In a post about two weeks ago, I explained a little about why we should be looking at the Hong Kong stock markets, and which instruments we could use. Then, bad news could be found everywhere, while the outlook seemed gloomy.
As close friends and I debated on what could be the likely outcomes of Hong Kong’s complex situation, I chose to believe in a more optimistic resolution (ie. Hong Kong’s leaders meeting at least one of the protestors’ key demands) while my close friend was more inclined to take the more pessimistic view that troops were being rotated in for the purpose of crushing protests.
In the last two weeks, Hong Kong tycoons have taken full-page advertisements urging for peace, and media outlets also reported that powerful leaders met with Hong Kong Chief Executive to come up with solutions. (Source: South China Morning Post).
Today, Hong Kong’s leader Carrie Lam held a press conference to announce the withdrawal of the extradition bill, and there might be a pending announcement about an inquiry committee being set up.
As a result, Hong Kong’s main stock indices have shot up close to 4 percent today. If you had taken action on my previous post to buy into the EWH (proxy to MSCI Hong Kong) or the Hang Seng index ETF around 22 August, you might be sitting on a paper gain of between 2 to 4 percent now.
However, if you are a long-term investor like me, you need to sit firm on the roller coaster. Last week's gains may be wiped out by tomorrow’s bad news. The U.S. -China trade tensions affecting Hong Kong and the rest of Asia is far from over, and it is still too early to say that protests will stop entirely. It is likely that some groups of Hong Kongers will push for the remaining demands to be met even after today’s press conference.