An Update on Hong Kong
December 26, 2019
2 min read
What's going on here?
Towards the end of November political shockwaves rocked Hong Kong: from district council elections turning the city from blue to yellow, the emergency mask ban ruled ‘unconstitutional’ and Beijing and Washington firing shots at each other in the form of a US Bill and returning sanctions.
What does this mean?
These municipal elections were seen as a key indication of support for Chief Executive Carrie Lam after the Polytechnic University siege and Hong Kong’s High Court ruling the emergency mask law ‘unconstitutional’. Hong Kongers showed their support for the protests with an unprecedented 71% turnout and almost 90% of seats going to pro-democracy councilors.
Before the Hong Kong government had time to appeal the ‘mask ban’ ruling, China’s National People’s Congress was quick to remind everyone who has the final say over the interpretation of its constitution. This is the strongest message so far and could be interpreted as either a denial of Hong Kong courts’ ability to interpret the Basic Law or its usual ‘helpful reminder’.
In the same week, Trump signed the Hong Kong Human Rights and Democracy Act into law, which mandates an annual review to check if Hong Kong has enough autonomy to justify special status with the US, backing pro-democracy protestors. Non-compliance could result in the US imposing sanctions for human rights violations in Hong Kong.
What's the big picture effect?
Whispers of a warming in the US-China relationship sent shares up by 0.6% as a resolution to 16-month trade war appeared possible. However, this could be in jeopardy as talks continue and Hong Kong becomes a chess-piece in these two superpowers’ struggle for dominance. Investors are waiting for the next move in the trade war after Trump signed this bill, so law firms and their clients may pause business into Hong Kong and China.
This economic downturn is likely to continue into the beginning of 2020: October reported the biggest retail slump of 24% and GDP also decreased by 2%. China has also recently restricted the US navy from visiting Hong Kong and placed sanctions upon non-government organisations, specifically human rights charities who advocate for democracy. Their reason for this was to punish the organisations for supporting the Hong Kong protestors.
However, despite all of the above, business is continuing: Alibaba had a record-breaking IPO of $11bn on the HKSE, having previously listed on the NYSE for $25bn in 2014. Some businesses, like Sun Hung Kai Properties, are also taking advantage of the decreasing properties prices and paying record prices for some prime real estate.
It remains to be seen what impact these events will have on Hong Kong as we progress into 2020.
Report written by Hannah-Mei Grisley
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