Investors better prepared for political surprise

Hong Kong stocks jump as Trump fears ebb; China also up

 10 Nov 2016 - 8:34

Hong Kong stocks jump as Trump fears ebb; China also up
A businessman looks at an electric quotation board flashing the Nikkei key index of the Tokyo Stock Exchange (TSE) in front of a securities company in Tokyo on November 10, 2016. AFP / TORU YAMANAKA

Reuters

SHANGHAI: Hong Kong stocks rebounded on Thursday morning from a 3-month low hit in the previous day, as they joined a surprise turnaround in global markets in the wake of a shock win for Republican Donald Trump in the U.S. presidential election.

The Hang Seng index pared its early gains and ended the morning session 1.9 percent higher, to 22,830.68 points, while the Hong Kong China Enterprises Index gained 2.0 percent, to 9,566.10.

The CSI300 index rose 1.1 percent, to 3,389.82 points, while the Shanghai Composite Index gained 1.1 percent, to 3,164.12 points.

Trump's stunning upset roiled global markets on Wednesday, sending investors scrambling for safe-haven assets such as gold, sovereign bonds, and the Japanese yen.

Overnight, though, risk asset markets made sharp reversal as traders reassessed the economic implications of a Trump presidency with many seeing it ushering in higher growth.

Moreover, Robert Di, founding partner of investment firm RPower Capital, said that many investors were better prepared this time around after the Brexit shock.

"Brexit has taught investors how to deal with black swans," Di said.

"What's more important, many investors think Trump's policy is actually good for the U.S. economy in the long term. What's good for U.S. stocks is good for Hong Kong stocks."

Still, lingering uncertainty around U.S. monetary policy could cap market gains, he said.

A Reuters poll on Wednesday showed that the Federal Reserve is on track to raise rates in December, its first in a year, despite the Trump upset.

Steven Sun, HSBC's head of China and HK equity strategy, played down Trump's anti-China rhetoric in the run up to Tuesday's U.S. vote.

Threats of higher tariffs for imports from the world's second-largest economy "could be blocked or toned down by the U.S. congress," Sun said.

There was across-the-board gains in China and Hong Kong, led by financial stocks.

Index heavyweight property developer China Vanke Co Ltd's shares in Hong Kong jump over 4 pct to almost 11-month high and the company's Shenzhen shares soared to a record high, as rival China Evergrande stepped up its stake.