Hong Kong’s political crisis shows few signs of a resolution but some investors say they see buying opportunities in the city’s beaten-down stock market, which is also threatened by a looming recession and US-China trade tensions.
Increasingly violent anti-government protests, which began in June, have seen millions of people take to the streets, hammering local industries like tourism and retail. The benchmark Hang Seng was the world’s worst-performing major equity market index in the third quarter, down 9 per cent, while Carrie Lam, the city’s chief executive, last week said the economy had slipped into a “ technical recession”.
But some investors say stock prices have fallen far enough. “Buying in Hong Kong now has to be a good long-term bet,” said Peter Kennan, a former UBS banker now running Black Crane Capital, a local hedge fund. He notes that the Hang Seng trades at just over 10 times trailing earnings — about half the level of the S&P 500, the US benchmark, and the MSCI World, which tracks developed markets.