Hong Kong rallies after extradition law U-turn

17th June, 2019 09:28:38 printer

HONG KONG: Hong Kong stocks rallied Monday, leading many Asian markets higher after last week’s losses, with investors cheering a decision by the city to suspend plans to push through a controversial extradition law.

Investors are also moving cautiously ahead of two huge market-moving events: the Federal Reserve policy meeting this week with its plans for interest rates in focus, and the G20 summit next week where US President Donald Trump and his Chinese counterpart Xi Jinping are due to hold trade talks, reports AFP.

Investors returned to buying in Hong Kong after three days of losses that saw the Hang Seng drop more than two percent after protests against the law – – which would have allowed extradition to China — turned violent Wednesday.

Another, peaceful, demonstration Sunday saw around two million people take

to the streets, according to organisers.

The plan had also spooked business leaders who feared it would damage the city’s reputation as an international business hub.

Traders “will breathe a loud sigh of relief today, as on Wednesday when tear gas and rubber bullets were filling the air, the markets were getting extremely jittery that this ticking time bomb was about to explode”, said Stephen Innes, managing partner at Vanguard Markets.

“Fortunately, cooler heads prevailed.”

The Hang Seng closed up 0.45 percent, while Shanghai gained 0.2 percent and Tokyo’s Nikkei ended up 0.03 percent.

Elsewhere, Jakarta, Seoul and Taipei all ended the day in the red.

In early European trade, London added 0.1 percent, with Frankfurt up 0.2 percent and Paris gaining almost 0.1 percent.

Traders are now awaiting the conclusion of the Fed’s policy meeting on Wednesday, with hopes it will provide some forward guidance on rates, even if it is not expected to announce a cut just yet. Most observers are tipping a reduction next month as the US economy shows signs of stuttering.

“A lot is riding on this week’s (meeting) as the anticipation of Fed easing has single-handedly buttressed global equity markets even as trade war escalation looms ominously,” Innes added.

But there was a warning that investors could sell up if the central bank comes up short in its post-meeting statement.