A sudden rally in mainland equities and a strengthening yuan have stimulated investor appetite for Hong Kong shares, which were recently the cheapest relative to the U.S. since at least 2005. But regardless of the cause, a rising stock market will bolster claims by officials that the new law would restore both stability and prosperity to a city that has been wracked by protests.
(July 7): Hong Kong’s rallying stock market is defying predictions of the death of the city in the wake of a new security law.
The Hang Seng Index jumped 7.8% in the three days after the law was imposed on July 1, its biggest rally since April 2015, and entered a bull market on Monday. The advance was led by mainland Chinese firms listed locally, with Geely Automobile Holdings Ltd. and China Life Insurance Co. jumping more than 29%, but Hong Kong firms have also seen sharp gains. The benchmark slipped 0.3% Tuesday, with volume almost three times the average for this time of day.
