The view from Hong Kong

I have been here, admittedly locked up in my own flat, for a week but have managed to form some views from phone and WhatsUp conversations. They are tentative but readers may be interested.

The Hang Seng stock market index has fallen from a high of nearly 29,000 on 16 Jan to 25,000 today. (Stock indices in the US have risen dramatically due to massive monetary loosening). The HK$ seems to be rock solid.(1US$ = HK$7.75020)

HK’s GDP fell about 9% y-on-y in June and July 2020 but seems to have flattened out. Upturn will be closely linked to Chinese economic revival now forecast at about 5 to 6% in 2021. It will also be much influenced by the revival of tourism. I see no chance of that for another six months to a year. HKG’s quarantine rules are so tough I don’t expect any tourists to come until the vaccine arrives.

China is offering the vaccine to anyone who wants it on a “take at your own risk basis” for about $60 for a two-shot dose in Zeijing Province. Tens of thousands have already had it and queues are long. I guess it will soon be offered to millions soon on a “pay and take it at your own risk” basis, [A clever multi-million person Stage Three test; and earn some money as well!!]

The tourism business seems to have been destroyed. All travel agents have laid off staff, people are working alternate-day shifts and Cathay Pacific has cut 8,500 jobs and cut executive pay. Subsidiary Dragon Air will be closed down.

The streets are bustling with people (all wearing masks), a goodly part of the economy seems to be bustling. The economy may bounce back sharply next year, something HK is famous for. US sanctions have had no effect.

The limit per table in a restaurant is eight (I think; I am unable to go out).

Politically, general interest has gone down – the normal in HK. Not a great deal of discussion of the new security laws that Beijing introduced. Ordinary people seem to ignore it but Pan-Democrat activists are trying to stir up some interest but most people seem unagitated. About 100 have been arrested but all (or all but one who drove a motorbike into some cops) are out on bail. No one has been charged under the new law. Quite a few have been charged under HK’s normal (old) laws.

In the Nov 2019 elections Pan-Dems took 57% (and 266 seats) and Pro-Beijing 42% (62 seats). It’s an first-past-the-post system. I suspect that if there is an election now Pro-Dems will win again but the margin will be smaller. Chief Executive Carrie Lam seems to be doing a good job.

Kumar David