Market Noise

Hong Kong protests weigh on Asian stockmarkets

Recent pro-democracy demonstrations in Hong Kong seem to have impacted investor sentiment across much of Asia. While there are other factors also responsible – such as some sluggish data on Chinese manufacturing activity – fears over escalating political unrest have contributed to rapid declines in several Asian stockmarkets.

Unsurprisingly, the strongest sell-off was on the Hong Kong market, with the Hang Seng index having fallen 7.3% for the month to 29 September. However, there have also been some interesting moves slightly away from the ‘epicentre’. For example, the MSCI Taiwan index has lost over 5% for the month (to 29 September). The political situation in Hong Kong is likely being watched with keen interest in Taiwan and the sharpness of this decline looks very much an emotionally-driven sell-off considering that the Taiwanese market has received systematic upward earnings revisions in recent weeks, as shown in the chart.

Taiwan: equities sell-off despite upwards revisions to earnings

Our view is that with so much uncertainty around the outcome of the situation in Hong Kong – and even less certainty as to any potential longer-term impact on markets – the best approach for the moment is to simply continue monitoring developments, particularly in the context of the fundamental economic picture.


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