Investors hold a dim view of Hong Kong’s outlook: the benchmark trades at the cheapest relative to MSCI Inc.’s global peers since the Asian financial crisis in 1999 on a price-to-book basis. Ironically, Chinese and U.S. stocks are doing a lot better. While the Hang Seng Index is down 14% this year, China’s CSI 300 Index of stocks has climbed 15%, and the S&P 500 Index has gained 4%.
Hong Kong stocks are bearing the brunt of escalating actions taken by Washington and Beijing to protect their national security.
The Hang Seng Index fell 0.6% on Monday to close at a six-week low. Top of investor concerns is deciphering the impact on the city’s listed firms from a host of measures taken in the Chinese and U.S. capitols. The broad sweep of Hong Kong’s new national security law, a planned ban on U.S. residents doing business with Tencent Holdings Ltd.’s WeChat app, as well as sanctions on some officials in the former British colony all hold potential for negative consequences for various firms and industries.
