September 4, 2019 / 6:48 AM / 7 months ago

Hong Kong shares jump 4% on reports extradition bill set to be withdrawn

HONG KONG (Reuters) - Hong Kong's main stock benchmark .HSI surged more than 4% on Wednesday afternoon after media reported the government was set to formally withdraw the proposed extradition bill that sparked three months of protests in the former British colony.

FILE PHOTO: The name of Hong Kong Exchanges and Clearing Limited is displayed at the entrance in Hong Kong, China January 24, 2018. REUTERS/Bobby Yip

A government source confirmed to Reuters the media reports saying Hong Kong Chief Executive Carrie Lam will officially withdraw the bill later on Wednesday.

The move would meet one of the protesters’ key demands.

The Hang Seng rose 4%, outpacing the 1.6% gains in Asia ex-Japan .MIAPJ0000PUS and 0.9% rise in Shanghai shares .SSEC.

Property stocks .HSNP jumped more than 7% while the financial sector sub-index .HSNF gained 3.7%.

Flag carrier Cathay Pacific (0293.HK), which has been caught in the crossfire between Chinese authorities and protesters in Hong Kong, rallied more than 7%.

“There are people covering their short positions and bargain hunting on local blue chips,” said Alex Wang, director at Ample Finance Group, as investors hope the formal withdrawal of the bill “will calm down the situation in the society.”

Dogged by escalations in local protests and the U.S.-China trade war, the Hang Seng lost 7.4% in August.

The double whammy has dampened business activity and dragged property prices in Hong Kong, one of the most expensive real estate markets in the world.

The Hong Kong dollar HKD=D3, pegged to the greenback in a tight range of 7.75-7.85 per dollar, rose as much as 0.08%.

Reporting by Noah Sin; Editing by Jacqueline Wong

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