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Hong Kong stocks are beating every other developed market in the world this month as lower valuations shelter shares from a global selloff and the citys worst political unrest since the 1960s.

The MSCI Hong Kong Index rallied 3.1 percent in October through yesterday, the most among 23 developed markets tracked by MSCI Inc. and one of only two to gain. The measure today erased its loss since police fired tear gas at pro-democracy demonstrators on Sept. 28, rising 0.9 percent, compared with a 3.2 percent slump by the MSCI World Index in the same period.

Hong Kong as a whole has held up pretty well despite whats going on, said Nicholas Yeo, a money manager at Aberdeen Asset Management Plc, which oversees $550 billion and hasnt changed its holdings because of the protests. After the first few days, people are becoming more rational and more pragmatic, he said. We havent come to a stage where this means its the end of Hong Kong.

With the benchmark Hang Seng Index trading at 10 times earnings yesterday, the lowest multiple among the worlds major developed markets, Bocom International Holdings Co. says the impact of the protests is already reflected in equity prices. RS Investment Management Co. sees catalysts for Hong Kong stocks in a trading link with Shanghai and prospects for Chinese stimulus.

The Hang Seng Index rose 1.4 percent to 23,403.97 at the close today, its steepest gain in seven weeks, while the MSCI Hong Kong Index added 1.4 percent.

Among 53 developed and emerging country MSCI indexes, only a measure of equities in Turkey rallied more in October through yesterday than the Hong Kong gauge, data compiled by Bloomberg show. Casino operators Sands China Ltd. and Wynn Macau Ltd. led gains, surging at least 9.7 percent.

While the Hang Seng Index plunged 3.2 percent over two days after police used tear gas on crowds last month, shares stabilized as the size of the protest sites shrank and investors weighed the impact on the citys listed companies.

Firms that get a majority of their sales from Hong Kong make up about 13 percent of the Hang Seng Index, while those that rely on China make up at least 54 percent, data compiled by Bloomberg show. Li & Fung Ltd., the wholesaler that gets more than half its revenue from the U.S., rallied 5.8 percent this month through yesterday.

Hong Kong Chief Secretary Carrie Lam and four other government officials held discussions yesterday with five members of the Hong Kong Federation of Students led by Secretary-General Alex Chow in an attempt to resolve the biggest challenge to Chinas sovereignty over Hong Kong since the end of colonial rule in 1997.

Student leaders have demanded China amend a decision that candidates in the citys first-ever leadership election in 2017 must be vetted by a nominating committee, a mechanism they say is designed to guarantee a chief executive more loyal to China than to Hong Kong.

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Hong Kong Stocks Defy Protests to Post Worlds Best Monthly Gain

by Sarah TITTERTON

Hong Kong (AFP) -- A band of Hong Kong art guardians are on constant standby at the city's main sprawling protest site. Their mission: to swoop in and save a vast array of creative works -- including the towering "Umbrella Man" statue -- if the police move in.

Over nearly a month of protests calling for greater democracy in the southern Chinese city, a kilometre-long stretch of highway opposite the government headquarters usually choked with traffic has been transformed into a riotous open air exhibition.

At the centre sits what protesters have dubbed "Umbrella Man" -- a 12-foot tall wooden sculpture symbolising the protester's inventive use of umbrellas to defend themselves against everything from rain and tropical heat to police batons and pepper spray.

Walk through the camp and demonstrators can be seen sketching new works on the road in chalk or hand-crafting hundreds of origami umbrellas. Virtually every wall, central reservation and pillar has become a hanging space while large banners flutter from two bridges crossing the occupied thoroughfare.

All the while a team is on constant alert for any sign of an impending police crackdown.

"Their job is to call me," Meaghan McGurgan, who runs a theatre blog and founded the Umbrella Movement Art Preservation group, told AFP. "I can then mobilise the rescue teams standing by."

The political, grassroots nature of the protest works are far removed from Hong Kong's usual art scene, dominated by pieces that sell for record-breaking sums.

"Everyone can see it, everyone can go, everyone can participate," McGurgan said of the impromptu outdoor art venue.

But activists are acutely aware it could all be lost if the police attack.

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Hong Kong protests: saving the movement's art

Hong Kongs pro-democracy movement will need to muster more political power to force the government to listen to its demands, said Alex Chow, one of the student leaders of the demonstrations, as the sit-ins stretched on Wednesday.

We will need to further justify our actions and rethink the strategy of [just] calling on more people to occupy the streets, said Chow, leader of the Hong Kong Federation of Students. If occupying the streets [alone] could force the government to back down, they already would have.

