Saudi Press

Saudi Arabia and the world
Thursday, Oct 02, 2025

Hong Kong Assets Turn Toxic as Trade War and Protests Cloud Outlook

Hong Kong Assets Turn Toxic as Trade War and Protests Cloud Outlook

Investor anxiety is visible just about everywhere in Hong Kong’s markets as recession warnings and escalating protests strain sentiment to breaking point.

While most of the world recovered Tuesday from a yuan-induced meltdown, Hong Kong saw the biggest spike in interbank rates in more than a decade, the longest stretch of equity declines since 1984 and the wildest stock swings in four years. Bears reloaded on the local dollar in a way not seen since 2017, betting it will soon break through the weak end of its trading band.

The threat from the trade war and weeks of local unrest is already showing in the property market, as well as tourist numbers, hotel occupancy and retail sales. A weak yuan is another cause for concern, as it will damp spending from mainland visitors and pressure earnings for firms that rely on China. Profits for members of the Hang Seng Index are forecast to drop the most since the global financial crisis this year, data compiled by Bloomberg show.

The gauge fell as much as 0.4% Wednesday, despite an overnight rally in the U.S. The MSCI Hong Kong Index lost 0.2%, on track for an 11th day of declines.

“There is risk-off sentiment in general,” said Michael Liang, chief investment officer at Foundation Asset Management (HK) Ltd. “Hong Kong’s political risk is definitely a part of it. Fewer people are willing to invest in the city’s assets.”

In some of the Chinese government’s strongest comments yet on the unrest that’s gripped the Asian financial hub since June, officials on Tuesday urged Hong Kong citizens to stand up to protesters. That followed Monday’s general strike that led to traffic chaos, violence, tear gas and flight cancellations in the most disruptive day since the protests started.

A QuickTake on why Hong Kong is protesting

The MSCI Hong Kong Index -- which unlike the more widely-used Hang Seng gauge doesn’t include Chinese heavyweights -- is suffering its worst stretch of losses since 1984. That was the year U.K. Prime Minister Margaret Thatcher and Chinese Premier Zhao Ziyang signed the Sino-British Joint Declaration in Beijing, committing to some of the terms for the handover of Hong Kong in 1997.

Hong Kong’s currency, while pegged to the greenback, is also influenced by the yuan due to the city’s close economic ties with China. It fell the most in more than three-and-a-half years Monday, tracking losses across Asia. The Hong Kong dollar’s 12-month forward points briefly spiked to 163 Tuesday, in a sign that some global hedge funds may betting against the currency. That was the highest level since early 2017.

The moves are affecting local borrowing costs, which underpin mortgages in one of the world’s least affordable housing markets. The rates are already facing pressure from tightening liquidity, which sent some tenors to decade-highs last month. One-month Hong Kong dollar interbank rates, known as Hibor, jumped the most since 2008 Tuesday.

Rates have remained ultra-low in Hong Kong since the financial crisis, while a huge amount of cash sloshing around in the financial system has helped fuel rallies in the stock and property markets. Now, stocks are falling and data last week showed July home sales fell 32% in value from a year earlier, while volume was down 21%.

And it could get worse: market watchers have warned home prices and retail rents may fall in the short term because of recent political unrest. A residential site was sold last month in a government tender for HK$11,842 ($1,511) per square foot -- the lowest price in more than two years. A purchasing-managers index fell to the lowest since March 2009 in July, signaling a contraction for a 16th month.

Hong Kong has a track record of resilience in the face of crises. From Asia’s financial implosion during the late 1990s to the SARS outbreak in 2003 and the global credit crunch of 2008, the city has always found a way to come out stronger.

That doesn’t mean a turnaround is near, however. The recent turmoil is making it almost impossible for investors to discern the outlook for Hong Kong assets.

