SINGAPORE (BLOOMBERG, REUTERS) - Hong Kong stocks soared on Wednesday (Sept 4) on reports Chief Executive Carrie Lam will formally withdraw the extradition bill that’s sparked months of protests.
The MSCI Hong Kong Index surged 5.4 per cent, its biggest gain since October 2011. Real estate firms led the gains, with Wharf Real Estate Investment Co, New World Development Co. and Sun Hung Kai Properties Ltd all up more than 9 per cent. The Hong Kong dollar strengthened as much as 0.08 per cent. The Hang Seng Index closed 3.9 per cent higher.
Lam plans to formally withdraw the bill, the South China Morning Post reported, citing unidentified sources. The Chinese-language Oriental Daily newspaper reported that Lam plans to set up a fact-finding committee. A spokeswoman for Lam’s office wasn’t immediately available to comment by phone or email.
An official withdrawal of the bill could provide a way to reduce public anger and stem the protests that have swept the city since June, although it’s unclear whether this would be enough to appease demonstrators. The MSCI Hong Kong Index tumbled 8.6 per cent last month as increasingly violent street clashes, the trade war and an economic slowdown darkened the outlook for the city’s companies.
“If the reported withdrawal and the meeting can somehow improve the situation and ease the unrest, that’s great news for sure,” said Sam Chi Yung, a strategist with Springwaters Financial Securities Ltd. “But I’d stay cautious after the nearly 1,000-point intraday jump today and watch what the government has to say to resolve the issue.”
The Hang Seng Properties Index rose 7.4 per cent. The gauge had tumbled more 20 per cent since its April high through Tuesday. Sun Hung Kai Properties Ltd. had its best gain since 2009. MTR Corp, which has seen a number of stations deliberately damaged in the protests, climbed 6.4 per cent.
China stocks closed meanwhile higher on Wednesday, bolstered by a private survey showing an upbeat services sector and helped by sharp gains in Hong Kong.
The blue-chip CSI300 index rose 0.8 per cent, to 3,886.00, while the Shanghai Composite Index ended up 0.9 per cent, at 2,957.41.
A private survey released on Wednesday showed 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.
"China's economy showed clear signs of a recovery in August, especially in the employment sector," Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group, said in a statement.
The survey helped offset worries over the more than year-long trade dispute between the world's two biggest economies.