Hong Kong's Hang Seng Index fell more than 5% today in its worst day since 2015, as China announced plans for a "national security law" for the semi-autonomous territory.
The announcement from Beijing late yesterday has rattled markets around the world and is likely to lead to fresh unrest in Hong Kong and further strain relations with Washington.
Some observers said the new law would signal the end of Hong Kong's special status and the "one country, two systems" arrangement that took effect upon Britain's handover to the Chinese in 1997.
We could have new protests. Local tensions could trigger Sino-US tensions and the latter is much more stressful for market sentiment and the macro economy.”
Kenny Wen, a strategist at Everbright Sun Hung Kai, told the paper, "We could have new protests. Local tensions could trigger Sino-US tensions and the latter is much more stressful for market sentiment and the macro economy."
Xinhua, the Chinese state-owned agency, said yesterday: "When needed, relevant national security organs of the Central People's Government will set up agencies in [Hong Kong] to fulfil relevant duties to safeguard national security." No further details were given.