The Hong Kong equity market, and in particular its world-class financial sector, has been a critical gateway for foreign investors to participate in and fund Mainland China’s economic resurgence over the past several decades. Lately, the Hang Seng Index, Hong Kong’s most recognized stock market gauge, has been selling off in response to pro-democracy and anti-extradition protests throughout the territory. Our concern is that the Chinese President, Xi Jinping, will lose patience with the uprisings and respond in a manner consistent with the 1989 Tiananmen Square Massacre when military assaults resulted in the loss of life for hundreds if not thousands of protesters. This is a risk that could derail the upward trend in global stock since the beginning of the year.
