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Thursday, June 23, 2016, 21:10

HK stocks extend rally on Brexit poll hopes

By Duan Ting in Hong Kong

Hong Kong stocks chalked up a fifth -straight day of gains on Thursday as investors banked on expectations that Britain will vote to remain in the European Union (EU).

Britons began voting on Thursday in a historic referendum to decide whether the UK should stay in the EU, with the latest polls pointing to 51 percent for “Remain” against 49 percent for “Leave”, indicating that the pro-Brexit camp is losing momentum.

"Global financial markets have rebounded slightly following the latest polls showing the possibility of Britain staying in the EU, and so has Hong Kong’s,” said Fielding Chan, chief Asia economist at Bloomberg LP.

The Hang Seng Index rose 0.35 percent to 20,868.34 on Thursday. HSBC Holdings, which is listed in London and Hong Kong, with its main operations in Europe, opened at HK$50.7 before closing up 0.99 percent at HK$50.8.

The MSCI All Country World Index jumped 0.7 percent at 10:48 am in London, with emerging markets rallying for a fifth day. The STOXX Europe 600 Index also surged for a fifth day, gaining 1.3 percent, according to Bloomberg. Britain’s benchmark FTSE 100 Index advanced 1.55 percent as of 7:28 pm in Hong Kong.

The Shanghai Composite Index, however, fell 0.47 percent to 2,891.96, while the Heng Seng China Enterprises Index added 0.25 percent to 8,785.07.

"Despite growing possibility of the UK staying in the EU, a departure is still possible, which would hit both the stock and property markets and spark an outflow of funds from Hong Kong, as many European banks and large Hong Kong-based companies have assets in the EU,” Chan said.

Hong Hao, chief strategist with BOCOM International, said the potential risks arising from a possible UK exit from the EU are extremely huge as the Hong Kong market is liquid and sensitive, and any changes in the currency market will eventually affect the stock market.

Chan, however, does not expect a global financial crisis in the event of Britain quitting the 28-member trading bloc as central banks are well prepared for it.

Sam Chi-yung, a strategist at South China Financial, said Britain remaining in the EU would be good for global markets, but expressed concern that even if Britain stays, differences in opinions between the two opposing camps in the UK would have some impact on its economy.

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