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. Last Updated: 07/27/2016

Markets Take Hong Kong in Stride

HONG KONG -- Hong Kong business leaders voiced confidence over the territory's future Monday as regional stock markets took the handover to China in stride and related stocks rallied in Singapore.


But some captains of Hong Kong business cautioned against jumping back into the local market when it reopens Thursday after a five-day handover holiday.


"I think we [the business community] are feeling extremely proud that Hong Kong as a whole has been able to tackle the extraordinary changes of the last couple of years, and [take] the prospect of what's about to happen so much in their stride," Swire Group Chairman Peter Sutch said.


"I think it's a sign of a mature and confident society that all augurs well for the future," Sutch said on the sidelines of an award ceremony presided over by Prince Charles at the British Trade Commission.


Wharf (Holdings) Ltd. director John Hung was equally upbeat, saying: "I think Hong Kong in general enters the handover in an optimistic frame of mind."


Across the Asia-Pacific region, analysts said they saw few risks from the midnight Monday handover of sovereignty -- and some said the future would be assured by Chinese money.


Feverish buying drove Hong Kong's Hang Seng Index up 0.5 percent to a record of 15,196.79 points last Friday, the final day of trading under British rule, eclipsing the previous record set only a week earlier.


"As far as regional financial markets are concerned, it could largely be a non-event," said Chan Tuck Sing, dealing director of Singapore's OUB Securities, reflecting a widespread lack of regional concern over the event.


In Singapore, Tianjin Zhong Xin Pharmaceutical Group, denominated in U.S. dollars, gained 12 cents to $1.15 on a turnover of 27.61 million shares.


Hong Kong Land Holdings Ltd. gained six U.S. cents to $2.66 on 1.98 million shares and China North Industries was up 3.5 cents at 60.5 cents with 4.21 million shares changing hands.


CM Telecom ended 3.5 cents higher at 34 cents on a turnover of 3.22 million shares. Dairy Farm International gained one-and-half cents to 75 cents on 591,000 shares.


Taiwan analysts said they were optimistic about prospects for the Hong Kong and Taipei stock markets following the handover.


"Thanks to the mainland's efforts to sustain current economic prosperity in Hong Kong, the market trend there is expected to continue its bullish run in the short term," said Allen Wu of Masterlink Securities Co. Ltd.


In Sydney, Citibank senior economist Annette Beacher said: "If any major investors were going to pack up, they would have done it long ago."


"Will something happen tonight? I'd be very surprised. Everything is priced in. People have known about the handover for so long the tick of the clock will make no difference," she added.


An analyst at a regional brokerage in Jakarta, Indonesia, said there could be some changes in Hong Kong's market regulations over the next six months, particularly concerning listings, but he expected strong demand to persist.


"I'm not worried, because if the market starts selling off, the Chinese government will likely inject cash," he said. "They don't want to see a downturn in the market. It's in their best interest to support it and prevent it from a free-fall."


In Tokyo, Tadao Horiuchi, broker at New Japan Securities Co. Ltd., said: "I don't think the stock market in Hong Kong or Japan will suffer a major setback in the immediate future.


"The handover has a great significance politically. But financially speaking, I don't expect a big impact here."


Red-chip issues, controlled by mainland interests, have been surging in Hong Kong on market expectations of imminent takeovers and asset injections.


However, business leaders here were cautious over the immediate prospects of the key Hang Seng Index when the bourse reopens.


"Quite frankly it doesn't matter if the Hang Seng index does this or that on Thursday or Friday," said Hung of Wharf Holdings.


"So long as people keep their sanity and go about their business the same way they have always done. We don't want to be distracted in any shape or form."


George Magnus, deputy chairman of Li Ka-shing's flagship Cheung Kong, said "we'll have to watch London," and keep an eye on Hong Kong stocks traded there.


Swire Group chairman Sutch said he was not considering any large early foray into the market.


"I'm reserving my gambling instincts for the start of the racing season," he said.