Hong Kong's China enterprises index has best day in three months after security law

  • Markets
  • Thursday, 02 Jul 2020

HONG KONG: Hong Kong stocks posted strong gains on Thursday, with the index tracking mainland stocks having its best day in more than three months, after a security law went into effect in the city this week.

The Hang Seng index rose 2.9%, to 25,124.19, while the China Enterprises Index, tracking mainland companies listed in Hong Kong, gained 3.1% to 10,056.86, logging its best session since March 25.

The Hong Kong stock market was closed for the Hong Kong Special Administrative Region Establishment Day on Wednesday.

Beijing unveiled the security law on Tuesday, and Hong Kong police made their first arrests of protesters under the legislation on Wednesday.

The U.S. House of Representatives passed legislation on Wednesday that would penalise banks doing business with Chinese officials who implement a national security law that House Speaker Nancy Pelosi called a "brutal, sweeping crackdown" on Hong Kong.

But Hong Kong shares gained as investors see the law leading to more listings by Chinese companies, more mainland money, and more financial links with the world's second-biggest economy, traders and analysts said, despite legislation some fear will erode the city's freedoms.

Washington's moves to revoke Hong Kong's special treatment under U.S. law will have limited impact, most analysts say, while closer economic ties with China will benefit the city.

"The market doesn't like uncertainties. This at least removed one uncertainty so it is read as a positive," said Kelly Chung, a senior fund manager at Value Partners. - Reuters

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