Shine is wearing off glittering financial hub
On a humid August evening, Hong Kong’s expat bankers spill out of their offices in the central business district and into a trendy new bar. Despite everyone’s best efforts to keep the mood light, talk soon turns to the protests.
“A lot of Westerners try to stay away from it, because they just want to work, make money, go home,” says Daniel, 26, a consultant from Liverpool who has worked for two years in Hong Kong.
But as protests have spread, they threaten Hong Kong’s status as a glittering financial hub, with the economy sliding toward recession. Yesterday, it was revealed the economy shrank 0.4 per cent in the past quarter, from April to June.
Even for rootless financiers, it is impossible to keep on living in a bubble. In Daniel’s own island neighbourhood, there was recently a stand-off, with protesters hurling bricks and metal street-signs as police countered with volleys of tear gas.
The protests have “become increasingly viewed as a long-run trend toward confrontation with the mainland”, says Julian Evans-pritchard, China economist at research firm Capital Economics. “Even if these protests do fizzle out, I think there is permanent damage done to the idea that Hong Kong is a stable business environment.”
Protesters have called on everyone to withdraw HK$10,000 (£1,000) with the aim of causing a run on
the banks. Some ATMS fell out of service but last night the full impact was unclear.
Prolonged turmoil such as this week’s five-day occupation of the airport will “hasten the marginalisation of Hong Kong’s status as a financial centre, since Hong Kong has been promoted as a gateway for China”, says Mike Wu, of Morningstar, a financial services firm.
The city’s leaders this week announced a
£2 billion stimulus package to boost GDP growth, which is at the lowest level since the global financial crisis.
Yet Hong Kong stocks are also among the worst performing in the world, with the benchmark Hang Seng index losing 4.5 per cent since June.
Banks including Standard Chartered, Bank of East Asia and DBS have had to close down branches during the protests. Hotels such as the Sheraton and upmarket brands such as Prada and Hugo Boss have followed suit. Major companies including HSBC and Disney have warned investors that the protests are taking a toll.
Many worry that Beijing will send in the military – a move that would almost certainly mean the end of Hong Kong as an attractive business hub.
“Just the threat of things escalating that far – if people thought it was a real possibility, it could trigger capital flight, which would in itself cause a lot of problems for Hong Kong,” says Mr Evans-pritchard.
But for now, the suits still line up for lunchtime salads and smoothies in the main business district and drinks flow after dark.
Some think the protesters should do more to protect business. “Business goes on alongside the protests. Don’t f--- with that, you know what I mean?” says Daniel.