Fresh HK fears spark sell-off across Asia

By May 22, 2020Property News

HONG KONG (AFP) – Hong Kong led a sell-off across Asian equities Friday after China introduced proposals to enact a national security law for the city, fanning geopolitical tensions and overshadowing optimism about a further easing of virus lockdowns across Europe and the US.
After months of concentrating on the economic impact of the coronavirus, traders’ attention flipped back to China-US tensions, already ex¬acerbated by Donald Trump’s constant criticism of Beijing’s handling of the pandemic.
On the first day of its rubber-stamp parliament, China submitted proposals to strengthen “enforcement mechanisms” in the financial hub, after it was rocked last year by seven months of massive and some¬times violent pro-democracy protests.
Plans for the announcement had sparked warnings of “the end of Hong Kong” and fears of further unrest, which crippled the city’s economy, even before the coronavirus struck.
And it sparked criticism from Washington, with the State Department saying the move would be “highly destabilizing, and would be met with strong condemnation from the United States and the international community.”
Shares in Hong Kong sank more than four percent going into the break, with financials and property firms battered as investors fretted about the city’s economic future.
“Riots in the street and plum¬meting real estate markets might be the least of Hong Kong’s building wall of worry as this authoritarian national security plan will most certainly bring into question HK status as a global banking centre,” said Stephen Innes of AxiCorp.
US lawmakers have already passed a law that would strip the city’s preferential trading status in the United States if it no longer enjoys autonomy from the main¬land.
“The geopolitical risks are meaningful,” David Riley, chief investment strategist at BlueBay Asset Management LLP said on Bloomberg TV. “It’s a concern for the market, and is a potential source of weakness and a correction.”
And Kenny Wen of Everbright Sun Hung Kai Co, added: “We could have new protests. Local tensions could trigger Sino-US tensions and the latter is much more stressful for market sentiment and macro-economy.”

Source: https://business.mb.com.ph/2020/05/22/fresh-hk-fears-spark-sell-off-across-asia/