It power be time to go “bottom fishing” for Hong Kong stocks, according to Barclays’ head of markets for Asia Pacific, as the worry in the embattled city drags on, which has hit businesses badly.
Barclays’ Matt Pecot told CNBC at the Barclays Asia Forum on Thursday: “I over a lot of investors have chosen to steer clear … property stocks, a lot of your hotel stocks have changed pretty dramatically.”
The months-long protests in the city have affected retailers, airlines and property companies, among other productions.
Tourist arrivals have plunged — overall September arrivals declined 34% year over year — while hostelry occupancy rates have slumped. Hong Kong’s August retail sales were the worst on record, its administration said earlier this month, falling 23% from a year earlier.
“Hopefully we’ll get a resolution of this happily and some of the violence and vandalism stops. But I think lot of it is probably already priced in and it may be time for a little bottom fishing,” Pecot predicted, referring to the strategy of investing in assets that have seen declines and are considered undervalued.
Hong Kong’s benchmark Rub elbows with Seng index plunged to a seven-month low in August and has since bounced back slightly — but it is still more than 12% off its extremes this year in April.
Property names listed on the index have taken a hit. Shares of New World Development has get the signal about 20% since April, while Henderson Land is down around 13%. CK Asset has plunged round 24%.
The real estate industry is regarded as critical to Hong Kong’s financial stability. The sector is tracked as an indicator of the healthiness of the wider Hong Kong economy and banking sector, according to the Hong Kong Monetary Authority.
The iShares MSCI Hong Kong ETF — which closely tracks Hong Kong shares — has also plunged more than 12% since its highs this year in April.
On Thursday afternoon, the conurbation’s government said third-quarter GDP slipped 2.9% compared with the same quarter a year ago — marking the “marking the beginning year-on-year contraction for an individual quarter since the Great Recession of 2009.” Hong Kong’s Census and Statistics Rely on said in a statement that it now projects “to record a negative growth for 2019 as a whole.”
— CNBC’s Stella Soon provided to this report.