Forex Marketz Daily Forex News – Fully Markets Update
Yes there is major unrest out of Hong Kong. Protestors are holding strong and continuing to gather. Is this disturbing? Yes, but investors should not sell their assets and stocks in China’s equity markets. Especially Hong Kong stocks and here is why.
Stocks on the Hong Kong exchange are selling for less than 10 times their price-earnings ratio. This indicates you are being paid for these current risks. Selling now is not a good move, especially on this news. There are and will be difficult times for Hong Kong in the future, but right now, is not the time to panic and sell.
What could make this a serious event? If Hong becomes like what we are seeing between Russia and the Ukraine. If we see sanctions and firms leaving, then we have a serious development and a reason to be concerned. Right now, that does not appear to be a likely event. There is a low probability of this happening, for now, but we should keep up to date on the situation. There is always going to be some form of geo political tension somewhere in the world. Politics is always dangerous, especially to the equity markets.
We are seeing pro-democracy protests continuing. Protestors are still in the streets of Hong Kong and are screaming for Leung Chun-Ying, the leader of the City to resign. This all started last month when Hong Kong announced they would limit the upcoming 2017 elections to those loyal to China. In other words, if you want to run for the chief executive position, or head of the city, you must be loyal to Beijing and the Chinese Communist Party.
Right now, China rules Hong Kong under a system called “one country, two systems.” This gives Hong Kong some autonomy and some freedoms. Hong Kong is not 100 percent free from mainland China and there is an eventual goal of complete autonomy at some point in the distant future.
Global markets were effected in overnight trading the Frankfurt DAX was down over 67 points to close at 9,422.91. U.S. markets also traded lower with the Dow Jones Industrial Average (DJIA) down nearly 42 points to finish at 17,071.22. This morning, the Shanghai Composite is a little over two points at 2,355.30. As for Alibaba (BABA: NYSE), shares fell over 1.89 percent to close at 88.75 a share as its options began to trade yesterday. We saw 21,000 calls and 19,000 puts in the first hour.
