Hong Kong Stocks surge on reports of extradition bill withdrawal

The Hong Kong share market skyrocketed on Wednesday, 04 September 2019, as investors chased for bottom fishing across the board after better than expected China's private services sector survey data and reports Hong Kong government will announce the formal withdrawal of an extradition bill that triggered months of unrest and has thrown the Chinese-controlled city into its worst crisis in decades. At closing bell, the Hang Seng Index declined 0.4%, or 98.70 points, to 25,527.85. The Hang Seng China Enterprises Index was down 0.7%, or 67.58 points, to 10,035.78.

Hong Kong's market opened higher and expanded gains after Carrie Lam, Hong Kong chief executive is set to withdraw the controversial extradition bill which sparked months of violent protests. Hong Kong has seen huge protests in recent months leading to bloody clashes with police on the streets and protestors. Protestors had been fighting a bill introduced by the central Chinese government, the extradition bill, which would have allowed Hong Kong's residents to be tried for crimes in mainland China.

Activity in China's services sector expanded at the fastest pace in three months in August as new orders rose, prompting the biggest increase in hiring in over a year, a private survey showed. The Caixin/Markit Services Purchasing Managers' Index came in at 52.1 in August, its highest since May. The 50-mark in PMI readings separates growth and contraction. Official data for August released over the weekend showed services sector activity picking up for the first time in five months in August.

Blue chips jumped across the board. HSBC (00005) rose 3.5% to HK$57.9. HKEX (00388) added 4.7% to HK$248. Tencent (00700) shot up 3.7% to HK$341.2. China Mobile (00941) put on 2.5% to HK$66.35. AIA (01299) surged 5.9% to HK$79.4.

Shares of companies that have come under the spotlight amid the turmoil in Hong Kong also skyrocketed following reports that extradition bill could be formally withdrawn. Railway operator MTR, which has been hit by disruptions in its operations and damage to its infrastructure, jumped 6.4%. Embattled airliner Cathay Pacific also saw its shares surge 7.21%, with the firm's CEO stepping down in mid-August amid heavy political pressure from Beijing after one of its pilots was found to have taken part in the ongoing protests in Hong Kong.

Property counters also rebounded strongly on the withdrawal news. Wharf REIC (01997) was the best blue-chip gainer. It swelled 12.1% to HK$46.3. New World Development (00017) mounted 10.1% to HK$10.6. Sun Hung Kai Properties (00016) ballooned 9.8% to HK$118.5. Henderson Land (00012) escalated 8.7% to HK$38.7. Sino Land (00083) lifted 7.8% to HK$11.64. CK Asset (01113) jumped 8.6% to HK$56.2. Hang Lung Properties (00101) ascended 6.2% to HK$18.88.

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