Newsletter

Related Articles

Saudi Press
0:00
0:00
Close
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Trump Organization Teams with Saudi Developer on $1 Billion Trump Plaza in Jeddah
Electronic Arts to Be Taken Private in Historic $55 Billion Buyout
Colombian President Petro Vows to Mobilize Volunteers for Gaza and Joins List of Fighters
Nvidia and Abu Dhabi’s TII Launch First AI-&-Robotics Lab in the Middle East
UK, Canada, and Australia Officially Recognise Palestine in Historic Shift
New Eye Drops Show Promise in Replacing Reading Glasses for Presbyopia
Dubai Property Boom Shows Strain as Flippers Get Buyer’s Remorse
Top AI Researchers Are Heading Back to China as U.S. Struggles to Keep Pace
JWST Data Brings TRAPPIST-1e Closer to Earth-Like Habitability
UAE-US Stargate Project Poised to Make Abu Dhabi a Global AI Powerhouse
Trump and Starmer Clash Over UK Recognition of Palestinian State Amid State Visit
Saudi Arabia cracks down on music ‘lounges’ after conservative backlash
Saudi Arabia Signs ‘Strategic Mutual Defence’ Pact with Pakistan, Marking First Arab State to Gain Indirect Access to Nuclear Strike Capabilities in the Region
Sam Altman sells the 'Wedding Estate' in Hawaii for 49 million dollars
Turkish car manufacturer Togg Enters German Market with 5-Star Electric Sedan and SUV to Challenge European EV Brands
World’s Longest Direct Flight China Eastern to Launch 29-Hour Shanghai–Buenos Aires Direct Flight via Auckland in December
New OpenAI Study Finds Majority of ChatGPT Use Is Personal, Not Professional
Kuwait opens bidding for construction of three cities to ease housing crunch.
This Week in AI: Meta’s Superintelligence Push, xAI’s Ten Billion-Dollar Raise, Genesis AI’s Robotics Ambitions, Microsoft Restructuring, Amazon’s Million-Robot Milestone, and Google’s AlphaGenome Update
Indian Student Engineers Propose “Project REBIRTH” to Protect Aircraft from Crashes Using AI, Airbags and Smart Materials
Could AI Nursing Robots Help Healthcare Staffing Shortages?
Turkish authorities seize leading broadcaster amid fraud and tax investigation
Qatari prime minister says Netanyahu ‘killed any hope’ for Israeli hostages
Apple Introduces Ultra-Thin iPhone Air, Enhanced 17 Series and New Health-Focused Wearables
Big Oil Slashes Jobs and Investments Amid Prolonged Low Crude Prices
Social Media Access Curtailed in Turkey After CHP Calls for Rallies Following Police Blockade of Istanbul Headquarters
Did the Houthis disrupt the internet in the Middle East? Submarine cables cut in the Red Sea
Gold Could Reach Nearly $5,000 if Fed Independence Is Undermined, Goldman Sachs Warns
Uruguay, Colombia and Paraguay Secure Places at 2026 World Cup
Trump Administration Advances Plans to Rebrand Pentagon as Department of War Instead of the Fake Term Department of Defense
Tether Expands into Gold Sector with Profit-Driven Diversification
Trump’s New War – and the ‘Drug Tyrant’ Fearing Invasion: ‘1,200 Missiles Aimed at Us’
At the Parade in China: Laser Weapons, 'Eagle Strike,' and a Missile Capable of 'Striking Anywhere in the World'
Information Warfare in the Age of AI: How Language Models Become Targets and Tools
Israeli Airstrike in Yemen Kills Houthi Prime Minister
After the Shock of Defeat, Iranians Yearn for Change
YouTube Altered Content by Artificial Intelligence – Without Permission
Iran Faces Escalating Water Crisis as Protests Spread
More Than Half a Million Evacuated as Typhoon Kajiki Heads for Vietnam
HSBC Switzerland Ends Relationships with Over 1,000 Clients from Saudi Arabia, Lebanon, Qatar, and Egypt
Sharia Law Made Legally Binding in Austria Despite Warnings Over 'Incompatible' Values
Dogfights in the Skies: Airbus on Track to Overtake Boeing and Claim Aviation Supremacy
Tim Cook Promises an AI Revolution at Apple: "One of the Most Significant Technologies of Our Generation"
Are AI Data Centres the Infrastructure of the Future or the Next Crisis?
Miles Worth Billions: How Airlines Generate Huge Profits
Zelenskyy Returns to White House Flanked by European Allies as Trump Pressures Land-Swap Deal with Putin
Beijing is moving into gold and other assets, diversifying away from the dollar
Cristiano Ronaldo Makes Surprise Stop at New Hong Kong Museum
Zelenskyy to Visit Washington after Trump–Putin Summit Yields No Agreement
×