Trump’s China Blockade is Pumping ‘Monumental Money’ Into Hong Kong Shares

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Trump’s China Blockade is Pumping ‘Monumental Money’ Into Hong Kong Shares

Trump’s China Blockade is Pumping ‘Monumental Money’ Into Hong Kong Shares
  • U.S. President Donald Trump is placing remark strain on vital Chinese language conglomerates.
  • As a consequence, a growing need of Chinese language tech stocks are departing from the U.S. to Hong Kong.
  • IPO listings in Hong Kong and China are growing, fueling the native inventory market sentiment.

U.S. President Donald Trump’s pass to blacklist vital Chinese language companies is unnerving gargantuan conglomerates. Tech stocks, at the side of Alibaba and Xiaomi, are seeing renewed demand in Hong Kong from patrons fearing U.S. restrictions.

Paradoxically, the migration of Chinese language companies from the U.S. inventory market fuels the demand for Hong Kong stocks.

After TikTok and WeChat, the U.S. authorities said it could maybe possibly presumably presumably well restrict China’s largest chipmaker SMIC. 

On September 8, President Trump vowed to chop again from U.S.-China ties. He said he would impose tariffs on American companies that dawdle away the U.S.

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

Until the November Presidential election, strategists await President Trump to intensify the strain on China.

Amid the uncertainty across the ‘Phase 1’ change deal, the Trump administration is continuously focused on particular particular person companies.

But President Trump’s map could presumably presumably well be benefiting China over the long poke.

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

Sam Le Cornu, the CEO of Stonehorn World Companions, said it’s a ways inflicting extra capital inflow into Hong Kong stocks.

He said a “mountainous sum of money” is arriving help to Hong Kong and its initial public offering (IPO) market.

All year long’s discontinue, Cornu expects an amplify in IPOs in Hong Kong. The trend could presumably presumably well catalyze extra effectively-established Chinese language stocks to pass a ways flung from the U.S.

The referring to trend ends up in two scenarios. First, it could maybe possibly presumably presumably well trigger China’s inventory market to expand. Second, it boosts Hong Kong after the U.S. revoked its special relationship with the plan.

In July, President Trump said at the White Dwelling that the U.S. would deal with Hong Kong as China. He said:

“Hong Kong will now be treated the identical as mainland China.”

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

The departure of Chinese language companies from the U.S. could presumably presumably well also just now now not necessarily wound the U.S. But it absolutely could presumably presumably well advantage Hong Kong and the sentiment around native stocks.

Within the shut to term, Cornu anticipates extra companies to follow the paths of Alibaba and JD.com. He said:

“There’s money to be made when taking a explore at this exercise. I have the 2d half of of the year will peep an amplify… in these IPOs.”

The Shenzhen Stock Exchange, which tailors to tech companies, has moreover noticed elevated listings in most up-to-date weeks.

Also can Hong Kong’s Hold Seng Index Thrive?

The Hold Seng index has aggressively started to encompass key tech stocks into the index in a transient length.

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 patrons began to swap Alibaba’s U.S. stocks for Hong Kong’s.

CreditEase Wealth Management executive Nelson Yan said long-term fund managers are an increasing form of excited by spellbinding to Hong Kong-listed shares.

Merely three months within the past, prosperous patrons in Hong Kong had been making ready for the worst-case scenario. Explore the video below:

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

“In our peep, it’s now now not unthinkable that the index will seemingly be expanded as extra companies reach to the market… We remain bullish on the HSI.

The U.S. finds itself in an unhappy predicament wherein it maintains its troublesome stance in Hong Kong nonetheless its policies are catalyzing the native inventory market.

Samburaj Das edited this article for CCN.com. Whereas you happen to peep a breach of our Code of Ethics or safe a lawful, spelling, or grammar error, please contact us.

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