Hong Kong Chief Executive Carrie Lam’s unpopular extradition bill is a symptom of the city’s political problem, not a cause. Investors are in for a shock if protesters aren’t satisfied with its long-awaited withdrawal.

Mrs. Lam has finally resolved to retire the bill that has sparked months of protests in the special administrative region of China. Stocks surged in response to the news, with the Hang Seng Index up nearly 4%, led by property developers. Wharf Real Estate Investment rose nearly 12%.

Hong Kong’s financial markets now seem priced for mild disruption, at worst—even amid the clearest signs yet that the political crisis is spilling over into the local economy.