Hang Seng Index closes at four-month high amid unrest

Hong Kong blue-chip stock benchmark Hang Seng Index rose to its highest level since 11 March 2020 at the close of Thursday’s (02 July 2020) session, despite ongoing tensions in the city.

The Hang Seng steadily rallied throughout the day, eventually hitting 25,221.4 at 16:00 HKT, based on IG data.

The index was the best performing in Asia today, gaining 2.85% on an intraday basis. Comparatively, Japan’s Nikkei 225, China’s Shanghai Composite, South Korea’s KOSPI and Singapore’s Straits Times Index grew 0.11%, 2.13%, 1.36% and 1.02% respectively.

New security law will benefit Hang Seng Index

The HSI’s strong performance today probably came at a surprise to some market watchers, with street demonstrations reignited in protest against a new security law that came into effect on Tuesday 30 June.

On Wednesday 01 July, Hong Kong police arrested some 370 protestors for their breaching of this very law. Ten of the arrested were ultimately apprehended for their involvement.

Nevertheless, the arrests appear to have had little negative impact on the index. On the contrary, some analysts interviewed by the South China Morning Post believe the security law will in fact lead to a greater inflow of Chinese investments.

Several US-listed Chinese companies, including Baidu, Weibo Corporation and Ctrip.com, are reportedly considering following in the footsteps of Alibaba, JD.com and NetEase, as they mull the possibility of secondary listings in Hong Kong.

Read more: Where next for JD.com following US$4bn Hong Kong listing?

Overseas events had more impact on the HSI

As IG market strategist Pan Jingyi noted earlier today, Asia indices had commenced the day with broad gains, taking their cue from the US indices, which recorded their best quarters in over 20 years.

Ongoing US and China political tensions stemming from the passing of the security law also did little to upset the Hong Kong stock market, as these developments were ‘well within the market expectations’, Pan added.

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Meanwhile, DailyFX strategist Margaret Yang observed in a client note that another successful phase one clinical Covid-19 vaccine trial – this time from US pharmaceutical giant Pfizer and German biotechnology firm BioNTech – also helped to set an optimistic tone for the day.

She added that better-than-expected manufacturing data coming out of the US, China and Southeast Asia earlier this week had also suggested that a stronger initial output recovery than initially thought.

‘This helped to paint a rosy view of the global recovery. However, the road ahead may remain bumpy with virus uncertainties and a complicated US-China debate over Hong Kong,’ Yang wrote.

Looking ahead, investors are now focused on US’ June 2020 non-farm payrolls. The consensus estimate is for 3.06 million jobs to be added, versus May’s actual figure of 2.5 million.

Hang Seng Index's top gaining stocks: Tencent, AIA, HSBC

The top gaining stocks on the Hang Seng Index this Thursday include: Hong Kong Exchanges and Clearing Limited (+6.06% in share price); China Mobile (+4.21%); Tencent (+3.99%); Ping An Insurance (+3.4%); AIA (+3.32%); and HSBC Holdings (+3.04%).

Only four stocks declined on Thursday, and they are: CSPC Pharma, Techtronic Industries, Hengan International, and Shenzhou International.

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