August 20, 2019
The Chinese embassy in Ottawa warned Canada to stop meddling in Hong Kong affairs a day after the country issued a joint statement with the European Union in defense of the fundamental right of assembly for Hong Kong citizens.
Hundreds of thousands of anti-government protesters rallied peacefully in Hong Kong on Sunday in the 11th week of what have been often violent demonstrations in the Asian financial hub.
In a related development, Hong Kong’s deepening political crisis now risks becoming an economic one, a study said.
After protesters brought the city’s airport to a standstill recently, investors and business leaders are growing increasingly alarmed by the fallout from 10 weeks of anti-government demonstrations that show no sign of letting up.
The short-term worry is that Hong Kong’s economy is headed for a recession as local unrest combines with the US-China trade war to pummel retail sales, weigh on real estate prices and sink the city’s $4.9-trillion stock market.
But an even bigger fear is that Hong Kong’s standing as a safe and reliable commercial hub will face irreparable damage — a potential death blow for an economy that has leveraged its business-friendly reputation to become the primary gateway between China and the rest of the world.
“Longer term, this poses fundamental challenges to Hong Kong’s status as an international financial center,” said Rory Green, a London-based economist at TS Lombard.
To be sure, few are predicting the imminent demise of Hong Kong as we know it. The city has demonstrated a remarkable penchant for overcoming crises over the past two decades, powering through everything from the Asian financial implosion of the late 1990s to the Sars scare of 2003.
And while Hong Kong Chief Executive Carrie Lam has yet to offer a solution for quelling the city’s unrest, she has said the government is considering “bold” measures to shore up growth.
Optimists are betting that the protests will eventually subside without much lasting economic damage, as they did during the city’s so-called Umbrella Movement five years ago.
“Those who purchased Hong Kong stocks during the 2014 protests triumphed,” said Zhuang Jiapeng, a fund manager at Shenzhen JM Capital Co.
Like many of his peers in China, Zhuang has been a buyer of Hong Kong in recent weeks. Investors from the mainland, where news on the protests is heavily censored, have boosted holdings of the city’s shares via cross-border trading links for 17 straight days, data compiled by Bloomberg show.
Still, that hasn’t been enough to offset a broader exodus by international investors.
Hong Kong stocks have lost nearly $500 billion of value since the protests kicked into high gear in early June, with benchmark indexes sinking to seven-month lows on Monday after clashes between demonstrators and police turned increasingly violent over the weekend.
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