Mediaboss Marketing

Hong Kong stocks are beating every other developed market in the world this month as lower valuations shelter shares from a global selloff and the citys worst political unrest since the 1960s.

The MSCI Hong Kong Index rallied 3.1 percent in October through yesterday, the most among 23 developed markets tracked by MSCI Inc. and one of only two to gain. The measure today erased its loss since police fired tear gas at pro-democracy demonstrators on Sept. 28, rising 0.9 percent, compared with a 3.2 percent slump by the MSCI World Index in the same period.

Hong Kong as a whole has held up pretty well despite whats going on, said Nicholas Yeo, a money manager at Aberdeen Asset Management Plc, which oversees $550 billion and hasnt changed its holdings because of the protests. After the first few days, people are becoming more rational and more pragmatic, he said. We havent come to a stage where this means its the end of Hong Kong.

With the benchmark Hang Seng Index trading at 10 times earnings yesterday, the lowest multiple among the worlds major developed markets, Bocom International Holdings Co. says the impact of the protests is already reflected in equity prices. RS Investment Management Co. sees catalysts for Hong Kong stocks in a trading link with Shanghai and prospects for Chinese stimulus.

The Hang Seng Index rose 1.4 percent to 23,403.97 at the close today, its steepest gain in seven weeks, while the MSCI Hong Kong Index added 1.4 percent.

Among 53 developed and emerging country MSCI indexes, only a measure of equities in Turkey rallied more in October through yesterday than the Hong Kong gauge, data compiled by Bloomberg show. Casino operators Sands China Ltd. and Wynn Macau Ltd. led gains, surging at least 9.7 percent.

While the Hang Seng Index plunged 3.2 percent over two days after police used tear gas on crowds last month, shares stabilized as the size of the protest sites shrank and investors weighed the impact on the citys listed companies.

Firms that get a majority of their sales from Hong Kong make up about 13 percent of the Hang Seng Index, while those that rely on China make up at least 54 percent, data compiled by Bloomberg show. Li & Fung Ltd., the wholesaler that gets more than half its revenue from the U.S., rallied 5.8 percent this month through yesterday.

Hong Kong Chief Secretary Carrie Lam and four other government officials held discussions yesterday with five members of the Hong Kong Federation of Students led by Secretary-General Alex Chow in an attempt to resolve the biggest challenge to Chinas sovereignty over Hong Kong since the end of colonial rule in 1997.

Student leaders have demanded China amend a decision that candidates in the citys first-ever leadership election in 2017 must be vetted by a nominating committee, a mechanism they say is designed to guarantee a chief executive more loyal to China than to Hong Kong.

See the original post here:
Hong Kong Stocks Defy Protests to Post Worlds Best Monthly Gain