928 Hong Kong | Raymond Chan | Finance News Network

928 Hong Kong

by Raymond Chan

This is not only a rare mass movement in Hong Kong, but also the Hong Kong police force’s second use of tear gas in the international financial hub. It is not difficult to imagine the impact of the news footage.
 
The recent pro-democracy movement in Hong Kong has raised global concern. Stories of the movement appeared on headlines of major international media, including BBC and the Financial Times. The pro-democracy protests, first named by the UK media as the “umbrella revolution” on account of protesters defending themselves from tear gas and pepper spray by umbrellas. Apart from umbrellas, protesters armed themselves with umbrellas, goggles and surgical masks, with their skin covered in plastic wrap. The protesters have also been considered “the most polite protesters” – they cleared away the rubbish at protest areas, putting “civil” into civil disobedience.
 
Revolutions have occurred throughout human history but they vary widely according to different social structures.  Both were spread through social media, however, due to a good basis of the rule of law and a majority of middle-class families in Hong Kong, the nature of the Umbrella Revolution is significantly different from that of the Jasmine Revolution in the Middle East.
 
“Internationalisation affects the interests of all parties.”
 
Hong Kong has a high degree of internationalisation: Hong Kong Stock Exchange (HKEx), which comes after Japan, is the world’s seventh-largest stock exchange. Hong Kong, in which many people from all over the world have been working and doing business, has the highest degree of globalisation in terms of capital flow.
 
 
 
Not only China, many western countries hold huge interests and investments in Hong Kong. The fortune of Hong Kong is linked with the interests and emotions of all parties.
 
“Short-term shocks have no impact on financial order.”
 
I am just an economic analyst so let me start analysing the movement from an economic perspective. At the time of writing, protesters are still gathering at Central, Admiralty, Wan Chai, Causeway Bay and Mong Kok. Many people addressed that the movement would result in a financial crackdown in Hong Kong; I disagree, objectively. The “Occupy Central” movement has been brewing for nearly two years; in face of it, major financial institutions has been getting ready with contingency mechanisms. For instance, a number of banks such as DBS and Citibank have activated the contingency plans – shutting more than 40 branches in the affected areas.
 
Unless the occupy movement protracts and results in any unexpected situations, otherwise regardless of the decline in Hong Kong’s stocks market, it will only bring a short-term instability, similar to the short-team impact of 911 incident on the US stocks market. HK dollar drops but capital outflow is not significant, just a bit tense before long holiday, and HIBOR is relatively stable. Hong Kong Monetary Authority reiterated that the bank system maintained a high liquidity and a good order.
 
“Political disputes weaken competitiveness in long term.”
 
In fact, under the current framework, Hong Kong government has no power to alter the decision of the Standing Committee of the National People's Congress; it definitely does not meet the demand of pan-democracy. Under the political climate generated by the mass social movement, similar protests in the future will occur more and more frequently; it is hard to improve the tense executive-legislative relationship which hampers the launch of long-term plans and as a result weakens Hong Kong’s competitiveness.
 
 
 
For sure, the overall competitiveness of a city is related to the options of political system and reflection of public opinions.  It is also difficult to generalise in economic development; things seems to be efficient may actually cause high social costs while controversial, rigorous and slow-progress projects may turn into better economic benefits.
 
When there is a comprehensive system with high acceptance in the society, damages and losses from social chaos can be avoided. Scottish independence referendum is probably an impressive recent example.
 
“There is a need to understand the public opinions.”
 
It is my honour to be born in Hong Kong, an international city that brings me a lot of opportunities. Despite living in Australia, people and affairs in Hong Kong are always my concerns.
 
According to an article by Lam Hang-chi in Hong Kong Economic Journal, Hong Kong people did not have a single vote to choose their leaders under British rule but the government had been trying to understand the public opinions. It reminds me the scenes of the Governor eating egg tarts on streets and the Commissioner of Police patrolling in protest areas with the company of a few police officers.
 
When talking to the readers, I realise most of the people think that they are supporting a righteous and truthful party. There may be an infallible truth somewhere in the world yet it is not something I can embrace with my little hands.
 
Someone asked President Lincoln during the Civil War, “the blue who advocates to free the slaves earnestly hope God can help while the gray prays for the opposition, so whose side is God on?” Lincoln simply replied, “my greatest concern is to be on God's side.”
 
We're seeking for an answer, but sometimes there is no answer at all.

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