Hong Kong | Stocks rally on election calm

Hong Kong stocks climbed after pro-democracy candidates swept the board in district council elections, putting pressure on the city’s government to address issues that have fueled months of protests.
The Hang Seng Index was 1.5% higher in early afternoon trading after opening above its 100-day moving average. The gain was led by developers and other stocks seen as most sensitive to the demonstrations. Analysts and investors also said the moves showed relief that the Sunday vote – which saw record turnout – went ahead peacefully.
“Investors expect that the result will prompt the government to respond some key issues with more reasonable measures,” said Andy Wong, a fund manager at LW Asset Management. “If some of these issues could be handled peacefully and smoothly, then the market may have confidence that violence may stop in near future.”
Wharf Real Estate Investment and Hang Lung Properties Ltd. were among the top performers on Monday, while MTR Corp., which operates the city’s underground railway, climbed 2.2%. The MSCI Hong Kong Index gained 1.9%.
“There is this relief that pro-democracy protesters are now being represented, and the government has to deal with this,” said Airy Lau, an investment director at Fair Capital Management Ltd. “I don’t think the government will respond in a harsh way.”
Here’s what others are saying about Monday’s market reaction in Hong Kong:
“It will be difficult for Beijing to ignore these results. The people have spoken, and now the ball is in Beijing’s court,” said Stephen Innes, chief Asia market strategist at AxiTrader.
“People are betting the Hong Kong government will do more to improve people’s well-being, including more supply of public housing, job creation, and economic stimulus, to help boost confidence in the government and stop violence,” said Banny Lam, head of research at CEB International Investment Corp.
“There wasn’t much conflict over the weekend. A stabler situation in local protests help boost market sentiment,” said Tracy Chan, analyst at KGI Asia.
“Longer term, there is still little clarity as to Hong Kong’s special status. Of course, markets want to rebound because this short-term uncertainty is out of the way. But fundamentally, not a lot has changed,” said Hao Hong, head of research at Bocom International. MDT/Bloomberg

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