Most Jardine-linked stocks soar on extradition Bill withdrawal

Singapore

STOCKS with significant exposure to Hong Kong - namely the Jardine-linked counters - soared on Wednesday on news that Carrie Lam, the territory's chief executive, would formally withdraw a controversial extradition bill that has sparked nearly three months of protests, and rocked the Asian financial hub this summer.

Property group Hongkong Land led the rally among the Jardine stable, with a 8.3 per cent jump, rising 45 US cents to US$5.89 by the closing bell.

The counter traded within a range of US$5.41 to US$6.02 for the day, with some 7.1 million shares changing hands - though it is still below its 52-week high of US$7.53.

Similarly, Jardine Matheson Holdings advanced 5.2 per cent, or US$2.72, to US$55.24, Jardine Strategic Holdings rose almost 2 per cent, or 61 US cents, to US$31.70, and Jardine Cycle & Carriage added 1.1 per cent, or 32 Singapore cents, to S$30.72.

These gains propped up the Straits Times Index, which finished 1.3 per cent higher on Wednesday.

Dairy Farm, however, dipped 0.1 per cent, or one US cent, to close at US$6.96.

"For those who made a play for Hongkong Land in the past couple of months, Wednesday's news represented a good opportunity to pocket some profits," one dealer noted.

Just last month, Morgan Stanley and DBS Group Research both issued a "buy" recommendation on Hongkong Land, with a 12-month price target of US$7 and US$7.70 respectively.

Conversely, JPMorgan recently lowered its target price on the stock to US$5.10 on Sept 2, down from US$5.85 previously.

Among other things, the analysts noted in their August report that the firm's Central office demand has started deteriorating, without signs of turnaround in the second half of 2019.

Also in the spotlight for the day was the Hong Kong dollar, which strengthened by as much as 0.08 per cent. The Hang Seng Index also closed 3.9 per cent higher, while the MSCI Hong Kong Index surged 5.4 per cent, its biggest gain since October 2011 with real estate firms leading the way.

Hong Kong's latest decision means that the government is acceding to one of five key demands of pro-democracy protesters who have taken to the streets in millions, in demonstrations that have become increasingly violent.

That said, not all analysts are convinced that the bill's withdrawal is likely to altogether end the protests that have roiled the city, and thrown it into its worst crisis in decades.

Edward Moya, Oanda's senior market analyst, said: "Violence might ease in Hong Kong, but the protests are likely to continue until we see the other four demands met: Mrs Lam's resignation, an inquiry into police brutality, the release of those who have been arrested, and more democratic freedoms."

He added that the market might just see "temporary reprieve" with Hong Kong assets.