With China's ambitions toward Hong Kong having emerged as the top political fault line in recent days, the market was closely following the start of Friday's National People's Congress where in addition to disclosures on Chinese political strategy, Beijing announces decisions on targets on GDP, CPI and fiscal deficit.
China sets 2020 CPI target at about 3.5%. China to use innovative monetary policy tools to finance real economy.
While none of the above was especially remarkable, the reason why stocks gave the report a thumbs down is because as Premier Li also said, China will safeguard national security in Hong Kong, i.e., China plans on expanding its crackdown on Hong Kong sovereignty, a step that comes one day after China announced dramatic plans to rein in dissent by writing a new law into the city's charter, and just hours after the Senate passed a bill that will retaliate against China should it do precisely that, effectively ensuring an even further deterioration in US-Sino relations.
Specifically, the National People's Congress confirmed plans to pass a bill establishing "An enforcement mechanism for ensuring national security" for Hong Kong, with Reuters adding that China's draft Hong Kong legislation says Hong Kong "Should finish enacting as soon as possible the regulations in basic law regarding national security" and that Hong Kong government and legal bodies should effectively prevent, stop and punish activities that endanger national security.
In addition to a more than 3% drop in Hong Kong stocks following the report of the imminent crackdown, three- and 12-month forwards on the Hong Kong dollar rose in New York trading, indicating traders expected more weakness ahead for the currency, which slipped the most in six weeks earlier in the day.
"The market is taking this news negatively for Hong Kong given the likely return of violent protest activities, higher risk for the U.S. to remove certain preferential terms for Hong Kong, such as the special tariff status, and risk-off sentiment," said Becky Liu, head of China macro strategy at Standard Chartered Bank Ltd. In addition to an imminent return of violent Hong Kong protests, China's position sets up an election-year showdown with Trump, who has come under pressure in Washington to reconsider the special trading status before the city's return to Chinese rule under a promise to maintain its liberal financial and political structure.
China has repeatedly stressed that the US should mind its own business and not mess in internal affairs, with Hong Kong considered one of them.
https://www.zerohedge.com/markets/end-hong-kong-china-announces-crackdown-hong-kong-national-security-law-abandons-gdp-target
China sets 2020 CPI target at about 3.5%. China to use innovative monetary policy tools to finance real economy.
While none of the above was especially remarkable, the reason why stocks gave the report a thumbs down is because as Premier Li also said, China will safeguard national security in Hong Kong, i.e., China plans on expanding its crackdown on Hong Kong sovereignty, a step that comes one day after China announced dramatic plans to rein in dissent by writing a new law into the city's charter, and just hours after the Senate passed a bill that will retaliate against China should it do precisely that, effectively ensuring an even further deterioration in US-Sino relations.
Specifically, the National People's Congress confirmed plans to pass a bill establishing "An enforcement mechanism for ensuring national security" for Hong Kong, with Reuters adding that China's draft Hong Kong legislation says Hong Kong "Should finish enacting as soon as possible the regulations in basic law regarding national security" and that Hong Kong government and legal bodies should effectively prevent, stop and punish activities that endanger national security.
In addition to a more than 3% drop in Hong Kong stocks following the report of the imminent crackdown, three- and 12-month forwards on the Hong Kong dollar rose in New York trading, indicating traders expected more weakness ahead for the currency, which slipped the most in six weeks earlier in the day.
"The market is taking this news negatively for Hong Kong given the likely return of violent protest activities, higher risk for the U.S. to remove certain preferential terms for Hong Kong, such as the special tariff status, and risk-off sentiment," said Becky Liu, head of China macro strategy at Standard Chartered Bank Ltd. In addition to an imminent return of violent Hong Kong protests, China's position sets up an election-year showdown with Trump, who has come under pressure in Washington to reconsider the special trading status before the city's return to Chinese rule under a promise to maintain its liberal financial and political structure.
China has repeatedly stressed that the US should mind its own business and not mess in internal affairs, with Hong Kong considered one of them.
https://www.zerohedge.com/markets/end-hong-kong-china-announces-crackdown-hong-kong-national-security-law-abandons-gdp-target
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