Chow said protest organizers are now thinking out how to regroup [and get] that many protesters back to the streets, while at the same time figuring out how to bring the campaign from street to the community, and mobilize more power from Hong Kong people to force the government to change.

Protesters in Hong Kong, a former British territory that returnedto Chinese rule in 1997 under a framework known as one country, twosystems, took to the streets late last month to demand open nominationsof candidates for the chief executive election in 2017. Chinas centralgovernment in Beijing has rejected such a framework, insisting that allcandidates must be approved by a special committee.

Five government officials met Tuesday with student leaders in the first of what is expected to be several rounds of talks aimed at resolving the political crisis. But the session did little to raise hope that a resolution was close at hand.

In an interview with The Times after the talks, Chow, 24, expressed disappointment about the dialogue and discussed what is next for the campaign.

What the officials were willing to offer was even less than what we expected, he said. No one knew what they are actually talking about. They said they would submit a report to Beijing and consider setting up a platform to supervise constitutional development, but there were no details, no timeline, nothing."

Chow said that although the Hong Kong government could reject the Aug. 31 decision by the Chinese National Peoples Congress to require strict screening of candidates for the next Hong Kong chief executive, the reality is that Hong Kong officials wouldn't dare do that, at least not yet.

To change that, Chow said, more political power is needed. How Chow plans to accomplish that, however, remains to be seen.

The real battle right now is not confronting or negotiating with the government; it is a battle of two strengths, he said. It is about if we have enough political power to force the other give in and give us more.

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Hong Kong protest leader: New strategies needed to pressure government

BEIJING, Oct. 22 (UPI) -- American saxophonist Kenny G visited a pro-democracy protest site in Hong Kong and was advised by the Chinese government Wednesday not to get involved.

The smooth-jazz musician, who performed four concerts in China last month and whose recorded work is popular in China, can be seen in a Twitter photo, with Occupy Central pro-democracy posters behind him and the caption "I wish everyone a peaceful conclusion to this situation."

His comments, which came after Hong Kong Chief executive Leung Chun-ying suggested foreign influences are involved in supporting the Hong Kong protests, received the attention of the Chinese government Wednesday.

"Kenny G's musical works are widely popular in China, but China's position on the illegal Occupy Central activities in Hong Kong is very clear. We hope that foreign governments and individuals speak and act cautiously and not support Occupy Central and other illegal activities in any form, said Ministry of Foreign Affairs spokeswoman Han Chunying at a Beijing news briefing.

Playing a work by the musician, "Going Home," has become a sign in China that a building, such as a shopping mall, is about to close and that it is time for visitors to depart. Time magazine suggested, "Conspiracy theorists might see a hidden message for the protesters here."

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China critical of Kenny G's pro-democracy stance

Five representatives from Hong Kongs pro-democracy movement of student protesters debated government officials Tuesday, while thousands watched the face-off on big screens set up at protest sites. Although the two sides did not come to an agreement on how Hong Kong should be governed, many saw the debate as a sign that protests were having some impact.

The Chinese governments decision to broadcast an unaltered discussion about democracy came as quite a change of tone. Days after protests broke out across Hong Kong in early October, Chinese Foreign Minister Wang Yi spoke in Washington andwarnedagainst what the Chinese government called illegal acts that violate public order.

The debate was "for the general public to tell the difference between right and wrong, to know whether it is the government or the students who reasons things out, protest leader Joshua Wong, 18, told the Sydney Morning Herald.

Despite repeated calls from the government to end demonstrations, thousands of protesters continued to flood Hong Kongs public squares demanding the freedom of a full democratic election in 2017. Their persistence has not gone unnoticed by the government.

"We cannot deny that in the past month, the class boycott started by you and the occupation movement, something huge has happened," Carrie Lam, Hong Kong's chief secretary, said during the debate. "Such a social movement is large-scale and its impact is far-reaching."

Lam was referring to Septembers week-long boycott of classes staged by a group of students from the Chinese University of Hong Kong. Students were then joined by pro-democracy activist group Occupy Central, which kicked off weeks of protests demanding universal suffrage.

Hong Kong currently operates under the One Country, Two Systems principle that China agreed to when the British returned Hong Kong in 1997. The agreement stipulated that Hong Kong would have a certain degree of autonomy, while still being considered part of China. The Chinese government had reportedly promised direct elections for Hong Kongs chief executive position by 2017. However, in August 2014, China said Hong Kong voters can only choose candidates approved by the government in Beijing.

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Hong Kong Protests 2014: Student Protesters Face-Off With Government In Democracy Debate