Hong Kong, Taiwan Markets React to Trouble in China

The student unrest that shook China last week moved two Far East stock markets on territory claimed by that nation in opposite directions. Analysts said the markets reflected how they viewed events on the mainland.

Hong Kong’s Hang Seng index, a key barometer of local market health, dropped 132.80 points--4.05%--during the week of pro-democracy demonstrations in Beijing.

In Taiwan, investors poured money into the market and turnover surged to a record $4.8 billion (125.63 billion Taiwan dollars) Thursday. The weighted index finished the week close to its all-time record peak of 8,789.78 on Sept. 24.

“Taiwan has set itself up as a rival political entity and anything that embarrasses the Beijing government is positive. Hong Kong is affected negatively by China. Hong Kong people hardly ever view China positively,” said James Capel analyst Chris Chong in Hong Kong.

Dickson Ho, senior analyst at W. I. Carr Securities in Taiwan, said of the unrest: “Frankly speaking, it’s just too far away. This is still a liquidity-driven market. Other factors really don’t matter very much.”

Daniel Chiang, vice president at International Investment Trust, said that unlike Hong Kong, Taiwan can afford to ignore the Beijing protests because they have no immediate bearing on the island’s economic or political situation.

Both Taiwan and Hong Kong are claimed by China and both have considerable trade ties with it.

But Hong Kong reverts to Chinese rule in 1997 and is suffering a brain drain of professionals who fear the changeover.