HK stocks rally after pro-democracy groups dominate polls

26-Nov-2019 Intellasia | Bloomberg | 6:02 AM Print This Post

Hong Kong stocks climbed after pro-democracy candidates swept the board in district council elections, putting pressure on the city’s government to address issues that have fueled months of protests.

The Hang Seng Index rose 1.7%, opening above its 100-day moving average. The gain was led by developers and other stocks seen as most sensitive to the demonstrations. Analysts and investors also said the moves showed relief that the Sunday votewhich saw record turnoutwent ahead peacefully.

Pro-democracy candidates took at least 278 seats of the 452 up for grabs, according to the South China Morning Post, about seven times more than the pro-government camp. Pro-democracy groups gained control of at least 12 of the 18 district councils after failing to win a majority in any of them four years ago, the report said.

“Investors expect that the result will prompt the government to respond some key issues with more reasonable measures,” said Andy Wong, a fund manager at LW Asset Management. “If some of these issues could be handled peacefully and smoothly, then the market may have confidence that violence may stop in near future.”

Wharf Real Estate Investment and New World Development Co. were among the top performers on Monday, while MTR Corp., which operates the city’s underground railway, rallied 1.6%. The MSCI Hong Kong Index gained 2%.

“There is this relief that pro-democracy protesters are now being represented, and the government has to deal with this,” said Airy Lau, an investment director at Fair Capital Management Ltd “I don’t think the government will respond in a harsh way.”

Here’s what others are saying about Monday’s market reaction in Hong Kong:

Stephen Innes, chief Asia market strategist at AxiTrader

It will be difficult for Beijing to ignore these results. The people have spoken, and now the ball is in Beijing’s court.

Banny Lam, head of research at CEB International Investment Corp.

People are betting the Hong Kong government will do more to improve people’s well-being, including more supply of public housing, job creation, and economic stimulus, to help boost confidence in the government and stop violence.

Patrick Yiu, managing director at Cash Asset Management

The reaction among sectors like REITs and property is especially sharp. There’s the optimism that the elections went smoothly, and it’s affecting Hong Kong’s companies.

Tracy Chan, analyst at KGI Asia

There wasn’t much conflict over the weekend. A stabler situation in local protests help boost market sentiment.

Hao Hong, head of research at Bocom International

Longer term, there is still little clarity as to Hong Kong’s special status. Of course, markets want to rebound because this short-term uncertainty is out of the way. But fundamentally, not a lot has changed.

(C) 2019 Bloomberg L.P.


Category: Hong Kong

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