Asian markets were mixed as India and Japan rose while China, Hong Kong, and the Philippines were off.
Asian markets were mixed as India and Japan rose while China, Hong Kong, and the Philippines were off. The Hang Seng plunged -4.97%, driven by the sum of all fears as US ADR delisting risk due to the Holding Foreign Companies Accountable Act (HFCAA) drove the Hang Seng Tech Index down -11.03%. While we have been voicing our concerns about the HFCAA for over a year, last Friday and today’s market action shows that HFCAA and its consequences are now being fully understood by investors in Asia. Panic and capitulation are apt descriptions of today’s market action as the Hang Seng Index closed below the 20,000 level, ending the session at a level not seen since June 2012. Remember that structured products are very popular in Hong Kong, which have knock-out prices when price levels are reached on individual stocks or indexes. I would assume that many structured products were liquidated not only on the stock moves but also on the Hang Seng breaching the 20,000 level, which puts even more selling pressure on the market. Reports that Russia asked China for military supplies weighed on sentiment though I doubt that this is true as it is in China’s economic best interest to see a resolution to the conflict in Ukraine.
