Fears of business slowdown rise as Occupy Central gathers steam

OCCUPY Central continues to gain momentum with protesters all over Hong Kong island and parts of Kowloon showing no signs of the demonstrations easing off. The protests, officially called Occupy Central with Peace and Love but more popularly known as Occupy Central, constitute a nonviolent civil disobedience movement initiated by Benny Tai Yiu-ting of the University of Hong Kong to express dissent against the implementation of universal suffrage for the election of the chief executive in 2017 and the Legislative Council three years after that. 

With banks and other offices in Hong Kong’s financial district closed, fears are growing as to how the demonstrations and potential souring of relations with China could impact business and manufacturing. Hong Kong, after all, is amongst Asia’s strongest economies, ranking fourth globally after the U.S., Switzerland and Singapore in terms of competitiveness, according to the 2014 IMD World Competitiveness Yearbook.

On the morning of 29 September, the second day of protests, the SAR’s benchmark Hang Seng Index dropped 1.43%. To ensure a smooth running of financial establishments, the Hong Kong Monetary Authority has implemented a contingency plan and announced it will keep the currency board mechanism operating, reported the South China Morning Post.

Local and foreign businesses have expressed concerns about the protests’ repercussions on Hong Kong’s economic stability and on specific industries such as tourism, food and retail. According to Yahoo!, the Hong Kong General Chamber of Commerce and business chambers representing Canada, Italy, Bahrain and India have alerted to the possibility that the protests could cripple businesses. Many SMEs have likewise conveyed anxiety about the impact on their business, based on a report from The Standard.

Earlier in July, the Hong Kong and Shanghai Banking Corp. downgraded Hong Kong equities to underweight partly due to the potential negative effects of Occupy Central. Other banks, however, dismissed any major financial repercussions from the protests.  According to the Wall Street Journal, Fan Cheuk Wan, chief investment officer for Asia Pacific at Credit Suisse Private Banking and Wealth Management, said that unless the movement escalates into a violent unrest it will not likely cause any long-term impact on the stock market.