Hong Kong Market surges on heels of big pro-democracy win

The Hong Kong stock market closed higher on Monday, 25 November 2019, as investors chased for bottom fishing after pro-democracy candidates surged to a landslide victory following a record voter turnout boosted hopes that violent protests may subside. The market mood was also lifted by increased optimism for the prospect that the United States and China will reach an agreement to de-escalate their trade war after positive trade dialogue between major economies. At closing bell, the benchmark Hang Seng Index advanced 1.5%, or 397.96 points, to 26,993.04, with 47 of the 50 constituent stocks posting gains. The Hang Seng China Enterprises Index grew 1.17%, or 122.71 points, to 10,628.88.

The pro-democracy camp had won 17 out of 18 district councils, taking more than 340 seats, boosted hopes that violent protests may subside. Islands district - which has 10 elected seats and eight given automatically to pro-establishment rural chiefs - was the only one held by the pro-Beijing camp. All councils had been under pro-establishment control since the 2015 elections.

 

Local shares were also experiencing gains on the back of latest wave of optimism after US President Donald Trump said on Friday a trade deal with China is "potentially very close." Chinese President Xi Jinping also reiterated his desire on Friday for a preliminary trade deal. U.S. national security adviser Robert O'Brien also said over the weekend that an initial agreement is still possible by the end of the year. More importantly, China announced that it is willing to impose stricter penalties on intellectual property (IP) violations. IP has been one of the issues in which the two countries had difficulty seeing eye-to-eye on. Therefore, this move by China was widely welcomed by market participants as it is a step towards finalizing a phase one deal. That confidence was reinforced on Monday after reports that both countries were "very close" to a phase one trade deal and that China was willing to negotiate for a phase two or even a phase three trade deal.

Blue chips rose across the board. HSBC (00005) gained 1.5% to HK$59. HKEX (00388) added 1.6% to HK$249.6. Tencent (00700) shot up 1.6% to HK$338.8. China Mobile (00941) rose 1.1% to HK$62.95. AIA (01299) jumped 3.6% to HK$90.1 after it announced a new CEO.

Property counters were higher on easing social unrest. Wharf REIC (01997) surged 4.7% to HK$44.75. Kerry Properties (00683) hiked 2.5% to HK$26.5. New World Development (00017) advanced 1.9% to HK$10.54. Sun Hung Kai Properties (00016) shot up 3% to HK$114.2. Link REIT (00823) moved up 2.4% to HK$82.5. Henderson Land (00012) was up 1.7% to HK$38.5. CK Assets (01113) spiked 1.7% to HK$53.7. Sino Land (00083) rose 1.6% to HK$11.74.

China Mengniu Dairy (2319 HK) rose 0.9% to HK$29.65 after saying it is moving to buy Lion-Dairy and Drinks, an Australian-branded dairy company. That follows its move in September to buy Australia baby milk formula maker Bellamy's for US$1 billion as part of its global expansion goals.

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