Market expects modest fallout from HK protests

The “potential challenge” to global markets of unrest in Hong Kong was unexpected but the effect should be “modest”, the chief economist of Coutts has said.

Mark McFarland said the Occupy Central demonstrations have caused “some jitters” among local and global investors, but he believed there would be a “limited effect on local or global markets”.

He said: “The longer Occupy Central continues, the more likely China will opt for more abundant stimulus and a slowdown in the economic reform that has underpinned our overweight stance on Chinese equities.”

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His comments followed news that the Hang Seng fell 3 per cent just before its national holiday last week (correct) as the protest intensified.

Analysts from RC Brown Investment Management also spoke of “subdued” markets following the situation, while Guy Foster, group head of research for Brewing Brewin Dolphin, claimed there were other factors at play, including the fact that property is unaffordable and residents have been geared into current high prices.

However, this was unlikely to cause investors in the UK worries over exposure.

Adviser view

Jason Hollands, managing director, business development and communications for national advisory firm Tilney Bestinvest, said: “Hong Kong is a vibrant business centre and with the protests taking place during China’s five-day Golden Week holiday, this is likely to have some disruptive impact on retail sales from mainland Chinese tourists.

“For now it is unclear how this will play out, but after a strong run year to date the uncertainty has weighed on the Hang Seng Index in recent days. As always, we believe investors should take a long-term view to investing in equities, especially in more volatile regions such as Asia.”