Protests Erupt As China Approves Controversial Hong Kong Security Law

<h2>China Approves Hong Kong Law</h2>
<p>The prospect of US action against China is looming large today following China’s approval of its proposed National Security Law in Hong Kong. The legislation was approved during China’s National People’s Congress with a vote of 2878-1. The new law, which represents the first time that Chinese law has been written into Hong Kong’s penal code, prohibits acts of subversion, splittism, terrorism and foreign interference. However, the vague terms (offered without definition) have raised concerns over the room for abuse of powers.</p>
<h2>Trump Threatens Action</h2>
<p>In response to the move, Trump has confirmed that the US can no longer view Hong Kong as an autonomous region which is likely to damage the special trading relationship Hong Kong enjoys with the US. Trump has also threatened to take action over the move, which has been viewed as one of aggression, against Hong Kong. While refraining from adding details yet, Trump commented yesterday that the administration would be announcing measures within the coming days. These could come as early as today following the overnight approval of the legislation.</p>
<h2>Protestors Arrested in Hong Kong</h2>
<p>Pro-democracy protestors in Hong Kong have railed against the move and have been taking to the streets in high numbers. 360 people were arrested yesterday as they protested against the Chinese law which includes clauses such as making the ridicule of the Chinese national anthem a criminal offence. Police officers clad in riot gear engaged large crowds with pepper-spray in scenes echoing those seen in Hong Kong last year. China has previously warned the US not to interfere in its handling of protestors in Hong Kong following the US passing a bill in support of the rights of pro-democracy protestors there and there are fears about how the two superpowers will clash over this issue.</p>
<h2>Fears of Trade War 2.0</h2>
<p>Tensions between the US and China have been extremely volatile in recent weeks with the US openly condemning China for its role in the COVID-19 outbreak. Trump has been particularly vocal in his criticism of China and has threatened to take action over the issue, suggesting the possibly of various measures such as cancelling the trade deal and applying fresh tariffs. As the market now waits to hear what action Trump has approved against China, there has been a loss of upside momentum in equities markets, which had been rallying strongly this week, as fears grow over a potential return to the trade war of the last two years.</p>
<h2>Technical views</h2>
<p><strong>S&amp;P500 (Bullish above 2968.50)</strong></p>
<p>From a technical viewpoint. The S&amp;P has broken above the yearly pivot at 2968.50 and with VWAP positive, price is on course to retest the underside of the broken bullish channel next, with the monthly R1 in sight also at 3098.50. Near term bullishness retained while price holds above the 2968.50 level.</p>
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