Hong Kong's status as int'l financial hub should be cherished

2019-08-28 16:21:12 Xinhua Gu Liping

Hong Kong's favorable international image and business environment has been tarnished as violent and disruptive protests have been going on for more than two months.

The disturbance's direct and negative effects on the economy are visible in the retail, catering and tourism industries, which have to resort to layoffs amid the sharp declines in sales, customer numbers and revenue.

Rioters repeatedly vandalized public facilities, besieged police stations, obstructed metro lines, attacked police officers and beat up people who held different views.

Tremendous turmoil was also caused at the Hong Kong International Airport after radical protesters paralyzed one of the world's busiest airports in early August, affecting the lives of ordinary Hong Kong people and hundreds of thousands of passengers.

Alarmingly, some extreme and radical protesters even took on Hong Kong's hard-won position as an international financial center by inciting runs on banks, sowing fears and battering investors' confidence in the equity markets.

As a result, many companies from the Chinese mainland and other parts of the world have suspended or delayed plans for initial public offerings (IPOs) in Hong Kong, a warning sign that should be noted by those who love Hong Kong.

Since its return to China in 1997, Hong Kong has consolidated its status as an international financial center, with one of the world's most active and liquid securities markets due to the free flow of capital and favorable tax policies on capital gains and dividend incomes.

Hong Kong overtook New York to become the world's top IPO market in 2018.

As a testing ground of China's financial opening-up, Hong Kong has become the world's largest offshore RMB business center, with stock and bond connects between Hong Kong, Shanghai and Shenzhen.

Charles Li, chief executive of the Hong Kong Exchanges and Clearing Ltd., said the volatility of Hong Kong's equity market has increased in recent days.

He said the impact of the current violent protests has not yet been clearly revealed in the market, warning its long-term effect on Hong Kong's economy and the market could be very far-reaching and much broader.

The financial services sector remains one of Hong Kong's most important economic pillars, accounting for 18.9 percent of the city's GDP and providing about 7 percent of job opportunities in 2017.

Given the financial sector's broader role in the economy, any disruptive moves or attempts to damage the financial sector in Hong Kong would jeopardize the vital interests of global financial institutions and hundreds of thousands of investors.

Paul Chan, financial secretary of the Hong Kong Special Administrative Region (HKSAR) government, warned the deteriorating external environment and the continued violent protests in Hong Kong are creating an "economic typhoon", citing aggregate unemployment rate of the retail, accommodation and food services sectors has risen from 3.4 percent at the start of the year to 4.3 percent, with 27,500 unemployed.

Chan stressed the financial risks in Hong Kong are controllable, with its capital adequacy ratio and liquidity coverage ratio in the banking system much higher than international standards, but the HKSAR government would continue to monitor the market to prevent possible risks.

Rampant acts of violence must be stopped and order must be restored in order to cherish Hong Kong's financial status as an international financial center.

Share : 0