On Wednesday, despite China’s warnings against such move, US President Donald Trump has signed the Hong Kong Human Rights and Democracy Act into law, saying in a statement released by the White House that he did so out of “respect for President Xi, China and the people of Hong Kong”.

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Trump Signs Two Bills Into Law

Despite China’s multiple warnings against such move, Trump has signed the Hong Kong Rights and Democracy Act into law on Wednesday; according to the White House, this act reaffirms and amends the United States-Hong Kong Policy Act of 1992, specifies policy towards Hong Kong and directs assessment of the political developments in Hong Kong (South China Morning Post, 28 Nov). This came as the US and China are in ongoing communication toward a phase-one deal.

China has expressed “strong opposition” to what they consider American interference in the protests, and previously warned the US not to underestimate China’s determination to defend its “sovereignty, security and development interests” (Bloomberg, 27 Nov).

Trump also said in a statement released by the White House said that he “signed these bills out of respect for President Xi, China and the people of Hong Kong”, and hopes that “Leaders and Representatives of China and Hong Kong will be able to amicably settle their differences” (CNBC, 27 Nov). Further according to the article on CNBC (27 Nov), the two bills that were signed back Hong Kong protesters: the first bill requires the State Department to annually certify that Hong Kong is sufficiently autonomous to retain its special US trading consideration (a status that has helped its economy) – this also sets up potential for sanctions against people responsible for human rights abuse in Hong Kong – while the second bill would bar the sale of munitions such as tear gas and rubber bullets to the Hong Kong police.

Markets’ Reaction

Stocks in Asia were set to trade higher on this news – the futures pointed to a higher open for Japanese stocks, with the Nikkei futures contract in Chicago at 23,485 while its counterpart in Osaka at 23,590 compared against the Nikkei 225’s last close of 23,437.8 points, while shares in Australia rose this morning, with the S&P/ASX 200 about 0.3% higher (CNBC, 28 Nov).

Overnight, the S&P 500 (SP500) closed 0.4% higher to 3,153.6 points, while the Dow and Nasdaq rose 0.2% and 0.7% higher, respectively. The indices posted fresh intraday records and the fourth straight day of gains.

The Hang Seng Index (HSI) futures has risen 0.2% to 27,082 as at the time of writing. Do note that the HSI warrants issued by Macquarie has started tracking the HSI December 2019 futures contract from yesterday, 27 November 2019. Meanwhile, the iShares China A50 Index ETF (China A50 ETF), which is designed to track the performance of the 50 largest A-Share companies listed on the Shanghai and Shenzhen stock exchanges (as measured by the FTSE China A50 Index), rose 0.3% to HKD15.02 yesterday.

Source: Macquarie Research - 28 Nov 2019