A dose of “fake news” sent the Hang Seng tumbling to a one-month low on Thursday.
Chinese state media tweeted that Hong Kong was set to impose a curfew this weekend in an effort to rein in protesters and quell escalating violence that’s brought the city to the brink of chaos in recent weeks.
Ultimately, Hu Xijin stepped in to “retract” the report, but it was too late to save local stocks. The index, which earlier this month had surged some 10% off the August lows into overbought territory, has fallen nearly 5% this week.
“A GT reporter reported from HK that the HKSAR government is expected to announce [a] curfew for [the] weekend”, Hu said, in a clarification tweet, adding that once he “checked how the information was obtained”, he concluded that it “is not sufficient to support this exclusive news”.
Ultimately, Hu “demanded” that the reporter “delete the tweet”.
And yet, you’d be forgiven for thinking it was a trial balloon of sorts, even as pro-democracy lawmaker Claudia Mo called it “fake news” and the government dismissed it as “totally unfounded”. Carrie Lam could, of course, call for a curfew, but one struggles to understand how it could possibly be enforced given that demonstrators have simply ignored any and all demands thus far, including a ban on face masks which backfired in October.
Lam and other officials huddled in a meeting until midnight local time on Wednesday, stoking speculation about what might be next. In the FX market, liquidity appears to be tightening, as HKD 3-month forward points jumped to the highest in two decades.
This looks to be one of the 10 worst weeks for local stocks in eight years.
Comments from Secretary for Security John Lee regarding the possible deployment of the PLA didn’t help the mood. “The Government of the Special Administrative Region did not invoke the aforesaid ordinances to appoint any special constables, employ any temporary police officers or raise any Essential Services Corps for assisting the Police in handling public order events in the past five months or so”, Lee said, in a written response to the legislature. “At the same time, the SAR Government has not sought assistance from the People’s Liberation Army to handle the conflicts in recent months”. The problem (in case you can’t read between the lines) is that he did not specifically rule out those, or any other measures.
School closures and various other cancellations underscore the severity of the situation. Hong Kong’s economy plunged into a recession in the third quarter and the final read on Q3 GDP is due Friday.
Retail sales and visitor numbers have collapsed. Foreign students are being encouraged to pack up and leave by the UK and Sweden. More than 200 people were arrested on Wednesday, when nearly 600 rounds of tear gas were fired.