U.S.-China tensions continue rising following Beijing’s proposed security legislation for Hong kong with President Donald Trump claiming that «very interesting» moves will come next week.

Despite continuous assurances by Hong Kong and Beijing officials that essential freedoms and judicial independence would remain, the U.S. is not backing down and is reportedly readying countermeasures.

«[Trump is] displeased with China's efforts,» said White House press secretary Kayleigh McEnany at a recent briefing. «[It is] hard to see how Hong Kong can remain a financial hub if China takes over.» 

Hong Kong Resilience

Although short-term confidence has been shaken by the surprise legislation, some industry participants point to the potential near-term gains made by the Hong Kong bourse due to U.S. pressures to delist Chinese firms. The move is expected to boost the size and diversity of Hong Kong's financial market, even if not directly its status.

«[T]here is no market in Asia can come close to offering the depth and scale of liquidity that Hong Kong provides,» said John Woods, Credit Suisse’s APAC chief investment officer. «Now I think a lot of these [delisted] companies will be exploring dual listing opportunities.» 

«There’s so much noise every single day,» said Bhaskar Laxminarayan, ‎Julius Baer’s Asia CIO in a recent media call. «There will always be uncertainty and politics but when we step back and take a look, it is clear where the growth engines are. You cannot wish away China. You have to have a slice of this growth.»

Tit-For-Tat

When asked if the administration had considered sanctions against China or visa restrictions for Chinese students, U.S. President Trump said it was a «very important question» and he would make moves that «you’ll find very interesting.

«It's something you're going to be hearing about over the next, before the end of the week. Very powerfully, I think,» he said, without providing additional details.

«China is making a big mistake, frankly,» Trump’s economic advisor Larry Kudlow separately said, adding that the administration would welcome American companies home from Hong Kong or mainland China. «We will do what we can for full expensing and pay the cost of moving if they return their supply chains and their production to the United States»