The world's imagination has been caught up in the
Hong Kong protests this week, but how has the unrest impacted
Asia's First City of Finance?
Tens of thousands of Hong Kong residents have been drawn to the
streets to join the pro-democracy movement, demanding the right to
elect their chief executive by universal suffrage in 2017.
What started as a student's class boycott has now turned
into the biggest civil movement in the city for decades,
now coined the "Umbrella Revolution". Ordinary
citizens (some with young children and toddlers) are marching into
the streets appealing for electoral reform.
Unlike demonstrations in other parts of the world, the highly
civil-minded protesters do not have an anti-business agenda. They
are following their non-violent principles closely; retail shops
are left unscratched and signs apologising for
the inconvenience caused by the protest can be seen
everywhere. Volunteers diligently work to clean up the streets,
pick up garbage and separate recyclables every morning, remove
graffiti created by fellow protestors and create lanes to enable
smooth passage for emergency vehicles. Some of them even offer
various free services, from haircuts, massages, counselling, and
legal advice to holding classrooms on the streets for students.
But what of the economy?
While immediate adverse market impacts of the protests can be
felt, it is more important to look at its long-term effect on the
city's economy through fundamentals. The strength of Hong Kong
as a global city and international business centre lies in its
institutions that ensure transparency, ease of doing business and
the rule of law. As long as the independence of the city's
legislature, executive, judiciary and media are intact, the
long-term outlook remains optimistic and its status as an
international financial hub is all but guaranteed.
Hong Kong has long served as the facilitator of trade between
China and the rest of the world. For the foreign investor, the
city is their gateway for investing in China as it offers a stable
operating environment with long-established rule of law. Last year
alone, Hong Kong accounted for two-thirds of foreign direct
investment (FDI) into the mainland.
For Chinese companies, Hong Kong serves as a reliable source of
equity financing which is fully integrated into the global economy.
Since 2012, Chinese firms have raised US$43bn (versus just US$25b
in mainland exchanges) through initial public offerings at the
well-established Hong Kong Stock Exchange (HKEx). The city's
unique status as a "Special Administrative Region" has
benefitted China enormously since unification in 1997.
And that's not to mention that it was Hong Kong
manufacturers that sparked the mainland's economic miracle by
being the first batch of investors to foray into its newly opened
economy in the 1980s.
Likewise, China is equally important to Hong Kong as tourism and
retail spending from mainlanders account for around 10% of its GDP;
the city exports half of its output to China, and one-fifth of its
bank assets are loans to mainland customers. Due to the symbiotic
nature of the Hong Kong-China relationship, it is only logical for
both sides to uphold the status-quo and safeguard the "one
country, two systems" governance principle which laid the
foundation for unification 17 years ago.
In most parts of the city people are going about their business
as usual, going back to their jobs during the day and returning to
the main demonstration sites after work. As the student leaders
agree to hold talks with government official, the pro-democracy
movement is expected to be heading to a more rational
It's only a matter of time before Asia's World
City gets her mojo back.
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