Here’s How Hard the Protests Are Slamming Hong Kong’s Economy
Ten straight weeks of anti-government protests in Hong Kong are taking a sharp toll on an economy already hit by the U.S.-China trade war. The protests began as weekend marches, but have become a daily phenomenon. As police tear gas has been countered by demonstrator petrol bombs, retail and tourism are taking a hit. Global brands from Walt Disney to Prada have warned of the impact. Cathay Pacific Airways and other airlines have canceled hundreds of flights after a sudden airport shutdown this week.
More than $600 billion of stock market value has been erased since early July, and analysts are expressing concern that property values could slump. Gross domestic product expanded just 0.6% in the second quarter and the continued unrest could raise the possibility of a recession, according to Bloomberg Economics.
Months of Protest
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July 2019
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August 2019
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Here’s a roundup of the mounting problems for Hong Kong’s economy and the businesses operating there:
Markets and Economy
Hong Kong’s stock market initially remained stable, but plunged as the violence escalated. Some economists believe a recession is possible if the protests continue, although Hong Kong’s government has vowed to take measures to shore up the economy.
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$622B
Stock market losses since July 2.
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12%
Plunge in Hang Seng Index since July 2.
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0%
GDP growth forecast by DBS for 2019.
Retail and Tourism
Hong Kong is one of the world’s largest luxury markets, and some major retailers are reporting slowdowns. Richemont and Swatch Group are among the luxury brands hit by store closures and decrease in tourist arrivals. InterContinental Hotels Group reported a decline in business travel in China amid a trade war with the U.S. and protests in Hong Kong.
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27%
Plunge in Switzerland’s exports of watches to Hong Kong in June.
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30-50%
Estimated drop in foreign visitors to stores in June. Brands like Prada, Ralph Lauren and Levi Strauss see sales drop amid unrest.
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3.5%
Fall in Macau casino revenue in July amid protests, fears of crackdown on junkets.
Transport
Protesters have been storming the airport and blocking trains, pressuring airlines and the city’s major public transportation network.
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19%
Slump in subway operator MTR Corp.’s share price since mid-July.
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200
Flights canceled by Cathay during airport shutdown on Aug. 12.
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20%
Plunge in Cathay’s stock since mid-July.
Property
The world’s most expensive housing market has stayed relatively stable, though analysts say the outlook is dimming. Properties at a key residential site near former airport, Kai Tak, sold at the area’s lowest prices in two years. CK Asset Holdings, the developer founded by billionaire Li Ka-shing, has postponed a planned sale of luxury condominiums.
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10%
The drop in housing prices Bank of America expects to see from the June peak. Firm expects government to propose bolder measures on land supply.
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17%
Decrease in the main index of property stocks since early July.
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20%
Drop in share price of Sun Hung Kai since mid-July, Hong Kong’s largest developer by market value.
Tycoons
Hong Kong’s business world is dominated by mammoth family empires, and some billionaire owners have taken a hit since the beginning of July from the market decline.
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20%
Drop in the net worth of Henry Cheng, chairman of jeweler Chow Tai Fook and property developer New World Development.
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12%
Fall in wealth of Li Ka-shing, Hong Kong’s richest man.
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13%
Decline in fortune of Lee Shau Kee, founder of real estate conglomerate Henderson Land.
IPOs and Deals
The protest-related weakness in Hong Kong’s equity market has also hurt dealmaking. The volume of follow-on share offerings in the city, which normally do best when stocks are rising, has dropped. Funds raised via initial public offerings are also lower.
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38%
The slump in volume of follow-on share offerings since the start of June compared to a year earlier.
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74%
Hong Kong IPOs since the start of June have raised $5.15 billion, down 74% from $19.63 billion a year earlier.
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1
The number of IPOs over $1 billion since June. The volume of deals is often low this time of year, but more than half of the summer’s new listings are trading below their offer prices.