rights Front, whose leader Jimmy Sham was attacked by unidentified masked on Thursday.
The Hang Seng Index reversed an afternoon drop to edge 0.1% higher at the close on the last trading day of a difficult month for assets in Hong Kong.
An underlying concern for real estate is that the protests will prompt people to leave Hong Kong, said Francis Lun, CEO at GEO Securities Ltd. “Since the protests began in June, there has been an undercurrent among Hong Kong’s middle class to seek immigration,” he said. “Maybe in five years, Hong Kong’s middle class will be hollowed out.”
--With assistance from April Ma.
To contact the reporters on this story: Will Davies in Hong Kong at wdavies13@bloomberg.net;Jeanny Yu in Hong Kong at jyu107@bloomberg.net
To contact the editors responsible for this story: Sofia Horta e Costa at shortaecosta@bloomberg.net, David Watkins
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