12-09-2018

Currency crisis continues to spread amid emerging markets and trigger capital outflows. The MSCI Emerging Markets Index has fallen 21% since January. With Hong Kong listed companies weight nearly 23 percent of the index, capital outflow from Asia has caused a big impact to Hong Kong capital market. The Hang Seng Index has dropped around 20% from its January high. Other than the negative impact due to the US - China trade war, Hong Kong situation now becomes even worse. Traders predict more capital will flow out of fund that follow the MSCI Emerging Markets Index around 21 September, after options and futures tied to the gauge expire. On the other hand, US President Donald Trump continues pressuring Apple to move its production lines back to the U.S in order to avoid his proposed tariffs on Chinese goods. This boosts the trade war fears. Furthermore, The People's Bank of China suspended reverse repo operations for the 16th consecutive trading days, which reduced money supply from the market and worsen the market atmosphere. We anticipate more investors will step out of the market until the macro economy become clearer, and both China and Hong Kong market will remain at a disadvantageous position.

Reference list:
Bloomberg
HK Economic Journal
HK Economic Times

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