The shares will not going to have a strong rebound soon
Hong Kong again came under the spotlight as it experienced its stocks staged a mild recovery today after a sharp two-day sell-off. It was recently reported that the Hong Kong stock index, Hang Seng Index, recently touched its lowest point since August 5 due to the US dollar that continues to take a toll after Donald Trump got elected as the president of the US.
“The Hong Kong market has stabilized along with global markets as investors begin to revise their pessimistic expectations about Trump’s victory,” said Wang Chen, a partner at Xufunds Investment Management Co. in Shanghai. “His policy of increasing infrastructure spending in the U.S. is good news for the U.S. and the rest of the world, which will benefit from rising exports of raw materials.”
It seems that America sneezes and rest of the world catches cold. The Hang Seng index closed 0.5% higher after finishing Monday at its lowest level since August 5. Adding to that, US also experienced dollar to drop slightly after climbing for the six straight days. It is important to note that after markets closed on Friday, the government of Hong Kong reported cooling economic momentum in the third quarter. Also, several economists believe that Hong Kong will continue to face pressure due to global economic uncertainty.
Moreover, it is worth noting that investor concerns about the two biggest economies have been eased after the President of China, Xi Jinping told Mr. Trump in a telephone call that cooperation was the only choice, with Mr. Trump saying that both nations have established a “sense of mutual respect”. Nevertheless, negative sentiments spread among the investors as Chinese Yuan plunges, which has made yuan-denominated assets less attractive to the investors.
“Expectations toward Trump’s economic stimulus has lifted the market in the short term, especially in sectors such as commodities,” said Xiao Shijun, analyst at Guodu Securities in Beijing. “But the increase is subdued by China’s economic condition and markets face downward pressure while being relatively stable in general.”