Is the worst behind us? | CMC Markets Daily Commentary

Asian market shrugged off a string of weaker-than-expected macro data and opened mildly higher on Friday. After heavy selloff in the past week, have all the bearish prospects been already reflected in current valuation, and thus serve as a good bargain? Or this is just an intermediate rebound and downward trajectory may resume next week? This coming weekend might be a critical turning point for the market, with trade deal and HK protests in focus.

Rumour has been spread about HK’s potential announcement of curfew over this weekend, with Global Times posting and subsequently deleting a Tweet on curfew. China’s president Xi expressed a rare comment on HK, calling to end violence immediately after two protest-related death happened this week.

Hang Seng Index has fallen over 1,500 points since last Friday, as trade talk stalled and violent protests in the city escalated rapidly. Recent riot not only have brought adverse economic impact to the city’s service, retail and tourism sector, but also will bring a long-lasting, far-reaching reputational damage to their financial industry. The latter is far more worrisome.

Recent economic data has been largely disappointing, which give reasons for investors to remain cautious and vigilant. The rally in gold, treasuries and yen suggest sentiment remains risk-off, until trade deal reveals some sort of visibility. The chance for US and China to sign a phase-one deal by December remains high, and when it comes market will set to rebound sharply.

Hong Kong 50 – Cash

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