Trump’s China Blockade is Pumping ‘Mammoth Money’ Into Hong Kong Stocks

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Trump’s China Blockade is Pumping ‘Mammoth Money’ Into Hong Kong Stocks

Trump’s China Blockade is Pumping ‘Mammoth Money’ Into Hong Kong Stocks
  • U.S. President Donald Trump is putting say stress on predominant Chinese language conglomerates.
  • As a result, a rising selection of Chinese language tech stocks are departing from the U.S. to Hong Kong.
  • IPO listings in Hong Kong and China are increasing, fueling the native stock market sentiment.

U.S. President Donald Trump’s wobble to blacklist predominant Chinese language companies is unnerving sizable conglomerates. Tech stocks, alongside side Alibaba and Xiaomi, are seeing renewed count on of in Hong Kong from traders fearing U.S. restrictions.

Ironically, the migration of Chinese language companies from the U.S. stock market fuels the count on of for Hong Kong stocks.

After TikTok and WeChat, the U.S. government said it can well well also restrict China’s largest chipmaker SMIC. 

On September 8, President Trump vowed to slash motivate from U.S.-China ties. He said he would impose tariffs on American companies that recede the U.S.

Money is Flowing Into Hong Kong Stocks; is it Counterproductive For the U.S.?

Except the November Presidential election, strategists not sleep for President Trump to intensify the stress on China.

Amid the uncertainty around the ‘Allotment 1’ change deal, the Trump administration is continuously targeting particular person companies.

But President Trump’s strategy can also very neatly be benefiting China over the prolonged interval of time.

alibaba
The year-to-date efficiency of Alibaba’s Hong Kong stock. | Source: Yahoo Finance

Sam Le Cornu, the CEO of Stonehorn World Companions, said it is causing extra capital inflow into Hong Kong stocks.

He said a “principal quantity of cash” is arriving motivate to Hong Kong and its initial public offering (IPO) market.

All the plan in which thru the year’s terminate, Cornu expects an amplify in IPOs in Hong Kong. The trend can also catalyze extra neatly-established Chinese language stocks to wobble a long way from the U.S.

The touching on trend finally ends up in two scenarios. First, it can well well also trigger China’s stock market to expand. 2d, it boosts Hong Kong after the U.S. revoked its special relationship with the space.

In July, President Trump said on the White Home that the U.S. would take care of Hong Kong as China. He said:

“Hong Kong will now be handled connected to mainland China.”

Merely two months after the resolution, multi-billion greenback tech companies are flowing into Hong Kong. 

The departure of Chinese language companies from the U.S. can also not necessarily disaster the U.S. But it indubitably could well help Hong Kong and the sentiment around native stocks.

Within the come interval of time, Cornu anticipates extra companies to follow the trails of Alibaba and JD.com. He said:

“There’s money to be made when attempting at this exercise. I own the 2nd half of of the year will search an amplify… in these IPOs.”

The Shenzhen Stock Trade, which tailors to tech companies, has also observed increased listings in most modern weeks.

Would possibly possibly presumably also Hong Kong’s Hold Seng Index Thrive?

The Hold Seng index has aggressively began to encompass key tech stocks into the index in a short interval.

hang seng stocks
The Hold Seng index’s year-to-date efficiency. | Source: Yahoo Finance

On September 7, the index listed Alibaba and Xiaomi, two Chinese language tech giants. Since mid-August, many traders began to swap Alibaba’s U.S. stocks for Hong Kong’s.

CreditEase Wealth Administration executive Nelson Yan said prolonged-interval of time fund managers are extra and extra brooding about transferring to Hong Kong-listed shares.

Merely three months within the past, prosperous traders in Hong Kong had been getting prepared for the worst-case scenario. See the video below:

Jeffries’ epic expressed newfound optimism in opposition to Hong Kong stocks, expecting the Hold Seng index to expand. The epic reads:

“In our imprint, it is not unthinkable that the index shall be expanded as extra companies technique to the market… We stay bullish on the HSI.

The U.S. finds itself in an melancholy keep wherein it maintains its complex stance in Hong Kong but its insurance policies are catalyzing the native stock market.

Samburaj Das edited this text for CCN.com. In case you search a breach of our Code of Ethics or discover a appropriate, spelling, or grammar error, please contact us.

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